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News :: Economy |
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Canadian Airline Collapses, Grounds Passengers |
Current rating: 0 |
by Reuters via Joe Futrelle
Email: futrelle (nospam) shout.net (verified) |
11 Mar 2005
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MONTREAL, Quebec (Reuters) -- Canadian discount airline Jetsgo ceased operations Friday and said it would seek court protection from its creditors, stranding hundreds of passengers during the March break school holidays, one of the busiest travel periods of the year. |
Montreal-based Jetsgo, Canada's third-largest airline, said difficult market conditions and competitive pressures forced it to take the drastic measure. It offered no details on the state of its finances.
The privately-held company was already under scrutiny from Canadian regulators because of safety concerns.
Jetsgo, which began flying in mid-2002 and immediately launched a domestic fare war, said the request for bankruptcy protection from a Quebec court would allow it to consider all options to reorganize its affairs.
Analysts said the grounding of Jetsgo, which operated a fleet of 25 jets and accounted for about 10 percent of the Canadian domestic airline market, would likely benefit Calgary-based no-frills carrier WestJet Airlines Ltd. , the country's second-largest carrier.
"We view the demise of Jetsgo as a positive for WestJet and think the shares will respond accordingly," said Merrill Lynch analyst Michael Linenberg in a research report Friday.
Linenberg raised his rating on WestJet stock to "buy" from "neutral."
WestJet shares closed at C$11.17 (US$9.28) in Toronto Thursday, well below it's 52-week high of C$19.25.
At Jetsgo's two key hubs, Pearson International Airport in Toronto and Montreal's Trudeau International Airport, the airline's kiosks and counters were abandoned.
"Where are the executives? They should be here to explain. They should be accountable," said Toronto traveler Craig Baumgartner who was on his way to New Brunswick.
Computer terminals had been removed and there were no Jetsgo staff to assist stranded passengers. Jetsgo's website, through which it booked much of its ticket sales, was not working Friday morning.
"We deeply regret that this had to happen. The decision to cease operations was only taken after difficult deliberation," Michel Leblanc, president of Jetsgo, said in a statement.
"We are very concerned about our customers and the significant hardship that this action causes."
Leblanc advised passengers to contact their travel agent or an alternative airline.
ACE Aviation Holdings Inc.'s Air Canada, the country's top airline, said it regretted that Jetsgo had made no arrangements that would enable Air Canada to accept the grounded airline's tickets.
Air Canada, which itself emerged from 18 months of bankruptcy protection at the end of September, said it would try to redeploy aircraft capacity to make as many seats available as possible to assist Jetsgo ticket holders, but flights were already heavily booked because of spring break.
WestJet said that until Monday, it will provide stranded Jetsgo customers with special fares on confirmed seats in all markets served by the two carriers.
WestJet also said it was offering C$35 standby fares to stranded Jetsgo crews, including flight attendants, pilots and maintenance personnel, until Sunday.
Jetsgo's grounding came just two days after Canadian officials said investigators had identified shortcomings in the airline's operating methods. The shortcomings were discovered during "a special inspection" into a forced landing of one of the airline's jets in January. |
See also:
http://www.cnn.com/2005/WORLD/americas/03/11/canada.jetsgo.reut/index.html
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