Mexicana suspends international flights

by B. N. Sullivan

Less than a week ago, Compañía Mexicana de Aviación (CMA), AKA Mexicana Airlines, filed for bankruptcy protection, but said it would continue to operate while undergoing reorganization.  Nevertheless, the carrier suspended ticket sales a day later.  Now the situation appears to have deteriorated even further as Mexicana announced today that it will suspend many of its international flights, beginning tomorrow, August 9, 2010.   Its domestic operations, MexicanaClick and MexicanaLink also are at risk.

Quoting from a press release issued by Mexicana on August 8, 2010:

Mexicana Airlines today announced that its financial situation has deteriorated substantially in the last week due to a series of events that have strangled the cash flows the airline needs to finance its day-to-day operations. One such event was IATA’s decision to suspend the carrier’s BSP sales channel, forcing it to suspend the sale and issuing of tickets indefinitely, with serious repercussions for MexicanaClick and MexicanaLink sales. Other sources of revenue have either dried up or are being retained by financial institutions following the company’s recent decision to file bankruptcy proceedings.

Consequently, Mexicana Airlines will be forced to cancel certain flights over coming days to optimize available resources and ensure that priority is given to homebound passengers.

Beginning tomorrow, August 9,2010, Mexicana will suspend flights on most international routes. [Click here to view a list of suspended flights.]

Mexicana's most recent press statement says, "It is hoped an agreement will be reached with union leaders and that additional resources can be obtained to secure the financial viability of the carrier."

Sadly, it also says, "If you are planning on traveling by air in the immediate future, Mexicana Airlines suggests you consider alternatives, where possible."

Mexicana files for bankruptcy protection, blames labor costs

by B. N. Sullivan

Compañía Mexicana de Aviación (CMA), AKA Mexicana Airlines, filed an insolvency petition today with a Mexico City district court.  Mexicana also filed a Chapter 15 bankruptcy petition in New York.  The airline intends to continue operating while it reorganizes.  Domestic subsidiaries Click and Link are not a part of the bankruptcy filing.

According to a press release issued today by Mexicana, the filings were made "in order to obtain bankruptcy protection and injunction relief in both countries."  The 'Concurso Mercantil' filed with the Mexican courts is similar to Chapter 11 bankruptcy in the U.S. in that it guarantees the operation of the company while it restructures.

Mexicana said yesterday that "the company's financial and labor situation is no longer sustainable," and the airline proposed drastic cuts to crew pay: 41% for pilots and 39% for flight attendants.  Mexicana also proposed to lay off about 40% of its present crew work force.  Quoting from the Aug. 2, 2010 press release:

...Concerted efforts have been made over the last four and a half years to restructure costs, efforts that have translated into savings of some US$800 million as a direct result of investment in IT systems, new routes and more efficient aircraft, but have not been sufficient to offset its crew costs.

Although the airline’s operating costs excluding crew labor costs are 30% lower than the average of legacy airlines in the United States, these non competitive labor costs are the main reason why the company has continued to suffer losses, to the extent that it is now financially non-viable. According to company sources, CMA’s pilots earn 49% more than the average wage paid by legacy airlines in the United States and 185% more than the average pilots flying Airbus A320s for other Mexican low cost airlines like Volaris or Interjet. Likewise, Mexicana Airlines flight attendants earn 32% more than the U.S. average and 165% more than their Mexican counterparts employed by the same airlines.

Numbers confirm, that if the CMA’s collective contracts had been more competitive, instead of registering losses of US$350 million from 2007 to date, the company would have posted profits of US$350 million, illustrating that CMA does indeed have the potential to be a profitable, financially viable carrier.

However, in light of the current situation, CMA has presented its pilots’ and flight attendants’ unions with two alternatives.

The first is the option to enter into a new collective contract to secure the CMA’s long-term financial viability. This would imply accepting cuts of 41% and 39% in wages and fringe benefits for pilots and flight attendants, respectively. This alternative also calls for additional cost-cutting measures, including downsizing 40% of the airline’s pilots and flight attendants. On the upside, it incorporates a profit-sharing plan whereby the unions would get a percentage of any operating profits that exceed 5% of the company’s total revenues.

As a second alternative, stockholders have offered to sell CMA to its unions for the token sum of $1 peso, proving them convinced of the vital role these labor organizations will play in the future of the company. As the only entities capable of turning the situation around, CMA’s management have stated that it would be willing to transfer control of the airline to its unions. The transaction would require further and more detailed negotiations with the unions, but in broad terms would require NGA to assume liabilities of US$120 million in bank credit lines, while the unions would have the option of retaining a BANCOMEXT loan for US$80 million or transferring this credit line and its respective sureties to NGA. The unions would also be given a six-month permit for the use of the Mexicana Airlines brand name, among other measures designed to allow for a smooth transition.

