Jetsgo may resume operations under new plan
CTV.ca News Staff
Jetsgo has proposed a restructuring plan that could resume operations for the failed discount airline.
A court-appointed monitor has outlined the idea as an option to creditors, the Toronto Star reported.
"The objective would be to file a plan that will permit an airline business to continue," said a status report on the company, released Wednesday by monitor RSM Richter Inc.
This "will present an opportunity for employment to potentially hundreds of individuals and will provide a financial recovery for the company's creditors superior to the result that they would achieve in bankruptcy."
The airline shut down earlier in March, leaving some 17,000 passengers stranded and about 1,350 employees out of work.
However, the plan may be a tough sell to creditors who are owed more than $100 million.
This total does not include money owed to employees or companies that leased 14 aircraft to the airline.
The proposal has already drawn some criticism.
"I'm dumbfounded. I can't believe they'd be suggesting that," John Weerdenburg, vice-president and chief executive officer of Ottawa's Macdonald-Cartier International Airport Authority, told the Star.
"Who ultimately would end up trusting the son of Jetsgo?"
Weerdenburg said his airport is owed $220,000 by Jetsgo and he suspects several airports will want their money up front.
Meanwhile, media reports suggested that at least a couple of Jetsgo creditors are seeking to seize grounded aircraft as remuneration for the $7 million that they are allegedly owed by the discount airline.
NAV Canada and the Greater Toronto Airports Authority have petitioned Quebec's Superior Court to lift a stay in proceedings and allow them to seize part of the grounded fleet in the aftermath of Jetsgo's downfall.
The monitor acknowledged that the plan will be a hard sell and that it would be premature to "determine whether a successful restructuring plan can be submitted to creditors, but the company is working diligently and in good faith in this regard."
Other points outlined in the report:
The new plan would be dependent on approval from stakeholders and creditors.
The monitor confirmed it plans to continue selling Jetsgo's assets.
A restructured company would lease aircraft with "negotiation of new terms with aircraft lessors premised on a different business model."
The monitor proposes continuing to cancel all contracts and the majority of airport leases.