Lynx Air to cease operations Monday, obtains creditor protection
Calgary-based, ultra low-cost airline launched in 2022 but faced 'significant headwinds,' company says
Lynx Air, a Calgary-based airline that launched less than two years ago with a promise to make air travel more affordable for Canadians, says it will cease operations on Monday.
The news came as the low-cost airline announced it had sought and obtained an initial order for creditor protection from the Court of King's Bench of Alberta.
"Over the past year, Lynx Air has faced a number of significant headwinds including rising operating costs, high fuel prices, exchange rates, increasing airport charges and a difficult economic and regulatory environment," said the company in a news release.
"Despite substantial growth in the business, ongoing operational improvements, cost reductions and efforts to explore a sale or merger, the challenges facing the company's business have become too significant to overcome."
The airline said it will cease operations at 12:01 a.m. MT on Monday, "with flights continuing to operate until that time."
In an email statement to CBC News, a spokesperson with the airline said that "growing financial pressures have made it impossible" to continue operations.
"We are focused on working with passengers currently in transit to find alternative arrangements to reach their destination," the statement reads.
A court filing by Michael Woodward, the airline's interim CFO, says Lynx had assets worth about $429 million as of the end of 2023, but that its liabilities totalled nearly $600 million.
The company has already defaulted on debts to several companies, according to the filing, including the firm that does de-icing at the Calgary airport, Delta Airlines, which maintains Lynx's fleet of aircraft, as well as airport authorities in Montreal and Toronto.
The company said passengers with existing bookings are advised to contact their credit card company to secure refunds for pre-booked travel. It also directed customers to its website.
Flight cancelled, passengers scrambling
But Lynx Air customer Kara Brereton-Cooke says her flight home to Winnipeg, which was scheduled for Saturday, has already been cancelled.
Brereton-Cooke said she received an email from Lynx Thursday evening following the announcement, advising that her flight from Vancouver to Winnipeg was cancelled. She and a group of seven friends have been left scrambling to find a way home.
"Seeing this email, we're now all just frantic."
The friends travelled to Vancouver for a bachelorette party, and were originally slated to fly home Friday. Brereton-Cooke says Lynx Air then rescheduled the original return flight to depart at 11 a.m. on Saturday, but then cancelled it entirely.
The group booked an extra night of hotel accommodations for Friday night after their flight was rescheduled. Now, they've booked last-minute flights through Air Canada for Saturday. The trip has become more expensive than anyone expected, she told CBC News.
"We just want our compensation back from them," Brereton-Cooke said. "We shouldn't have to go through our credit card companies to get a refund."
CBC News contacted Lynx Air for a comment on the flight cancellation and refund process. A spokesperson responded via email on Friday afternoon and directed customers to check for updates in the FAQ section of Lynx Air's website.
And other Alberta-based airlines have since responded to the Lynx Air news with various offers for affected consumers.
Canada's airlines react
"We recognize the immediate impact this information has on passengers and employees of Lynx, and we are committed to assisting where we can through a number of actions," reads a statement posted to WestJet's website Thursday night.
The Calgary-based airline is offering deals to those impacted by Lynx's announcement: a 25 per cent discount for all economy fares between Feb. 22 and Oct. 26 on WestJet routes that were previously served by Lynx Air.
Air Canada says it will add over 6,000 seats on some routes that were operated by Lynx, as well as capping certain fares for select dates, according to a statement released Friday afternoon.
And Flair Airlines, an ultra-low cost carrier (ULCC) like Lynx, also responded to the news.
Stephen Jones, Flair Airlines president and CEO, said maintaining ULCCs and ensuring market competition is "critical" for consumers.
"When there is less competition, deserving Canadians are the ones who suffer," reads an email statement from Jones.
"While acknowledging other airlines' discount efforts, it's important to note that their discounted fares are still higher than our base fares."
The company says it has now added recovery flights for any Lynx passengers and crew who have been affected and is "exploring further measures."