In response to statements by representatives of the pilots union (ASPA) to the effect that both proposals outlined by CMA would be rejected, the company said that it is time to acknowledge reality, that the paradigm of commercial aviation has changed worldwide and that only airlines that operate at competitive costs can hope to survive and continue flying. CMA will continue to negotiate with its unions.

A short time ago, Reuters published an article about the Mexicana situation, reporting that crews "already gave up multiple benefits in 2006, saving Mexicana around $35 million per year," and thus are reluctant to accept the pay cuts proposed this week.  The Reuters article included comments attributed to crew union leaders:

"We don't have any other option than continue negotiating," Fernando Perfecto, head of the pilots' union told Reuters on Tuesday after learning Mexicana had filed for creditor protection.

"We are not going to stop working, on the contrary, we will continue business as usual," he said, knocking down any possibility of a strike.

Lizette Clavel, who heads the flight attendants union, told Reuters on Tuesday the creditor protection filings came as a surprise to unionized employees.

Commenting on the option presented to crews to buy out Mexicana, Ms. Clavel said, "We reject the fraudulent intention of making Mexicana de Aviación file for creditor protection since this means sharing the losses while privatizing the gains by leaving Click and Link out of the proceedings."

UPDATE Aug. 4, 2010: Reuters is reporting that Mexicana suspended ticket sales this afternoon.

UPDATE Aug. 8, 2010:  Mexicana  has announced the suspension of international flights, beginning August 9, 2010.

Canada's Skyservice Airlines folds

by B. N. Sullivan

Canadian charter carrier Skyservice Airlines, Inc. abruptly ceased operating and filed for receivership yesterday, March 31, 2010. The company was burdened by large debt obligations, and what media reports refer to as the airline's "unsustainable" cost structure. The airline's closure will put roughly 1,000 staff out of work.

According to receivership documents filed with the Ontario Superior Court of Justice, Airservice had 1,088 employees on March 31, 2010, of which approximately 74% are unionized. Statements to the court indicate that all employees have been paid for their work through March 31. Plans are underway to repatriate employees posted overseas.

The majority of Skyservice employees will be terminated, although about 50 will be retained temporarily to assist with the wind-down of operations.

According to a CTV News article about the demise of Skyservice, the company went through a series of cost-cutting measures in 2008 and 2009:

Starting in the fall of 2008, management cancelled snacks at internal meetings, restricted BlackBerry use, lowered office thermostats and scrapped company-paid parties in favour of potlucks. Besides issuing layoff notices, Skyservice also instituted a hiring freeze and reduced some salaries. Restrictions were even placed on printing, photocopying and long-distance calls, but the relative small savings weren't enough to save the airline from entering a tailspin into receivership.

The Skyservice Cabin Crew Association issued the following statement:

The Skyservice Cabin Crew Association ("SCCA") is deeply saddened by today's announcement that Skyservice Airlines Inc. (the "Company") has been petitioned into receivership. The SCCA has worked diligently with the Company and the other employee stakeholders over the past year to find $10 million of savings for the Company. Unfortunately, even those concessions were not enough to prevent today's event. Many of our members have been with the Company since its inception in 1994. They and all of our members have devoted and committed themselves with enormous energy to the airline and its passengers. For us, this last chapter is a tragedy. The SCCA has retained the law firm of Koskie Minsky LLP to represent the interest of its members in the receivership process. We will ensure that our members' rights are protected to the full extent of the law.

In a statement of its own, the company said, "Skyservice Airlines and the receiver are committed to winding up the business in an orderly and responsible manner. The company and the receiver will continue to treat employees and other stakeholders fairly and in a transparent manner throughout this process."

Best of luck going forward to all Skyservice crew members and staff.

Japan Airlines: Imminent bankruptcy to result in loss of 15,700 jobs

by B. N. Sullivan

Japan Airlines (JAL), which has been struggling financially for some time, is expected to file for bankruptcy tomorrow. As a part of its restructuring plan, the airline will eliminate 15,700 jobs -- one third of its work force, according the the Financial Times. The staff reductions are expected to occur over a period of up to three years, rather than all at once.

"JAL’s bankruptcy could be the largest of a Japanese group outside the financial services sector and would be one of the country’s fifth or sixth-largest," says the Financial Times.

JAL is expected to continue operations during its restructuring. The airline will cease operating more than 20 unprofitable routes.

In 2009, JAL asked pilots, cabin crew, and ground workers to volunteer for two months of unpaid leave, and even suspended part of its pilot training programs to save money. Pensions of pilots and other workers also were reduced.

