Insolvent Aveos Fleet Performance Inc. racked up $790-million in liabilities last fall, including a trail of debts owed to a who’s who of aviation companies, from engine makers to its largest customer, Air Canada.
But Air Canada said Thursday that it is encouraging maintenance, repair and overhaul companies “across Canada and around the world to conduct due diligence and assess which of the former Aveos businesses may be viable in Canada under new ownership.”
The aircraft repair firm’s liabilities exceeded the book value of its assets by $165-million on Sept. 30, 2011 – a gap that widened by January to $219.8-million.
Engine makers and suppliers GE Canada International Inc. (owed $2.8-million) and CFM International (owed $2.4-million) are named in the list of hundreds of creditors left in the lurch when Aveos abruptly shut down this week, laying off more than 2,600 workers in Montreal, Winnipeg and Vancouver. Aveos is a privately owned company whose roots date back to being a division of Air Canada, but the Montreal-based plane repair firm was sold to private investors in 2007.
Components supplier Honeywell International Inc. is out $2.2-million, while other creditors include Thales Avionics Inc., GE Engine Services Distribution LLC, Boeing Co., Airbus SAS, Embraer SA and Federal Express, according to the March list compiled as part of Aveos’s petition this week for bankruptcy protection. On Tuesday, however, debt-laden Aveos said its business was a lost cause and the plane maintenance firm opted to liquidate its assets instead of restructuring.
Aveos carried $446-million in long-term debt and had trade payables totalling $209-million on Sept. 30, 2011, according to financial statements filed in Quebec Superior Court. While total amounts payable to Air Canada have yet to be hashed out, the airline estimates that Aveos owes the airline at least $35-million.
In 2010, lenders took majority control of Aveos, formerly named Air Canada Technical Services. Law firm Blake Cassels & Graydon LP is representing a lending group, whose administrative agent is Credit Suisse AG, court filings show.
Law firm Osler Hoskin & Harcourt is listed as being owed more than $78,000, while other smaller creditors include Premier Aviation Overhaul, Kelowna Flightcraft, Jazz Air, Global Public Affairs, Xerox Canada, the Centre for Asia Pacific Aviation and K-Bro Linen.
On Thursday, Air Canada defended itself against accusations by union leaders and Quebec and Manitoba politicians that the carrier is contravening the Air Canada Public Participation Act. Critics allege that the collapse of Aveos has left the carrier without any airframe heavy maintenance centres in Montreal and Winnipeg. Vancouver isn’t protected under the act.
In a newsletter to employees, Air Canada cited a ruling last May by the Ontario Superior Court of Justice. “The court found that Air Canada did meet the act’s requirement on the basis of its own overhaul and maintenance functions. Air Canada intends to remain fully compliant with the act, which also requires it maintains its head office in Montreal and subjects the airline to the Official Languages Act,” the newsletter said.
“We realize that many Air Canada employees have friends and colleagues at Aveos and understandably feel badly for their current situation.”