Bankrupt regional airline leaves airport hanging | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

In 2024, a number of smaller Canadian airlines have been forced to declare bankruptcy after struggling to bring in passengers and make a dent on heavy debt load.

Calgary-based ultra-low-cost carrier Lynx Air filed for bankruptcy protection and ceased operations in February 2024 while Canada Jetlines followed in September. The Mississauga-based airline launched in 2022 with the business model of shuttling East Coast Canadians to popular vacation destinations like Cancun and Orlando but had to fold just two years later after failing to make creditor payments.

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‘It would be unfair’: five airports teamed up to sue Lynx Air

When the latter airline first announced that it was ceasing operations in August 2024, four executives including CEO Brigitte Goersch immediately walked off from their jobs.

Rebranded from the longstanding Calgary airline Enerjet in 2021, Lynx Air had even more potential but was never fully able to recover from the travel dropoff that took place during the covid-19 pandemic. By the time it shut the business in 2024, the airline racked up debts of more than $47.8 million CDN ($33.71 million USD) to various creditors, $4 million CDN ($2.82 USD) and an additional $25.6 million CDN ($18 million USD) in unpaid government taxes.

Those airport taxes have become part of a protracted legal battle with several airports across Canada. On April 1, the top court of the Alberta province ruled that four airports including Calgary International Airport (YYG) and Edmonton International Airport (YEG) have no claim to appeal an earlier decision to not give it the right to recoup $4.1 million CDN in lost airport fees.

Lynx Air is a Canadian airline that ceased operations in 2024.

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“It would be unjust if Lynx’s creditors were to receive a windfall by gaining access to the [airport fee] funds,” the legal team representing the five airport authorities wrote in a filing to the Alberta’s Court of King’s Bench in June 2024.

Efforts to recover the funds were initially shot down by federal court in August 2022 but were given the right to appeal that decision by the Court of King’s Bench the following November.

Court once again shoots down claim, cites ‘commercial risk’

“The Airport Authorities were sophisticated parties organizing their affairs with other commercial entities in a specialized industry,” the three-judge panel on the Alberta Court of Appeal wrote in the final ruling denying the airport’s claim. “Commercial risk was allocated in accordance with the terms of the [agreement].”

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The Appeal Court ruling further stated that “there was no wrongdoing by Lynx Air” as “the failure to remit” was a contractual breach that resulted of the airline running out of funds and being forced to declare bankruptcy (a risk that the airports should have taken into account when establishing the agreement).

Other airports included in the lawsuit include Vancouver International (YVR), Halifax Stanfield (YHZ) and Winnipeg James Armstrong Richardson International (YWG). Based primarily on the West Coast, Lynx Air owed the most to Calgary and Vancouver airports — a respective $2 million ($1.41 USD) and $1.1 million ($0.77 million USD) Canadian dollars.

The Airport Authority for Toronto’s Pearson Airport (YYZ) had a separate agreement with the airline and was able to recover $1.7 million CDN ($1.2 million USD) in unpaid fees through a different court.