Two U.S.-based carriers -- American Airlines and Delta Air Lines -- have been embroiled in a bidding war for some of JAL's routes. JAL and American are both members of the Oneworld alliance, but JAL is reportedly considering a move to SkyTeam, which would ally it more closely with Delta, which is already a member of SkyTeam.

Reuters reports:

In recent days, reports have suggested that Atlanta-based Delta, with its strong transpacific route structure, could be irresistible for JAL.

A Japanese newspaper reported on Saturday that JAL has already agreed on a tie-up with Delta.

Reuters also reported that while the Japanese government does not have an official stance on who JAL should ally with, some senior officials in the transport ministry are pushing for JAL to defect to SkyTeam.

Mesa Air Group files for Chapter 11 bankruptcy protection

by B. N. Sullivan

Citing an "untenable financial situation" due to leases on aircraft it no longer needs or wants, Mesa Air Group has filed voluntarily for Chapter 11 bankruptcy protection. Mesa CEO Jonathan Ornstein said the move will allow Mesa to "eliminate excess aircraft."

"In addition" said Ornstein, "this action will give us the opportunity to reach a more timely conclusion in the litigation with Delta Air Lines in which Mesa is currently seeking damages in excess of $70 million."

Mesa sued Delta Air Lines after the latter canceled a lucrative contract.

In a statement to the press Mesa claimed that they "will continue to operate as normal, without interruption" during the financial restructuring. No layoffs were announced, however fleet reductions usually are accompanied by work force downsizing as well, so who knows what may be in store later in the year for crews and other Mesa employees.

Meanwhile, Mesa's press release specified (among other things) that the company is "seeking authority from the Court... to continue to pay employee salary and benefits," stating that it has ample liquidity to support itself during the bankruptcy process.

Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, respectively, and independently as Mesa Airlines and go! Mokulele. The latter is not included in Mesa's Chapter 11 bankruptcy filing.

UPDATE Jan. 6, 2010: The Mesa Air Group (MAG) unit of the Air Line Pilots Association (ALPA) has released the following statement regarding Mesa's bankruptcy filing:

“While we are not surprised by the company’s bankruptcy filing, it is a sad day for all of us as MAG pilots. Our company experienced tremendous growth since it began operating in 1982.

Unfortunately, the steady decline in the U.S. economy has had a tremendous impact on our partners and our company and MAG was forced to declare bankruptcy to eliminate excess aircraft. The bankruptcy process will allow our company to restructure its fleet and debt so that it meets the flying needs of our partners and remains competitive for future business opportunities.

“MAG has some of the lowest costs in the industry. Labor expenses are clearly not the problem, and the company indicated that they plan to honor the existing collective bargaining agreement with their pilots. The union will continue working to protect our pilots’ rights under this agreement.

“We have an extremely dedicated pilot group and are strongly committed to seeing our airline succeed. MAG pilots offer its partners and their customers quality service and proven performance, and we are committed to maintaining the same level of excellence for passengers traveling on our aircraft.”

Scotland's FlyGlobespan goes bust, strands crews and passengers

by B. N. Sullivan

Scottish low-fare and charter airline Flyglobespan has ceased operations, leaving some 800 staff suddenly jobless, and reportedly stranding at least 5,000 passengers abroad. An article about the debacle on the Scottish news Web site The Sun mentioned that flight crews were "understood to be stranded" as well.

The carrier's parent, Globespan Group, entered administration after "having suffered liquidity issues," according to a terse message posted on the Flyglobespan.com Web site. That message went on to say, "Unfortunately, the Joint Administrators have been unable to continue trading the companies and therefore all flights operated by The Globespan Group plc or Globespan Airlines Ltd have been cancelled and the aircraft grounded."

According to several news articles, the majority of Flyglobespan's staff, including crew members, will lose their jobs immediately. A small number of employees will be retained temporarily to help wind down the company's operations.

The Sun reported:

Last month the company staved off collapsed with a last-ditch cash injection. And only a day before going bust, Flyglobespan had been talking about a bright future. On Monday, founder Tom Dalrymple predicted "good news" over a funding deal.

Apparently Mr. Dalrymple was overly optimistic?

Many crew members and other Flyglobespan staff said that they received no official notification of the airline's demise from the company. Sadly, they learned they had lost their jobs when they read news stories or heard about the company's collapse on television.

Rumor has it that crew members down route were told to find their own way home. This wouldn't be the first time the failure of an airline has left crew stranded all over the map and having to pay their own way home, but it is despicable just the same. Talk about adding insult to injury!

And I suppose if there is no money available to buy tickets home for crews it is too much to hope that the crews and ground staff might (eventually) receive their final paychecks.

