Hopes of quickly resurrecting Montreal-based maintenance company Aveos Fleet Performance have diminished after it rejected a $15 million emergency loan offer from Air Canada, days after seeking bankruptcy protection and sending termination notices to 1,300 staff.

Air Canada, which relies on Aveos to maintain its aircraft, offered a $15 million debtor-in-financing package to keep the company afloat after it filed for protection on 19 March.

However, Aveos chairman Eugene Davis says the proposal "did nothing" to address the "many issues" discussed with the airline. "At this point, we have exhausted all measures."

Air Canada, forced to activate a contingency plan for maintenance, believes the loan would have permitted Aveos to re-open certain facilities.

Aveos emerged from Air Canada's former maintenance division after the carrier sold the business in 2007. But the airline has grown critical, claiming its management has "failed repeatedly" to expand and diversify its revenues.

The carrier also brushed off Aveos's claim it had deferred or cancelled $16 million of aircraft maintenance work during the past two months - a deferral which Aveos partly blames for its financial position. It adds that Air Canada has extended its maintenance intervals, reducing work volumes.

"Contrary to Aveos's court filings and public statements, Air Canada has been very supportive of Aveos and has provided financial and other assistance to the company," Air Canada says.

Dave Ritchie, general vice-president Canada of the IAMAW union, says the closure of Aveos marked a "sad day for this skilled workforce". The union says Aveos will stop its airframe heavy maintenance business to concentrate solely on component and engine support, and that nearly 1,300 of its 2,600 personnel have been laid-off permanently as a result.

Air Canada intends to make alternative maintenance arrangements with "a number of other service providers", primarily in the USA and Canada.

Aveos has a narrowbody airframe maintenance subsidiary, Aeroman, in El Salvador.

  • Additional reporting by Michael Gubisch in London

Source: Flight International