In an interview with CBC News, Jones said he believes this is a growth opportunity for Flair because the company hopes to fulfil the consumer demand for discount airlines as ULCC options dwindle.
"It's a really tough industry, let's just leave it at that."
Lynx Air's flight attendants had just joined the Canadian Union of Public Employees (CUPE) earlier this month.
"We're devastated for our members at Lynx Air and all employees who lost their jobs today," Lou Arab, communications representative for CUPE, told CBC News.
"We will represent them and defend their rights in these times and we'll fight to ensure that employees get everything they're legally entitled to.
"The company was clear that it's losing investors and doesn't have the capital to support continued operations."
Airline industry is 'notoriously difficult'
Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce, said she suspects airport charges and added fees played a major role in Lynx's decision.
"I think the airport fees as they're structured makes it hard for discount airlines to be successful in Canada long term," she said.
"There's been a confluence of events that's really put a lot of downward pressure on the airline business… So when you're a discount player and your margins are even tighter, you're going to feel the economic headwinds that much more acutely."
Yedlin calls the industry "notoriously difficult," citing various post-pandemic challenges such as labour shortages and increased fuel costs.
She says Lynx Air's announcement is unfortunate for consumers hoping to save on travel costs.
"I think the question is, what do we need to do in Canada to ensure the viability of discount airlines?"
Eddy Doyle, chief executive of Canada Jetlines, said his company looked at entering the ultra low-cost carrier market several years ago, but decided against it.
Instead, it operates in the leisure market, selling packages and flying to sun destinations. Canada Jetlines also does a lot of charter flights, he said, including those for sports teams and companies.
Doyle said the country's ULCC market is challenging because of the many high fees airlines have to pay, including landing fees, Nav Canada fees, airport improvement fees, taxes and security costs.
"It's more difficult in Canada to stimulate new demand, when your starting price is composed of a lot of taxes," Doyle said. "And the second reason we decided not to go and play in that arena is the fact that you do need the deep pockets if you're going to take on the two major carriers in Canada."
Ultra-affordable services promised
Privately-owned Lynx Air, which was formerly Enerjet, began flying in the spring of 2022, with a promise to bring ultra-affordable services to travellers. Lynx Air's inaugural flight was April 7, 2022, jetting from Calgary to Vancouver.
When it announced its plans in 2021, the company's CEO at the time said the goal was to link Canadians to people and places.
"Airfares have traditionally been high here in Canada, and we at Lynx believe in meeting Canadians' needs who can't afford to travel or can't afford to travel as often as they'd like," said Merren McArthur, who stepped down last year for personal reasons.
Prior to Thursday's announcement that it would cease operating, the airline was flying nine Boeing 737 MAX 8 aircraft to 18 destinations in Canada, the U.S. and Mexico. As the end of last year it employed about 500 people, with 390 working in Alberta and 110 in Ontario.
Lynx began by flying to several Canadian cities in 2022, including Calgary, Edmonton, Halifax, Toronto, Vancouver and Victoria, B.C. Later that year, it announced a major expansion into the United States and followed that with the launch of a series of international flights in 2023, including Montreal to Las Vegas, and Toronto to Los Angeles, among others.
Transport Minister Pablo Rodriguez addressed the news via social media on Thursday evening.
In a statement posted to X, formerly known as Twitter, Rodriguez said he is following the announcement closely.
"For any travellers that had a return flight booked with Lynx, I expect Lynx to help you get back home as soon as possible. I expect Lynx to fully refund you if your fare won't be honoured," the statement reads.
"My office has been in touch with Lynx, we will continue to communicate with all parties, and we've convened calls with other airlines to see how they can help, to ensure that passengers are put first."
Osler, Hoskin & Harcourt LLP are acting as legal advisers to Lynx Air. FTI Consulting Canada Inc. was appointed as the monitor under the Companies' Creditors Arrangement Act.
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With files from Tony Seskus, Tom Ross, Solomon Israel and Kyle Bakx