An article about the company's collapse on the BBC news Web site quoted the Secretary of State for Scotland, Jim Murphy, who said, "The news that Flyglobespan has gone into administration is a real blow for Scotland and first and foremost for the hundreds of employees who now face redundancy a week before Christmas."

Another unnamed Scottish government spokesman said, "We recognise that this will be an anxious time for employees and their families, particularly at this time of year."

Indeed.

[Photo Source]

SkyEurope goes under

by B. N. Sullivan

Back in June, I wrote a short post about Slovakian low-fare carrier SkyEurope Airlines when it voluntarily filed for reorganization, i.e., bankruptcy protection. Unfortunately, they didn't make it. A short time ago, SkyEurope announced on its Web site that it had "suspended its sales and operations immediately."

Jason Bitter, Chief Executive Officer of SkyEurope, tried to sound optimistic at the time the company filed for reorganization, saying, "It is good for our customers who may have full confidence in flying SkyEurope for holidays, city breaks, business travel, and friend and family visits. It is good for our suppliers who will be fully paid for goods and services provided during the reorganisation. And it is good for our employees because it allows us to preserve and protect jobs.”

Flight schedules continued until late today when, as an AFP news article put it, SkyEurope "threw in the towel" and canceled all of its flights. AFP reports on the rapid deterioration over the past 24 hours:

Earlier Monday the airline had cancelled all afternoon flights from Bratislava and all flights as of Tuesday from Prague.

The Ruzyne Prague airport said Monday it would halt all SkyEurope's flights as of Tuesday after the airline failed to pay its debts, the airport spokeswoman Eva Krejci told AFP.

The Vienna airport halted SkyEurope's flights in mid-August for the same reason.

Slovakian news Web site SKToday.com also reported that "SkyEurope wasn't able to refuel its airplanes, with the company purportedly failing to settle its payments to fuel suppliers."

More than a thousand passengers reportedly have been left stranded at a number of European airports. As usual, no mention was made of the fate of the crews and whether they were stranded at out-stations along with the passengers.

Payment of salaries to SkyEurope staff already were deferred earlier this month in an effort to give the company more operating capital. Sources in Eastern Europe speculated earlier today that perhaps flights were being canceled because employees were refusing to work. Whether or not a work stoppage was initiated I cannot confirm, but in any case, it's moot since the insolvent carrier now has ceased operations.

SkyEurope had bases bases in Bratislava, Kosice, Vienna, and Prague.

Low-fare carrier SkyEurope Airlines files for reorganization

Low fare carrier SkyEurope Airlines announced today that it had voluntarily filed to reorganize under 'creditor protection'. The airline is the operating subsidiary of SkyEurope Holding AG, headquartered in Bratislava, Slovakia.

A SkyEurope press release about the filing explained:

During the reorganisation, existing supplier agreements must be honoured by suppliers and by SkyEurope. Suppliers will be paid for goods and services received during reorganisation, but the company is protected from action by creditors to enforce payment of pre-existing debts. The objective is for SkyEurope to emerge from the period of creditor protection a stronger and financially stable business.

The airline intends to continue to flying its scheduled and charter routes during reorganization.

Jason Bitter, Chief Executive Officer of SkyEurope, said, “This is a good step for SkyEurope because it means we will be able to operate without any disruption while we implement our reorganisation. It is good for our customers who may have full confidence in flying SkyEurope for holidays, city breaks, business travel, and friend and family visits. It is good for our suppliers who will be fully paid for goods and services provided during the reorganisation. And it is good for our employees because it allows us to preserve and protect jobs.”

Lithuanian carrier flyLAL ceases operations

Lithuanian carrier flyLAL will cease operations today, January 17, 2009, according to a message posted in the airline's website. The airline's management says the move came after a deal to sell the flyLAL's assets to an outside investor, identified by the airline as Swiss investment fund SCH Swiss Capital Holding AG, fell through.

In a prepared statement, Vytautas Kaikaris, CEO of flyLAL, said, "We decided that ceasing operations of flyLAL – Lithuanian Airlines is the only possible decision in the current circumstances. This decision is triggered by intention not to increase damages and worsen conditions of the airline’s creditors."

Kaikaris blamed unfair market conditions, record-high oil prices and low demand for winter season flights as the main reasons for airline’s business downturn. Another major factor, he said, was "the current fleet, which did not correspond to the new market conditions – the load factor did not reach the targets, therefore flight operations only increased airline’s loss."

flyLAL – Lithuanian Airlines will file for bankruptcy "if no proposals for future airline development are received in the nearest days,"according to the CEO's statement.

