Canadian charter airline Skyservice suspends operations
Wednesday, March 31, 2010
The company cites debt levels and changes in the vacation travel market with its decision to shut down operations and file for receivership. At the time of the filing in Ontario Superior Court, Skyservice is said to owe almost $9 million CAD to long-term partner and Thomas Cook subsidiary Sunquest Vacations. This situation exacerbated the debt load already put on the airline by a leveraged buyout in 2007 by Vancouver-based private equity firm Gibralt Capital Corporation. That placed more debt than was workable on the troubled airline, along with Roynat Capital calling in their loans to Skyservice earlier in the year.
Skyservice has stated that it will work with its partner companies and other providers to ensure customers stranded by the airline's sudden shutdown are dealt with effectively, according to a company representative. In addition to customers impacted by the cancellation of flights for the month of April, approximately 860 jobs are expected to be lost as a result of this shutdown.
Tour operator Signature Vacations, under a contract with Skyservice until 2013, has stated that they were prepared for the airline's receivership, having joined forces with rival service Sunwing Airlines.
Last year, operator Conquest Vacations declared bankruptcy, allegedly due to the economic downturn and reduced revenues throughout the industry.