Jetsgo moved Fokkers to protect assets from creditors
globeand mail.com
Jetsgo sent jets to Quebec for safe haven from creditors
Under guise of 'air worthiness' checks, company sought to protect its Fokkers
By BRENT JANG
Tuesday, March 15, 2005 Page B1
A financially imperilled Jetsgo Corp. sent the bulk of its fleet of 15 Fokker 100s to Quebec City last Thursday night in a calculated effort to protect its prized assets from creditors.
Jetsgo pilots had been told to refuel and fly to Quebec City for "air worthiness" checks on parts, including engine thrust reversers, The Globe and Mail has learned. A Transport Canada official said no maintenance checks were ordered and airport and aircraft industry officials added that Jetsgo ultimately wanted to ensure an orderly return of its company-owned aircraft.
Four hours before Montreal-based Jetsgo announced its shutdown at around midnight Thursday, the discount carrier started transferring the Fokkers to its Quebec City hangar, keeping the planes away from creditors, such as authorities at Toronto's Pearson International Airport.
Insolvent Jetsgo, privately controlled by Montreal entrepreneur Michel Leblanc, filed for bankruptcy protection on Friday morning in the Quebec Superior Court.
Some of Jetsgo's Toronto-based pilots stayed overnight in Quebec City and then rode a Via train back to their Ontario home base, said one Jetsgo pilot familiar with the situation.
"The pilots were kept in the dark. They would not have flown the planes back to Quebec City if they knew the company was being shut down," one pilot said.
Jetsgo had hired NordTech Aerospace Inc. to provide maintenance, repair and overhaul services in Quebec City for Jetsgo's fleet. NordTech itself is owed $2.5-million for work previously done on the fleet.
An industry source said yesterday that it made sense for Mr. Leblanc to protect his 15 Fokkers from creditors breathing down his neck and to worry less about the airline's 14 leased Boeing MD-83s.
The used Fokkers, with an average age of 12˝ years, could be worth $750,000 apiece, depending on their condition, the source said.
Officials working for Pearson's operator, the Greater Toronto Airports Authority (GTAA), had phoned Jetsgo financial vice-president André Deslauriers early last week, seeking payment for landing fees and other charges, such as counter space.
Then GTAA chief financial officer Judy Fountain sent a so-called "arrears letter" to Jetsgo, demanding payment for overdue bills running into the millions of dollars, as did Nav Canada, the country's operator of air traffic control systems.
Nav Canada threatened to seize aircraft on March 7, but backed off after working out a schedule for payments in arrears.
Still, with other creditors attempting to tighten payment schedules, Jetsgo opted to set the wheels in motion that would lead to the 2˝-year-old airline seeking court protection from creditors.
One by one, starting Thursday night and lasting through early Friday, the Fokkers owned by Jetsgo made a beeline for Quebec City, including planes from Halifax, Moncton, Ottawa, Montreal and Toronto.
Jetsgo's leased 160-seat Boeing MD-83s followed the usual pattern of parking overnight at Pearson, Vancouver International Airport and Montreal's Trudeau Airport.
Jetsgo bought the 100-seat Fokkers from American Airlines Inc. in February, 2004, and those aircraft would have been easier to seize, compared with getting into a battle over the MD-83s with Jetsgo's leasing company.
Around 9 p.m. last Thursday, GTAA staff began to notice a pattern across Canada of Jetsgo's Fokkers heading for a leased Quebec City hangar. It took them by surprise because on a normal night, those Fokkers would tend to park at whatever airport is listed as that flight's final destination.
By Friday morning, most of the Fokker fleet had made it to Quebec City, a court filing said. However, one Fokker was still in West Palm Beach, Fla., according to a GTAA official who didn't want to be named. Eight of Jetsgo's 14 MD-83s were stored at Pearson, while the remaining six were spread between Vancouver and Montreal.
The Fokker flights to Quebec City didn't appear on the schedule of regular routes. "They weren't on our boards, but they were flights put into the mix. They just had their pilots fly them back, so it wouldn't have been a flight for passengers," GTAA spokeswoman Connie Turner said in an interview yesterday.
On Thursday night around 10 p.m., rumours ran rampant at Pearson that Transport Canada had ordered a special inspection of the Fokkers.
Airport officials believed the rumours had a grain of truth because the federal department had issued a 30-day warning notice to Jetsgo last Tuesday to ensure that its internal manuals would be updated. Transport Canada had uncovered deficiencies in the carrier's "organizational structure," including managers being stretched too thin.
But Transport Canada didn't order any grounding or special inspection of Jetsgo's Fokkers, so "in hindsight, it was very clear that Jetsgo wanted those planes back in Quebec," Ms. Turner said.
A Transport Canada spokeswoman confirmed yesterday that the government didn't force the Fokkers to fly to Quebec City.
Yesterday, Toronto-area Jetsgo employees showed up at a Pearson hangar to collect final paycheques. .
But as with so much of the Jetsgo saga, even the carefully planned final paycheques didn't go smoothly. Late yesterday, court-appointed monitor RSM Richter Inc. addressed concerns from employees who had run into problems cashing their cheques. "We have now been advised that all problems have been sorted out and that cheques will clear the bank," RSM Richter's Yves Vincent said in a statement.