Bankruptcy filingCanada 3000 files for bankruptcy protection
Last Updated: Thu Nov 8 14:44:25 2001
TORONTO - Canada 3000 has filed for creditor protection under federal bankruptcy laws. The move will allow it several months to restructure without facing the possibility that a creditor would force the company to liquidate.
The filing, which Canada 3000 president Angus Kinnear had warned might be coming, came after an all-night negotiating session between the troubled airline and its unions broke off with no agreement on job cuts.
The airline and its unions had been trying to reach an agreement on potential layoffs at Canada 3000, which is losing $700,000 a day.
Late Wednesday, Canada 3000's unions offered to approve 680 job cuts to help keep the country's second-largest airline operating.
Outside a meeting of Canada 3000's board and its unions, company spokeswoman Angela Saclamacis said the cuts would affect 180 of the airline's 577 pilots, and 500 of its 1,500 flight attendants.
After the talks broke down, union officials expressed their disappointment that a deal couldn't be worked out.
"We moved as far as we possibly could because we realize the company is in financial difficulty as a result of the downturn that has hit the airline industry since September 11th," Humberto da Silva, president of the CUPE component that represents flight attendants at Canada 3000's Royal Aviation subsidiary.
"We feel this deal would have given them what they needed to make it through this downturn until the economy improves and the airline industry returns to normal again," da Silva said.
"Our members...worked through the night and gave all they could to save their jobs and this airline. It is up to (Canada 3000 president Angus) Kinnear to move this forward," Francois Bellemare, president of the airline division of CUPE, said.
Also on Wednesday, the former head of Royal Aviation unveiled what he called a "serious" offer to buy back his airline.
Michel Leblanc, the former president of Royal Aviation, said he's offered $25 million and will assume $24 million of Royal's debt, making the offer worth $49 million - an amount that he said represents "fair market value" for most of Royal's assets.
Canada 3000 bought Royal for $82 million in stock earlier this year.
Leblanc said his offer is conditional on Canada 3000 getting $30 million in loan guarantees from Ottawa.
He said his plan would save a majority of Royal's 1,400 jobs.
So far, Canada 3000 has not responded to the Royal offer.
On Wednesday morning, the Canada Industrial Relations Board (CIRB) dismissed Canada 3000's application to shut down Royal Aviation, setting the stage for a possible bankruptcy restructuring by the troubled carrier.
The airline had appeared before a CIRB hearing Tuesday to ask the board to allow it to re-open contracts, making it easier for Canada 3000 to fold its Royal operations and lay off 1,400 Royal employees without having to consider seniority rights with the other Canada 3000 employees.
But the CIRB said it didn't have jurisdiction in the matter. Board chairman Gordon Hamilton said the company and unions should get together to work out a cost-cutting plan.
Trading in shares of Canada 3000 remained halted on Thursday at the request of the company. They last traded Tuesday at $3.11.
Written by CBC News Online staff
Norman Hermant reports for CBC TV
[Download Players]
CBC Newsworld Morning's Mark Kelley talks to former Royal Aviation president Michel Leblanc about his plans to buy back the airline from Canada 3000
CBC Newsworld's Jennifer Gates talks to aviation expert Tony Hine from Capital Canada Ltd., about the likelihood of Canada 3000 filing for bankruptcy protection
CBC Newsworld's Costa Maragos talks to Humberto d'aSilva from CUPE about the talks breaking down between Canada 3000 and the unions
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