Meanwhile, a report by the AFP news agency suggests that the decision to shut down flyLAL's operations actually occurred after a court froze the airline's assets at its creditors' request, and the airline's operating license was suspended. The AFP article quoted Lithuanian Transport Minister Eligijus Masiulis, who said, "Civil aviation operations are heavily regulated and supervised. FlyLAL is not meeting the requirements due to its difficult situation."

AFP also reported that while flyLAL was ordered to halt all scheduled flights as of January 17, 2009, its charter arm, would remain in service. In any case, the last scheduled flight operated by flyLAL reportedly departed from Amsterdam on January 16, 2009 19:30 local time.

Headquartered in Vilnius, Lithuania, the airline had 360 employees.

"We sincerely regret that the current situation has led to this painful decision and no other solution was found," said Kaikaris.

[Photo Source]

Turkish carrier Inter Airlines folds

Turkish carrier Inter Airlines, based in Antalya, has become the latest small airline to fold. According to an article today on Flight International, Inter Airlines has ceased operations, and plans to return the three Airbus A321s in its fleet. The article went on to say that the airline laid off 49 workers last month, and continued yesterday with 90 pilots, cabin crew and technicians.

Just last month, the Turkish publication Today's Zaman ran an interesting article about the outlook for Turkey's aviation industry. In what now seems a prophetic statement in light of today's news, the article quoted Inter Airlines CEO, Ömer Torosluoğlu, who predicted that up to half of Turkey's 16 private airlines might fail, saying, "Only those companies that can find additional financing will survive. The fast loss of value in the Turkish lira against the dollar might also cause big losses on domestic lines."

Inter Airlines had operated domestic passenger service within Turkey, as well as international service to a number of destinations in Belgium, Germany, Spain, and the Netherlands.

[Photo Source]

Sterling Airlines declares bankruptcy and ceases operations

Copenhagen-based low-fare carrier Sterling Airlines declared bankruptcy this morning, October 29, 2008. The carrier grounded its entire fleet of 24 Danish-registered aircraft, and ceased operations.

A multi-lingual message posted on Sterling's website said that a "battle to keep the company alive" had failed in the face of significant increases in fuel prices over the past year, and the global financial recession. A restructuring plan was initiated over the summer, however the meltdown of the financial market in Iceland several weeks ago became the last straw. It prevented Sterling's Icelandic owner from coming through with the financing that would have allowed the airline's operations to continue. In short, the airline ran out of money, with no time left to raise more.

Here is an excerpt from the Sterling Airlines bankruptcy announcement:

With the global financial recession that started in the autumn of 2007, Sterling by winter 2007 – 2008 was seeing signs of stagnation in the market. Significant fuel cost increases, and at the same time a planned heavy expansion of our activities, made us more exposed than we would have been otherwise.

By spring 2008, the airline industry was hit by decreasing demand and rapidly increasing fuel prices. That led to Sterling accumulating large losses. During summer and autumn the management of Sterling implemented a restructuring plan of the company resulting in a reduction in fleet and manpower, and a pull-out of a lot of loss-making activities, without compromising our services. The full effect of these actions were planned to have impact start of 2009.

To get the company restructured, the shareholder of Sterling gave financial support from the end of July 2008 to the end of September 2008 transferring 444.5 million DKK to the company. The plan was to continue financial support into 2009. On the 29th September 2008, the Icelandic financial environment started to collapse. Over a 3 to 4 weeks period, the whole financial system melted down, and that resulted in our shareholder being unable to continue his support to the company. Negotiations have been conducted with several potential investors, but it was impossible to make ends meet. The inevitable result is that Sterling Airlines A/S has no option but to file for bankruptcy.

Buzz on the grapevine is that Sterling's more than 1,000 employees were given no advance warning of the shutdown of the airline. Instead, many employees heard about the bankruptcy from news reports -- unfortunately not an unusual situation in the case of airline bankruptcies. Worse still, employees were not paid for September, and rumor has it that crews who were away from base are now stranded at their layover hotels.

As usual in these situations, the press is full of stories about thousands of stranded passengers who now have to find alternative transportation, and pay additional fares in order to return home. This is very unfortunate, of course, but presumably those passengers at least have jobs to come home to.

Another sad day in what has to be one of the saddest years for commercial aviation.

Spain's LTE International Airways suspends operations

LTE International Airways, a low-fare Spanish carrier, has suspended operations. According to a news article in Spain's El Mundo, the announcement cited financial reasons. LTE also notified crews that operations would be ceased "temporarily," mentioning banking problems.

A source quoted by El Mundo also said that the airline may be preparing to declare bankruptcy. Spain's Dirección General de Aviación Civil (DGAC) must now decide whether to withdraw LTE International's operator's certificate.

