Canada 3000 grounds planes; thousands stranded

Canada 3000 suddenly ceased all of its operations Friday and grounded its entire fleet a move that stranded thousands of travellers around the world.

The stunning development which was relayed in a Thursday midnight news release came just hours after it was granted creditor protection by the courts.

• FROM Nov. 8, 2001: Canada 3000 granted court protection; will lay off 1,500

"Canada 3000 Airlines regrets to advise that it will cease flying operations effective November 09, 2001," was the terse comment posted on the company's Web site.

"We are therefore unable to transport passengers to their destinations, and recommend that they seek an alternative means of travel. We very much regret this action and wish to thank our passengers for their patronage in the past."

• Nov. 9, 2001: Canada 3000 grounds planes; thousands stranded

A Canada 3000 spokesperson said the airline's board made the decision to cease operations after some of its planes were being seized internationally and domestically. 'We wanted to be able to bring our planes and crews back to Canada," Canada 3000 representative Angela Saclamacis said at a Friday afternoon news conference.

Still, the airline held out hope late Friday that it might still be able to resume flying. A company lawyer said Canada 3000 was still talking to possible investors.

"The board has not made any final decision on whether to start up again or not start up again," Bill Burden, a Canada 3000 lawyer, told a bankruptcy court hearing in Toronto.

The airline was due to fly 40,000 passengers this weekend and 100,000 in the next week. As many as 300,000 Canadians have tickets for travel through Chistmas and beyond.

Other airlines scramble to add capacity; offer deals to Canada 3000 customers

Air Canada said it would let stranded Canada 3000 passengers buy one-way tickets to return home at 50 per cent off Air Canada's normal rates. For those Canada 3000 travellers who haven't started their travel, Air Canada said it would allow them to buy tickets without the normal advance booking restrictions that usually apply to discounted tickets.

WestJet said it would not directly honour Canada 3000 tickets, but would "assist those Canada 3000 passengers who have been stranded." WestJet said it has seats available for travel this weekend.

Air Transat said it would offer Canada 3000 customers "preferential rates" and would add flights and capacity in Toronto and Montreal.

Tour operator Signature Vacations said it would fly home its stranded passengers at its expense.

Via Rail will not honour Canada 3000 tickets, but will add extra cars on some routes.

• TIMELINE: A brief history of Canada 3000

Meanwhile, thousands of travellers are stranded in places as far away as Australia.

Other travellers were already at Canadian airports Friday morning, looking forward to flying south, when they were told that the airline wasn't flying any more and their holiday plans were now in shambles.

People phoning Canada 3000 merely got a recording, informing them that the airline's planes were no longer flying.

Canada 3000 staff were not able to provide customers with much information.

Compensation available for some ticket holders

Some people who have tickets on Canada 3000 flights may not be left out of pocket.

Louise Crandall of the Association of Canadian Travel Agents says compensation may be available for some ticket holders.

Crandall says those who bought holiday packages from a travel agent in B.C., Ontario or Quebec could be reimbursed from a travel insurance fund in each province. But that compensation applies only if Canada 3000 goes into bankruptcy, which hasn't yet happened.

People who purchased travel insurance or bought tickets on a credit card may also be eligible for compensation.

Shutdown follows tumultuous week

No reason was given for the shutdown. Late Thursday afternoon, the company had announced plans to restructure after being granted the creditor protection it had sought. It said it would chop 1,500 jobs, cut 30 per cent of its seat capacity, and would begin talks with creditors.

A statement from Canada 3000 president Angus Kinnear Thursday afternoon said the airline had sought creditor protection because of "delays in securing concessions" from its unions.

"This step allows us to continue serving the travelling public while restructuring our operations to ensure the long term viability of Canada 3000," Kinnear said just seven hours before the plug was pulled.

The company said Thursday it was still flying, encouraged people to continue booking, and said it was looking forward to a "favourable winter flying season."

Now, all 4,800 Canada 3000 employees face a very uncertain future. Employee rallies are planned in Toronto and Vancouver.

The shutdown capped a tumultuous week for the troubled carrier, which is losing $700,000 a day and has little cash left.

On Tuesday, it had tried to chop its Royal Aviation subsidiary acquired earlier this year for $82 million in stock a move that would have allowed it to lay off Royal's 1,400 workers but keep the rest of Canada 3000 flying.

But the Canada Industrial Relations Board ruled against it, saying it didn't have the jurisdiction.

Then, the airline began a marathon negotiating session with its unions to try to work out a cost-cutting deal that would keep it viable. But after that attempt failed Thursday morning, the company went to court and got creditor protection a legal manoeuvre that would give it time to restructure without having to worry that a creditor might launch an application to liquidate the airline.

And then, the sudden shutdown.

Canada 3000 was Canada's second-largest airline. After it acquired Royal Aviation, it bought Halifax-based CanJet in late March.