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Air Canada comments on Aveos notice of closure

If accepted, the $15 million Debtor-in-Possession (DIP) financing could have assisted in stabilizing Aveos for the benefit of its employees and stakeholders and supported an orderly restructuring. This stabilization would have permitted Aveos to reopen certain of its facilities and recall certain of its employees, which would have in turn allowed Air Canada to provide additional maintenance work to Aveos.

To ensure Air Canada's customers are not inconvenienced and are able to continue traveling and booking Air Canada with confidence, the airline will be activating its contingency plan. This will ensure that maintenance work continues in full compliance with all regulatory requirements and is consistent with the high standards of Air Canada's maintenance programs.

Air Canada believes that Aveos has failed to act in the interests of its employees, customers and other stakeholders by abruptly abandoning its business while other viable options to closure were available.  Management at Aveos has failed repeatedly to attract new business to expand and diversify its revenue stream. By its own admission in court filings, the company is not cost competitive and has suffered operating losses for several years.

Aveos claims that Air Canada has withheld or directed elsewhere maintenance work it should have properly received. Since the beginning of 2011, Air Canada has undertaken 135 airframe checks and Aveos performed 123, or 91 per cent of them. As well, Aveos performed 52 of 56, or 93 per cent, of engine checks performed for Air Canada. Work was sent to third parties only when Aveos was unable to perform it and only in accordance with the terms of the commercial agreements between the parties and the applicable collective agreements.

Contrary to Aveos's court filings and public statements, Air Canada has been very supportive of Aveos and has provided financial and other assistance to the company. Among other things, Air Canada:

Participated in the 2010 out-of-court restructuring through a $22 million term note, that among other things allowed Aveos to defer payments without interest penalty when its cash reserve fell below a prescribed level.

Committed up to $50 million to reimburse Aveos for airframe operating losses as part of the 2010 restructuring.

Paid or advanced approximately $9 million on March 15, 2012 in respect of various invoices including invoices in dispute.

Offered Aveos on several occasions financing support to permit an orderly restructuring and allow it to remain in business, including most recently the $15 million DIP financing.
Net amounts owing by Aveos to Air Canada to date are in excess of $35 million.