Zoom airlines grounded; hundreds stranded in Canada, UK

TORONTO — Hundreds of Zoom Airlines passengers were stranded Thursday in Canada and the UK after the cash-strapped Canadian airline suddenly canceled all of its flights after creditors took action to get money owed them.

Zoom said the economic downturn and the unprecedented rise in the price of aviation fuel made it impossible for the privately owned company to continue operations.

"We have done everything we can to support the airline and left no stone unturned to secure a refinancing package that would have kept our aircraft flying," company founders Hugh and John Boyle said in a statement.

"Even as late as lunchtime today (Thursday) we believed we had secured a new investment package to ensure future operations but the actions of creditors meant we could not continue flying."

Boyle said the company was unable to complete the investment package, leaving the directors of Zoom with no option but to start insolvency/administration proceedings.

Zoom's founders apologized to passenger several hours after their flights were canceled, explaining that the airline had to be suspended after the company failed to pay bills to government, airport, supplier and aircraft creditors.

Rising fuel costs added 50 million Canadian dollars ($47.5 million) in operating costs for the airline in the last year, said Boyle.

The effects of rising fuel costs have been evident for several airlines. AMR Corp.'s American Airlines, UAL Corp.'s United Airlines, Continental Airlines Inc., Delta Air Lines Inc. and Northwest Airlines Corp. have all announced capacity cuts, most of which take effect next month.

Halifax airport spokesman Peter Spurway said airport volunteers are attempting to help 213 passengers reach their destinations with other airlines after a plane destined for Ottawa, Ontario, was grounded following a flight from London's Gatwick Airport. Spurway said baggage handlers with Servisair refused to load Zoom's aircraft because their company has not been paid. Servisair officials could not be immediately reached for comment.

The Halifax airport is owed more than 200,000 Canadian dollars ($190,000) but has not put a claim on the aircraft because it is a common occurrence for airlines, according to Spurway.

In Calgary, dozens of passengers were transported to Vancouver, British Columbia, by WestJet, Canada's second-largest airline, on Wednesday afternoon after Zoom's Boeing 767 was grounded by a court order.

The Ottawa-based airline owes more than 400,000 Canadian dollars ($380,000) to the authority that runs the Calgary airport, along with money to the airplane's owner, ground support and refuelers.

The owner of the Boeing 767 terminated Zoom's lease on the aircraft, a Calgary airport spokesman said Thursday.

"The aircraft is on the ground in Calgary pending resolution with Zoom and the leaseholder as well as the creditors," said Wayne Reimer, Calgary airport's duty manager.

In Scotland, the Civil Aviation Authority instructed the Glasgow airport authority to detain a Boeing 757 for nonpayment of charges from Eurocontrol, the European organization for the Safety of Air Navigation, and NATS (the air traffic services provider).

That aircraft had been scheduled to travel Thursday morning to Halifax, Nova Scotia, and Ottawa.

The Glasgow airport is also owed money but its detention order has been lifted, officials said in an e-mail Thursday.