Lynx Air Flights Suspended Due To Financial Issues

Canada’s low-cost carrier Lynx Air has announced it will suspend all flight operations from February 26th due to ongoing financial difficulties. In a statement, the airline cited “compounding financial pressures associated with inflation, fuel costs, exchange rates, cost of capital, regulatory costs, and competitive tension in the Canadian market” as reasons for the suspension.

Lynx Air was founded in 2021 following a rebranding from Enerjet, based in Calgary. It was backed by private equity firm Indigo Partners, which provided over $100 million CAD in debt financing. However, rising economic headwinds have put increasing financial strain on the upstart airline. As of December 2023, Lynx Air’s debt to trade creditors was over $46 million CAD, while it owed Indigo $100 million CAD in principal loans and a further $24 million in interest payments.

The Difficulties Facing Lynx Air

The suspension comes after reports that Lynx Air had been in talks for a possible merger with fellow Canadian low-cost carrier Flair Airlines. However, the compounding issues of inflation, fuel costs and regulatory burdens have proven too great an obstacle for the young airline to overcome alone. With insufficient cash reserves to continue funding operations, Lynx Air obtained creditor protection and appointed a monitor to oversee its bankruptcy process.

Lynx Air operated a fleet of nine Boeing 737-800 aircraft serving eighteen destinations across Canada, the United States and Mexico. While it had orders for another 29 Boeing 737s, the rising economic challenges forced the suspension of flights and potentially spells the end for the ambitious low-fare startup. Its grounding marks another shakeup in Canada’s competitive airline industry following consolidation among carriers.