Canada 3000 suspends flights

Canada 3000 fleet grounded

Canada 3000, the second largest Canadian airline, grounded its fleet late on Thursday shortly after filing for bankruptcy protection.

In a statement announcing the suspension of all flights, the company said: "We very much regret this action and wish to thank our passengers for their patronage in the past."

The move, which has left thousands of passengers stranded, is at odds with the company's upbeat prediction earlier this week that it would be able to ride out the post-11 September slump in air passenger numbers.

Canada 3000 successfully applied for legal protection from its creditors on Thursday, and earlier this week secured a C$75m (£32m; $46.4m) loan guarantee from the Canadian government.

Vulnerable position

Canada 3000, which leases all of its aircraft and made two major acquisitions earlier this year, was heavily exposed to the sharp downturn in passenger numbers after September 11.

Bookings fell from 95,000 a week before September 11 to between 45,000 and 66,000, depriving it of much-needed cash.

The company had planned to reduce capacity by 30%, but was barred from closing down its Royal Aviation subsidiary under Canadian labour regulations.

Negotiations with staff unions over pay freezes and possible lay-offs collapsed on Thursday.

Trading in Canada 3000 shares, which have fallen by 50% since September 11, was suspended on Tuesday.

Aircraft impounded

Manchester airport authorities on Friday said they have impounded one of the carrier's jets due to unpaid airport charges.

Canada 3000 has 4,400 employees and a fleet of over 40 aircraft.

The company carries around 5 million passengers a year to 100 destinations worldwide, including Gatwick, Manchester, and Glasgow in the UK.