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A laid off Aveo employee makes a call in front of the aircraft maintenance company's plant Tuesday, March 20, 2012 in Montreal.THE CANADIAN PRESS/Ryan RemiorzRYAN REMIORZ/The Canadian Press

Cash-strapped Aveos Fleet Performance Inc., reeling after its contracts to repair planes were scaled back by Air Canada, says it will be liquidating assets and shutting down.

Aveos said Tuesday it had rejected an offer of $15-million in emergency financial aid made late Monday by Air Canada .

The aircraft maintenance company initially filed for protection under the Companies' Creditors Arrangement Act, seeking to restructure and salvage a portion of its business.

But an 11th-hour offer by Air Canada after months of "protracted negotiations did not appropriately address Aveos's challenges, and it was clear that a restructuring under the CCAA would not be possible," Aveos said.

More than 2,600 Aveos employees will lose their jobs, including people who had been assigned to airframe heavy maintenance and staffers who worked on engine overhaul and component repairs, Aveos said.

Montreal-based Aveos, which had been granted protection from creditors by Quebec Superior Court on Monday, said it was squeezed by Air Canada – its main customer and former parent – and began locking out employees on Sunday.

Private-equity investors bought a majority stake in Aveos in 2007, but in 2010 a group of lenders took control of the company.

Aveos chairman Eugene Davis said the privately owned company exhausted its options with Air Canada, so an insolvent Aveos must close plants in Montreal, Winnipeg and Vancouver.

Mr. Davis described Air Canada's decision to defer and cancel work with Aveos over the past two months as the final blows.

Air Canada vigorously disputed that claim, saying Aveos authored its own demise by failing to diversify its revenue.

The International Association of Machinists and Aerospace Workers said it is disgusted by the full-scale shutdown. "All employees have been laid off," said IAMAW spokesman Bill Trbovich. "It's not a happy day for our members. We're calling on the federal government to intervene."

Geneviève Sicard, a spokeswoman for Transport Minister Denis Lebel, said it is disappointing to hear about the plant shutdowns, but "Aveos's decisions are those of a private company."