LTE International Airways is based in Palma de Mallorca. It operates both chartered and scheduled passenger flights, using a fleet of Airbus A320 aircraft.


[Photo Source]

Sun Country Airlines cuts paychecks by 50% and issues WARN letter

Things are in tumult at Minnesota-based Sun Country Airlines. Like so many other carriers, Sun Country has been struggling financially for months in the face of huge increases in fuel prices, coupled with a general economic downturn. More recently, another significant problem arose when the CEO of the airline's parent, Petters Group Worldwide, was arrested on federal charges of mail and wire fraud, money laundering and obstruction of justice. While the federal investigation that led to the arrest apparently pertained to a unit of the Petters Group separate from the airline, continued financing for the aviation unit has been jeopardized as a result.

Late last week, Sun Country CEO Stan Gadek met with the airline's pilot and flight attendant unions to explain that a planned-for loan from the parent company to cover expenses during the current quarter would not be possible, now that the airline needed to separate itself financially from the Petters Group. With such financing suddenly unavailable, Gadek told employees that in addition to rescheduling payments to vendors and generating other sources of cash, the airline would have to further reduce wages in order to stay in business. To that end, Gadek announced that all employees would have to take a 50% "pay deferral," beginning with their October 7, 2008 paychecks.

Under terms of the "pay deferral," communicated to employees in a letter from the Sun Country CEO, the "reduction in payroll will be recorded as back wages owing to employees and accruing interest at a nominal rate." In other words, the intention is to pay back the "deferred" wages to employees, with interest, when -- and if -- the company gets back on solid ground financially. The letter to employees also stated that Gadek himself will "work without pay until this crisis is resolved."

Everyone wants to believe that Sun Country will be able to make it through the cash crunch intact, but things are shaky enough that the airline issued a WARN letter to employees on October 1, notifying them of the possibility that they might be jobless by December 1, 2008. [Under the provisions of the federal Worker's Adjustment and Retraining Act (WARN Act), employers are required to provide notice 60 days in advance of a shutdown or mass layoff.] The letter said, in part:

...[T]his is to notify you that should Sun Country not be able to obtain additional financing or obtain relief from our major creditors in the near future there is a distinct possibility that the airline will be shut down and/or you will be furloughed. While the timing of this action is not predictable at this time, you should prepare yourself for the possibility that such a shut down or furlough could impact your employment as early as December 1, 2008. Depending on what happens, such an employment loss could be temporary or permanent and could affect all Sun Country employees or a subset of employees that includes you.

Sun Country's pilots, represented by the Air Line Pilots Association (ALPA), released a statement in response to the WARN letter, saying that they had made no commitments to management and no negotiations are scheduled at this time. The pilots' union states that they are leaving all options open "during this period of evolving circumstances."

Last spring, 45 Sun Country pilots were furloughed involuntarily in conjunction with a capacity reduction. At the time they were announced, those furloughs were expected to run from May 1, 2008, through October 31, 2008.

UPDATE Oct. 6, 2008: Local media in Minnesota are reporting this morning that Sun Country Airlines has filed for Chapter 11 bankruptcy protection. Airline officials announced that Sun Country intends to continue to fly its regular schedule.

[Photo Source]

XL Leisure Group goes bust and XL Airways UK ceases operations

Rumors have been circulating for days about the impending bankruptcy of the UK's third largest tour operator, XL Leisure Group. Now it's official, according to a notice just posted on the XL.com website, and XL Airways UK, a unit of XL Leisure Group, has ceased flying due to the financial collapse of its parent.

The announcement says, in part:

On 12 September 2008, Alastair Beveridge, Nick Cropper, Simon Appell and Stuart Mackellar were appointed as Joint Administrators of the Companies by the Court.

The Companies entered into Administration having suffered as a result of volatile fuel prices, the economic downturn, and were unable to obtain further funding.

The Joint Administrators cannot continue trading the business and therefore all flights operated by the Companies have been immediately cancelled and the aircraft grounded. Going forward, the Joint Administrators are unlikely to be able to trade the business or operate the aircraft.

News media in the UK report that XL Leisure Group employs about 2,500 people. It is unclear exactly how many of those work for XL Airways UK. The airline has hubs at London Gatwick, Manchester, and Glasgow.

XL Airways France and XL Airways Germany are said to be unaffected at this time.

[Photo Source]

Insolvent transatlantic carrier Zoom Airlines ceases operations

Low fare transatlantic carrier Zoom Airlines suspended operations today due to insolvency. According to a message posted on the Zoom website, the airline suspended operations with as of 18:00 UTC on Aug. 28, 2008. All flights have been canceled and Zoom's aircraft have been grounded.

