Skyservice Airlines shuts down operations

Wed Mar 31, 2010 3:22pm EDT
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By Susan Taylor

OTTAWA (Reuters) - Privately held Skyservice Airlines said on Wednesday it was shutting down operations after a Canadian court appointed a receiver, granting the request of lead secured creditor Thomas Cook.

The charter airline said in a brief statement that it could no longer operate profitably because of changes in the Canadian vacation tour market and its high debt.

The Toronto-based company's total debt load was not disclosed. Earlier this year, Sunquest Vacations' parent, Thomas Cook Canada Inc, took over C$8.8 million ($8.7 million) in Skyservice debt from another lender, said Thomas Cook spokesman John Lute.

Skyservice was unable to restructure its business and by March 31 could no longer meet its financial obligations, Sunquest said in a press release.

Skyservice has canceled all remaining flights scheduled to depart Canada in April, including one flight set to leave on Wednesday for the Dominican Republic.

It has operated aircraft for Sunquest and other tour operators, including Signature Vacations and Sunwing Vacations, between Canada and destinations in the Caribbean and Mexico since 1995, Sunquest said.

Sunquest said it has organized replacement flights, largely with Air Transat and newcomer Enerjet, for all passengers affected by the suspension of operations.

Shares of Air Transat jumped more than 8 percent to C$13.64 on the Toronto Stock Exchange on Wednesday.   Continued...