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Regional airline Pascan Aviation files for creditor protection to restructure

MONTREAL – Regional airline Pascan Aviation has filed for creditor protection but says it will honour reservations and tickets as it continues to restructure its business in parts of Quebec and Atlantic Canada.

Pascan says two government agencies are providing a total of $1 million in financial support while Pascan operates under the Companies’ Creditors Arrangement Act.

The airline provides 40 daily flights to 12 airports in Quebec, New Brunswick and Newfoundland and Labrador using eight to 10 of its fleet of 23 small turboprop aircraft. The rest are grounded and up for sale.

Service to Ottawa and several other locations was suspended as it restructured operations over the past two years that saw its workforce and network size cut by about half.

No layoffs are planned for the remaining 150 employees, which is down from 340 in June 2013, said company spokeswoman Elaine Zakaib.

“It’s business as usual,” she said in a brief interview.

Two of Pascan’s creditors, Business Development Bank of Canada and Investissement Quebec, will provide the interim financing as the company works to resolve creditor claims.

Zakaib said Pascan owes $25 million to creditors, including $5 million that is unsecured.

She said a proposal will be submitted to them in the coming weeks. About 13 planes in its fleet will be sold.

Quebec Superior Court has ordered a stay of claims to at least Sept. 29.

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