* In receivership, cancels all remaining flights
* Business hit by high debt, market changes
* Sunquest Vacations organizes replacement flights
(Adds details, background)
By Susan Taylor
OTTAWA, March 31 Privately held Skyservice
Airlines said on Wednesday it was shutting down operations
after a Canadian court appointed a receiver, granting the
request of lead secured creditor Thomas Cook.
The charter airline said in a brief statement that it could
no longer operate profitably because of changes in the Canadian
vacation tour market and its high debt.
The Toronto-based company's total debt load was not
disclosed. Earlier this year, Sunquest Vacations' parent,
Thomas Cook Canada Inc, took over C$8.8 million ($8.7 million)
in Skyservice debt from another lender, said Thomas Cook
spokesman John Lute.
Skyservice was unable to restructure its business and by
March 31 could no longer meet its financial obligations,
Sunquest said in a press release.
Skyservice has canceled all remaining flights scheduled to
depart Canada in April, including one flight set to leave on
Wednesday for the Dominican Republic.
It has operated aircraft for Sunquest and other tour
operators, including Signature Vacations and Sunwing Vacations,
between Canada and destinations in the Caribbean and Mexico
since 1995, Sunquest said.
Sunquest said it has organized replacement flights, largely
with Air Transat TRZb.TO and newcomer Enerjet, for all
passengers affected by the suspension of operations.
Shares of Air Transat jumped more than 8 percent to C$13.64
on the Toronto Stock Exchange on Wednesday.
Skyservice's troubles stem partly from an industry shift
about five years ago, when scheduled airlines added tour
operations to their business, which cut demand for seats on on
its charter planes.
It also faced growing pressure as domestic airlines such as
Air Canada ACa.TO and WestJet (WJA.TO) added capacity, or
available seat miles, said Robert Kokonis, managing director of
AirTrav Inc, an airline consulting company.
"Changes in the global and Canadian tour operator
marketplace really left Skyservice in a position where it did
not enjoy the same strong market position," Kokonis said.
A bruising slowdown in demand for air travel during the
recession also sparked cost-cutting by carriers that had to
compete harder for business.
Skyservice was founded in 1986. According to its website,
it employed over 1,200 staff and flew more than 20 commercial
aircraft to destinations in Canada, the United States, the
Caribbean, Mexico and Europe.
"Thomas Cook and Sunquest did everything possible to assist
Skyservice and limit the effect of its financial difficulties
on travelers," said Michael Friisdahl, chief Executive of
Thomas Cook North America.
"Unfortunately, faced with unprecedented difficulties in
the airline business, Skyservice could not return to
(Reporting by Susan Taylor; editing by Rob Wilson)