Canada 3000 placed in bankruptcy
After days of struggling to find a way to get its planes back in the air, Canada's second-largest airline rolled to a dead stop Sunday as it was placed in bankruptcy.
- INDEPTH: Canada 3000: Grounded
Canada 3000 issued a news release late in the day confirming that its board of directors, president and other corporate officers had resigned a common move before bankruptcy because it reduces the liability of individual executives.
An Ontario Superior Court judge has appointed Deloitte & Touche Inc. as "Trustee in bankruptcy" to supervise sale of the airline's assets.
The company secured court protection against creditors Nov. 8, and had been negotiating with banks, investors and others since then to try to keep operating.
On Friday, it grounded all of its planes stranding passengers around the world and leaving about 4,800 workers without jobs.
- FROM NOV. 10, 2001: Canada 3000 executives hope to fly again
Employees rallied to try to save the airline, urging Ottawa to intervene. But the federal government, which had previously offered a conditional $75 million in loans, insisted Canada 3000 come up with a "viable business plan" first.
Before news of bankruptcy was confirmed, the Canadian Union of Public Employees had criticized Transport Minister David Collenette for not coming to the table with financial aid. "I think he needed to be there on Friday," Andrea Addario told CBC TV.
Flight attendants were planning a protest in Toronto on Tuesday, when Canada 3000 was scheduled to appear before a bankruptcy judge. They're now organizing a demonstration outside Collenette's office on Monday.
Like most other airlines, Canada 3000 had been losing money since the deadly hijackings in the United States Sept. 11 scared away travellers.
Other factors played a role in its demise, according to analysts, including a switch from chartered tours to regular domestic and international flights, the purchase of two rivals within the past year, as well as competition from Air Canada's new discount service.
Although some people held out hope the carrier would be able to restructure, experts warned that last week's request for bankruptcy protection would shatter consumer confidence and virtually guarantee its collapse.
"You're not going to get the advanced bookings to make the company viable" under those conditions, predicted Fred Lazar, an economist at York University, who was interviewed hours before the bankruptcy announcement. "People will have said, 'Look, I can't trust this company to be around in January or March, so I'd rather book with one of the other chartered carriers or with Air Canada."