Jetsgo Bankrupts, Thousands Stranded
Posted 3-12-2005 at 05:23 PM
Discount airline Jetsgo obtained court protection from creditors on Friday and grounded its jet fleet, stranding 17,000 passengers during the March break school holidays, one of the busiest travel periods of the year in Canada.
In a court affidavit, Montreal-based Jetsgo, which has 1,200 employees and is the country's third-largest airline, said it lost about C$55 million ($49 million) over the past eight months, on top of a C$9.6 million loss in the year to June 27, 2004.
Jetsgo said it had a negative net worth of about C$19 million and that its business was no longer viable because air fares were well below cost.
The privately held company was already under scrutiny from Canadian regulators because of safety and operational concerns. Transport Canada this week gave the airline 30 days to rectify problems.
In February it had restricted the airline to flying no higher than 28,000 feet, which adds to fuel costs.
"They'd grown too fast and it was putting strains on senior management," said a spokeswoman for the transport department.
Jetsgo, which began flying in mid 2002 and immediately launched a fare war with Canada's other airlines, said it decided to stop operating its fleet of 29 jets because it could not ensure reliable operations, even to repatriate stranded passengers.
Jetsgo's woes, which it blamed in large part on a "coordinated attack" on its business by no-frills carrier WestJet Airlines Ltd., electrified the shares of rival carriers.
WestJet shares surged as much as 51 percent on Friday before closing at C$15.60, up C$4.43, or almost 40 percent.
Discount airline Jetsgo obtained court protection from creditors on Friday and grounded its jet fleet, stranding 17,000 passengers during the March break school holidays, one of the busiest travel periods of the year in Canada.
In a court affidavit, Montreal-based Jetsgo, which has 1,200 employees and is the country's third-largest airline, said it lost about C$55 million ($49 million) over the past eight months, on top of a C$9.6 million loss in the year to June 27, 2004.
Jetsgo said it had a negative net worth of about C$19 million and that its business was no longer viable because air fares were well below cost.
The privately held company was already under scrutiny from Canadian regulators because of safety and operational concerns. Transport Canada this week gave the airline 30 days to rectify problems.
In February it had restricted the airline to flying no higher than 28,000 feet, which adds to fuel costs.
"They'd grown too fast and it was putting strains on senior management," said a spokeswoman for the transport department.
Jetsgo, which began flying in mid 2002 and immediately launched a fare war with Canada's other airlines, said it decided to stop operating its fleet of 29 jets because it could not ensure reliable operations, even to repatriate stranded passengers.
Jetsgo's woes, which it blamed in large part on a "coordinated attack" on its business by no-frills carrier WestJet Airlines Ltd., electrified the shares of rival carriers.
WestJet shares surged as much as 51 percent on Friday before closing at C$15.60, up C$4.43, or almost 40 percent.
Yeah, that's why they now call it Jetsgone
