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Canadian airline gets protection from creditors

Posted: Friday, November 09, 2001

TORONTO (AP) -- Canada's second-biggest airline was granted protection from creditors Thursday after negotiations with unions on cutting hundreds of jobs failed to reach an agreement.

Canada 3000, which operates flights from Canada to the United States, Mexico, Europe and the South Pacific, said it's losing $460,000 a day and is almost out of cash.

Judge John Ground of the Ontario Superior Court granted the airline temporary protection from creditors, allowing it to restructure its debt, cut its workforce and negotiate with creditors while trying to formulate a survival plan.

Canada 3000 is also seeking Chapter 11 bankruptcy protection in the United States because it has creditors in California.

''We've got a downturn in the economy and we've got the events of Sept. 11 and most recently impact of the Canadian dollar (which) affects this organization's ability to pay some of its American lessors,'' Bill Burden, a Canada 3000 lawyer, said in court Thursday.

In Ottawa, Transport Minister David Collenette said the bankruptcy protection allows Canada 3000 ''to restructure itself and be free from legal obligations to creditors.''

Collenette recently agreed to a $50 million loan guarantee for Canada 3000, but that was rescinded because the airline failed to meet conditions including a business plan to prevent future losses.

Under the court filing, Canada 3000 will continue to fly while the company negotiates with creditors.

The airline filed for protection after negotiations with unions on cutting hundreds of jobs ended without agreement earlier Thursday.

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On the Net:

http://www.canada3000.ca



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