The message on the website explained, "Both Zoom Airlines Inc. and Zoom Airlines Ltd., the Canadian and UK airlines, will be filing for insolvency proceedings in their home countries today."

News reports, including a story published today by the UK's Times Online, say that two of Zoom's aircraft were refused permission to depart as creditors attempted to seize assets in the hours before the insolvency announcement. From the Times Online:

A Zoom flight from Glasgow to Halifax and Ottawa was grounded by BAA, the airports operator, this morning for non-payment of European and British air traffic control fees, stranding 205 passengers.

A further 156 passengers at Glasgow were also left without a flight when their plane was grounded in Canada for failure to pay aircraft leasing and airport fees.

The Times article went on to say that aviation regulators presumably refused to allow the airline to continue operating without the immediate payment of debts to air traffic controllers, and that suppliers were refusing to refuel Zoom's aircraft unless they were paid in cash, which would have cost about £30,000 per flight. In addition, Reuters reports, Zoom is said to owe Calgary's airport authority C$400,000 ($380,000) in landing fees.

Zoom founders Hugh and John Boyle said in a statement that the airline's demise was due to "the unprecedented increase in the price of aviation fuel and the economic climate." They said they had been trying to obtain re-financing for their financially troubled airline, but had failed to do so. As a result, the airline had to cease operations.

In its story about the demise of Zoom Airlines, the AFP news service quoted an Transport Canada official who said that the carrier had "voluntarily returned its operating license to Transport Canada."

No word yet on the fate of the airline's hundreds of employees. It is not clear if any arrangements were made to repatriate Zoom crews who were at out-stations at the time of the shut-down, or if they have been left stranded. Anyone who has such information is welcome to post it in the comments.

[Photo Source]

Gemini Air Cargo shuts down operations

Word on the street is that Gemini Air Cargo has ceased operations. Usually I try to stay away from posting rumors on Aircrew Buzz, but I've had an unusual number of inquiries over the past 24 hrs about whether Gemini was going out of business. This prompted me to make some inquiries of my own. There's no message or notice on the Gemini Air Cargo website stating that the carrier's operations have ceased, however several sources I tend to trust have said that the rumor about the shutdown of Gemini's operations is true.

Apparently I am not the only one trying to verify the rumors. An article today on FlightGlobal.com, which is known as a reliable source of aviation news, reports that "sources with knowledge of the situation" say that Gemini Air Cargo has indeed closed its doors.

Regular readers of Aircrew Buzz will recall that I reported in June that Gemini Air Cargo filed for Chapter 11 bankruptcy protection. At that time, 75 of Gemini's 225 pilots were either furloughed or terminated, however the air freight carrier continued to operate its DC-10-30F and MD-11F aircraft. The bankruptcy filing in June was the air cargo operator's second in two years.

I will add an update to this post as soon as any official information becomes available.

UPDATE Aug. 15, 2008: Air Cargo News reported this morning that Gemini Air Cargo has ceased operations and has entered Chapter 7 liquidation. The article said, "The bankruptcy court was due to rule on a successful bidder on 15 August, however, it is believed that negotiations with the final interested party, Bravia Capital, broke down on 12 August and the airline subsequently ceased flying operations."

According to Air Cargo News, Gemini's four MD-11Fs will now be returned to the lessors, two to GECAS and two to AerCap. Rumor has it that the two GECAS-owned aircraft are likely to be placed with World Airways, which has been looking to increase its MD-11 fleet.

Bankrupt Gemini Air Cargo eliminates 75 pilot jobs

Last week Gemini Air Cargo filed for Chapter 11 bankruptcy protection for the second time in two years. The carrier plans to continue to operate during restructuring, however 75 of its 225 pilots are being furloughed or terminated, a move that the pilots' union says is in violation of the terms of their contract.

The Gemini Air Cargo pilots, represented by the Air Line Pilots Association (ALPA), released the following statement about the bankruptcy announcement:

“We are very surprised by the bankruptcy announcement,” said Capt. Bill Atchison, chairman of the Gemini unit of ALPA, “and we are also very troubled by the additional news that 75 crewmembers were terminated or furloughed. The furloughs were done in direct violation of Section 23 of our current contract, and we will take whatever steps are necessary to protect the rights of those pilots affected.

“However, we remain optimistic that these cost-saving measures are necessary during this financially turbulent time to re-position the company as an attractive opportunity for prospective investors.

“Gemini filed for Chapter 11 bankruptcy protection in 2006, and emerged five months later as a stronger airline. I am confident we will see the same results during this restructuring and Gemini will emerge with prospects for a healthier future by the end of summer.

