1) A turbulent year
After spending its spring months looking in vain for partner carriers for its summer program, CanJet Vacations announced in May that it was closing down. Then in September, CanJet suspended flying operations. It was a relatively calm bow-out for a tour operator and an airline, unlike others in recent memory.
SkyGreece, meanwhile, had a whole lot of turbulence in late August and early September, first announcing it was delaying flights – for days, not hours – due to “operational considerations”, then ceasing operations but vowing to restructure. Whatever the reasons for its troubles, in the court of social media, SkyGreece was already #AirlineFail, with angry (and stranded) passengers venting their frustrations. The airline finally announced in November that it was bankrupt.
But the biggest creditor protection story by far was TravelBrands. The company said it was “business as usual” when in late May it obtained an Order from the Ontario Superior Court of Justice (Commercial Division) granting it creditor protection under the Companies’ Creditors Arrangement Act (CCAA).
After acquiring what was then Thomas Cook Canada Inc., the company made significant effort to address challenges associated with the business, “and has been largely successful,” said a statement. But there were remaining isolated legacy issues that were significantly impacting TravelBrands’ financial performance.
Those included $3.6 million a year in rent charges for Thomas Cook’s former head office at 75 Eglinton East. The entire building was empty and available for sub-lease but there had been no takers since TravelBrands moved out. The lease was later disclaimed. The Sears Travel relationship had also been problematic, according to sources, and margins were dwindling. In fiscal year 2014, the company’s net operating loss was $4.5 million. The company’s forecast for fiscal year 2015, assuming the status quo, is a net operating loss of $11.6 million.
In June KPMG posted a list of TravelBrands’ 3,000 or so known creditors ranging from hotels and cruise lines to travel agencies and tour operators. Soon after TravelBrands reached agreement with Sears Travel and continues to operate the brand while it is in creditor protection. In KPMG’s list of creditors, Sears Canada is listed as being owed $5.99 million.
Restructuring followed and a number of well-known industry names, including Al Budhwani, Firdosh Bulsara, Aggie Stoduto, Kim Uno and Dawn Rzepka, left the company. At the same time TravelBrands announced that former ACV President and CEO Zeina Gedeon was coming onboard as CEO.
Now TravelBrands heads into early January with a court date on its calendar. TravelBrands will have its $3.9 million dispute with Gibralt Capital Corporation adjudicated by the Court at a hearing taking place Jan. 5. What’s next in the case? Stay tuned.
