Zoom Airlines shuts down, strands thousands
Ross Marowits, The Canadian Press
Published Thursday, August 28, 2008 3:59PM EDT
MONTREAL - Hundreds of Zoom Airlines passengers were stranded in Canada and Britain when the cash-short Ottawa-based company suddenly suspended its operations and cancelled all of its flights after creditors took actions to get money owed to them.
Zoom said the economic downturn and the unprecedented rise in the price of aviation fuel had made it impossible for the privately owned company to continue operations.
"We have done everything we can to support the airline and left no stone unturned to secure a re-financing package that would have kept our aircraft flying," company founders Hugh and John Boyle said in a statement.
"Even as late as lunchtime today (Thursday) we believed we had secured a new investment package to ensure future operations but the actions of creditors meant we could not continue flying."
"Having been unable to complete the investment package, the directors of Zoom had no option but to instigate insolvency/administration proceedings."
Even before the company issued its official announcement, passengers knew there were problems because their flights were cancelled. But it took several hours before Zoom confirmed it had suspended operations due to money problems.
Zoom's founders apologized for the inconvenience caused by the airline's demise after it failed to pay bills to government, airport, supplier and aircraft creditors.
In Halifax, 213 people were stranded after baggage handlers apparently refused to load Zoom's aircraft because their company hasn't been paid.
A flight was grounded by court order in Calgary and another one was being delayed in Glasgow, Scotland.
Rising fuel costs added $50 million in operating costs for the airline in the last year, it said.
It's a problem that has hurt all airlines and forced several U.S. carriers into bankruptcy.
The Halifax airport is attempting to help 213 passengers reach their destinations with other airlines after the plane destined for Ottawa was grounded following a flight from London's Gatwick Airport.
"The volunteers have been deployed to assist the passengers. We've got our food providers helping them out with snacks and stuff to try and make the best of a very challenging situation for them," said spokesman Peter Spurway.
The Halifax airport is owed more than $200,000 but hasn't put a claim on the aircraft because that's a common occurrence for airlines, he said.
Spurway said baggage handlers with Servisair are owed money and they have refused to service Zoom's aircraft. Company officials couldn't be immediately reached for comment.
Passengers had been put up in hotels Wednesday evening after a flight that arrived Wednesday afternoon was grounded for unrelated mechanical issues.
In Calgary, dozens of passengers were transported to Vancouver by WestJet, Canada's second-largest airline, on Wednesday afternoon after Zoom's Boeing 767 was grounded by a court order.
The Ottawa-based airline owes more than $400,000 to the authority that runs the Calgary airport, along with money to the airplane's owner, ground support and refuelers.
The owner of the Boeing 767 terminated Zoom's lease on the aircraft, a Calgary airport spokesman said Thursday.
"There are a number of ground support agencies and services as well as the airport authority that are owed some funds from Zoom, so the aircraft is on the ground in Calgary pending resolution with Zoom and the leaseholder as well as the creditors," said Wayne Reimer, Calgary airport's duty manager, said in an interview.
In Scotland, the Civil Aviation Authority instructed the Glasgow airport authority to detain a Boeing 757 for non-payment of charges from Eurocontrol, the European organization for the Safety of Air Navigation, and NATS (the air traffic services provider).
That aircraft had been scheduled to travel Thursday morning to Halifax and Ottawa.
The Glasgow airport is also owed money but its own detention order has been lifted, officials said in an e-mail.
Zoom employed 450 people in Canada and 260 in the United Kingdom before the shutdown.