“We are scheduled to open Section 6 contract negotiations in March 2009, and we will move forward with the development of a strategic plan to support those negotiations. We want and need to be prepared for the future growth of this airline, any increase in the types of services we provide, and the possible expansion of the current and additional aircraft type we fly.”

Aviation news website FlightGlobal.com, quoting from a letter to Gemini employees from the cargo airline's management, reports that the decision to file for bankruptcy was driven by "record-shattering fuel prices" coupled with revenue shortfalls encountered over the past 12 months.

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Silverjet ceases operations

Silverjet, the 'low fare business class' airline, has grounded its three leased aircraft and suspended passenger service. In a brief message on the Silverjet website, CEO Lawrence Hunt announced that from May 30, 2008, the carrier "will cease operations." Referring to Silverjet investors, Hunt's message said that "due to unforeseen circumstances, they were unable to unlock the finance that we needed."

Seeming to suggest that there still was hope for the future, Mr. Hunt's message also said, "We are working actively with new investors who are prepared to inject new funds so we can recommence operations. If we are able to achieve this, we will make an announcement as soon as possible and we hope to be able to bring you our very 'sivilised' flying experience again."

Silverjet had been in operation since January of 2007. The airline had been offering all-business-class service from London Luton to Newark and Dubai, using Boeing 767 aircraft. The airline had never made a profit. Trading of Silverjet shares on the London stock exchange was suspended late last week, a foreshadowing of today's announcement.

An article on the Times Online website about the collapse of Silverjet said:

The decision to ground all flights came after Silverjet failed to secure a $5 million (£2.5 million) loan from a Gulf investor. Thousands of passengers have been left stranded or needing to change travel plans by the operator, which flies from Luton to Dubai and New York. The Civil Aviation Authority estimated that 7,000 UK and 2,500 nonUK customers have been affected and they are not covered by the air travel industry’s insurance scheme.

Silverjet has told passengers to contact their credit card companies or travel agents to try to recover their money.

No mention was made of the fate of crew or other Silverjet employees.

The shut-down of Silverjet follows that of competitor Eos Airlines, which filed for bankruptcy protection about a month ago. Another competitor, MAXjet, filed for bankruptcy in December of 2007. Earlier this month it was announced that MAXjet's assets were being sold to a group that said it intended to operate a luxury charter service.

For the moment, privately owned French airline L'Avion is the sole independent carrier offering business-class-only trans-Atlantic flights. L'Avion operates Boeing 757-200 aircraft between Paris-Orly and Newark.

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EuroManx: Another small air carrier folds

EuroManx, a small airline based on the Isle of Mann, ceased operations several days ago. A message posted on the EuroManx website on May 9, 2008 explained:

For the past 5 years EuroManx has focused on providing a locally based operation offering high quality schedules and services dedicated to the Isle of Man.

During this time the employees have worked hard to develop and grow the business but over the last 6 months a number of factors including rising fuel prices and reduced passenger numbers have proved to be insurmountable obstacles to the airline being able to continue to operate.

EuroManx, which had been in business since August 2002, operated Dash-8 aircraft on flights between the Isle of Man and Belfast City, Liverpool, London City and Manchester airports.

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Sri Lankan airline Mihin Lanka suspends operations

Mihin Lanka, the budget airline owned by the government of Sri Lanka, has suspended operations indefinitely. The reason, according to news reports: they have no planes!

As reported yesterday by the Sri Lankan news website The Sunday Times Online:

The carrier’s last aircraft, an Airbus A-321 taken on wet lease from BH Air, based in Bulgaria, was reclaimed by its owners on Thursday, with all the aircraft’s staff, equipment and stores. It is understood that the cash-strapped carrier, which in its first year of operation was already billions of rupees in debt, was unable to come up with the cash to renew the lease.

Mihin began operations in April last year and stopped flying a year later, at the end of last month. Mihin Lanka’s controversial CEO Sajin de Vass Gunewardena was due to leave the airline at the end of April this year.

The Sunday Times also says that Mihin Lanka has been "scouring markets in Europe and India in a bid to obtain new aircraft on a dry lease, at a lower cost."

A number of news outlets in Sri Lanka have reported that Mihin Lanka's CEO, Sajin Vaas Gunawardene, resigned several weeks ago.

A visit to the Mihin Lanka website yielded no public messages or news releases about suspension of operations, however the "Flight Information" page said " NO FLIGHTS ARE SCHEDULED FOR TODAY." The "Flight Schedule" page lists flights between Colombo and a number of destinations during the period of June 1, 2008 to October 25, 2008. Perhaps the Mihin Lanka management believes they will have some aircraft available by the first of June.

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