Lynx Air obtains creditor protection, ceasing operations on Feb. 26

Low-cost airline Lynx Air announced that it will cease operations on Feb. 26, 2024 at 12:01 a.m. MT.

What’s happening at Lynx Air?

In a news release on Feb. 22, the Calgary-based airline said it has obtained an initial order for creditor protection from the Court of King’s Bench of Alberta under the Companies’ Creditors Arrangement Act (CCAA).

“Over the past year, Lynx Air has faced a number of significant headwinds, including rising operating costs, high fuel prices, exchange rates, increasing airport charges, and a difficult economic and regulatory environment,” the release reads.

“However, despite substantial growth in the business, ongoing operational improvements, cost reductions, and efforts to explore a sale or merger, the challenges facing the company’s business have become too significant to overcome.”

Lynx Air added that “every effort” is being made to support affected passengers.

SEE ALSO
• Employee rights when companies declare bankruptcy
• WestJet to merge with Sunwing Airlines by October 2024
• Bad Boy Bankruptcy and Severance Pay

How did Lynx Air get here?

The privately-owned airline, formerly Enerjet, launched in April 2022 — promising to bring ultra-affordable services to travellers. Its inaugural flight was from Calgary to Vancouver.

Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce, told CBC News that she believes airport charges played a major role in Lynx Air’s decision to cease operations.

“I think the airport fees as they’re structured makes it hard for discount airlines to be successful in Canada long term,” Yedlin said.

“There’s been a confluence of events that’s really put a lot of downward pressure on the airline business… So when you’re a discount player and your margins are even tighter, you’re going to feel the economic headwinds that much more acutely.”

Federal government’s response

In a post on X, formerly Twitter, Transport Minister Pablo Rodriguez said he is “closely following” Lynx Air’s announcement.

My statement on Lynx Air: pic.twitter.com/U5SY0rqfW1

— Pablo Rodriguez (@pablorodriguez) February 23, 2024

“For any travellers that had a return flight booked with Lynx, I expect Lynx to help you get back home as soon as possible. I expect Lynx to fully refund you if your fare won’t be honoured,” the statement reads.

“My office has been in touch with Lynx, we will continue to communicate with all parties, and we’ve convened calls with other airlines to see how they can help, to ensure that passengers are put first.”

Severance pay for Lynx Air employees

When a company restructures or declares bankruptcy, it’s still responsible for providing workers with unpaid wages and severance packages.

Therefore, Lynx Air owes full severance pay to non-unionized employees who lose their jobs. This includes individuals working full-time, part-time, or hourly in Alberta, B.C., and Ontario.

However, because employees are classified as “unsecured creditors” during a restructuring or bankruptcy in Canada, the reality is that staff at the low-cost airline will likely receive little to no severance.

Why: Unsecured creditors are lower in priority for repayment — behind secured creditors like banks and government tax claims. In many cases, there’s usually not enough money to fully compensate staff after secured creditors are paid.

The difference between what Lynx Air employees are owed, and what little they might receive, could be tens of thousands of dollars.

ADDITIONAL RESOURCES
• Wrongful dismissal in Alberta: Employee rights
• What to know about wrongful dismissal claims in B.C.
• Wrongful dismissals in Ontario: What employees need to know

The Sears Act

Championed by Samfiru Tumarkin LLP, the Sears Act focuses on better protecting employees during a company’s bankruptcy.

It aims to make sure employees get treated as secured creditors, so they can be paid their severance and unpaid wages first — ahead of unsecured creditors.

When should I contact an employment lawyer?

You should contact the experienced employment law team at Samfiru Tumarkin LLP immediately — but ONLY when you lose your job, your employer permanently closes the company, and one of the following happens:

• Your employer doesn’t file for restructuring or bankruptcy
• Your employer claims they will file for bankruptcy through the CCAA or Bankruptcy and Insolvency Act (BIA), but doesn’t follow through

In these scenarios, non-unionized employees are still legally entitled to a full severance package, which can be as much as 24 months’ pay.

This is where Samfiru Tumarkin LLP can be invaluable. Our employment lawyers in Alberta, B.C., and Ontario have helped tens of thousands of individuals enforce their rights.

If you are a non-unionized worker who needs help with an employment issue, contact us or call 1-855-821-5900 to get the advice you need, and the compensation you deserve.