Air Canada seeks bankruptcy protection

MONTREAL, April 1 (UPI) -- Air Canada, the world's 11th largest airline, filed for bankruptcy Tuesday, after failing to gain concessions from its unions in order to keep running amid sinking revenues.

The carrier said in a statement it was filing for protection under the Canadian Companies' Creditors Arrangement Act. This status is similar to Chapter 11 bankruptcy protection in the United States. The bankruptcy filing will allow Air Canada to restructure its debt.

Like the entire industry, the Canadian carrier has been hurt by the aftermath of the Sept. 11, 2001, terrorist attacks. It also was affected by more recent problems, including falling passenger loads amid fears of terrorism prompted by the Iraq war. Further, the spread of the severe acute respiratory syndrome through Asia is having a growing impact on cross-Pacific and world flights.

"Clearly, while not our preferred course of action, a CCAA filing is necessary to allow Air Canada to make the required changes to compete effectively and profitably in a changed environment," said Robert Milton, president and chief executive officer, in a statement.

"Air Canada's customers around the world can continue booking with confidence that their travel plans will not be disrupted. It has been repeatedly demonstrated that the action we have taken today to restructure will not create a disruption to service."

The Canadian carrier's problems are similar to those afflicting the airline and wider travel industry: war, terrorism fears and SARS. That deadly virus had, as of Tuesday, killed at least 62 people.