Bankruptcy Filing
In March 2012, a week before Aveos made its bankruptcy filing, the Montreal Gazette reported that, according to unnamed Aveos insiders, the company was no longer making employees' pension contributions or maintaining their benefit packages, was losing business, and was forced by several suppliers to pay cash rather than the usual 30-, 60-, or 90-day bill invoices. In rebuttal, a statement released by Aveos read "Aveos has made and continues to make employee and employer payments to its pension plan in accordance with its obligations under the Federal Pension Benefits Standards Act."[21]
On Sunday, March 18, 2012, Aveos padlocked its doors, instructing many of its 1,800 Montreal employees to leave the premises at 5:30 p.m. and take their tools and belongings with them. According to several emails and voicemails to the Montreal Gazette, workers were told to contact the company for further instructions.[22]
On Monday, March 19, 2012, Aveos filed for creditor protection, laid off more than 2,600 workers, and shut plants in Montreal, Winnipeg and Vancouver. The Winnipeg plant is scheduled to shut down and lose 412 jobs, the Vancouver operation would close and shed 356 jobs while the Montreal site is likely to have at least 1,000 positions axed. According to the Companies' Creditors Arrangement Act filing in Quebec Superior Court, Aveos lost $48.9 million and its liabilities recently exceeded the book value of assets by $219.8 million. The company had a pension solvency deficit of $26 million at the end of 2011.[23]
In the court filing, Aveos laid the blame for its troubles squarely on Air Canada, which it accuses of refusing to deliver planes for repairs and of soliciting undercutting bids from rivals for work. Air Canada provides more than 85 per cent of Aveos's revenues and has a contract with Aveos that runs to 2013. Air Canada did not directly address the key issues of providing planes or undercutting bids, but said in a general statement that Air Canada "is very disappointed by the Aveos announcement."[24]
Approximately 1,800 of the affected employees are based in Montreal, while 350 are in Winnipeg and 250 are in Vancouver, according to the International Association of Machinists and Aerospace Workers. "The maintenance component that supplies work to the Air Canada fleet has effectively ceased operations," according to Lorne Hammerberg, the IAMAW's local president in Winnipeg.[25]
Liquidation
On March 20, 2012, after getting permission from the Quebec Superior Court, Aveos said that it would immediately begin the process of liquidating its Canadian aircraft maintenance business, putting virtually all of the company's 2,600 employees across Canada out of work. About 160 employees will remain to oversee the liquidation process. According to chairman Eugene Davis, "The company had no viable option but to cease operations. We deeply regret the job losses and the impact this decision has on our employees in Canada and extend our sincere gratitude to them for their dedication and service over the years."[26]
Air Canada said it could be forced to cancel flights and strand thousands of passengers if Aveos is unable to complete repairs to several planes. The airline's lawyers argued in vain Monday for a Quebec Superior Court judge to order Aveos to not lay off more workers and to meet its obligations to complete the aircraft repairs. Justice Mark Schrager denied an Air Canada request that would have forced Aveos to maintain operations and employment to complete the contracted repairs. "Accommodation, if there is any between Aveos and Air Canada, is going to be made in a boardroom, not a courtroom," he said before granting creditor protection Monday.[27]
Aveos ownership
As of March 2012, the ownership of Aveos has not been made public. Court documents state only that the company is privately held and "domiciled" in the Cayman Islands and Luxembourg. In a January 2010 interview with the Montreal Gazette, at the end of the Aveos debt restructuring and change of ownership from Kohlberg Kravis Roberts and Sageview Capital, the then-president of Aveos, Chahram Bolouri, would only say that the new shareholders were largely former creditors, "about four or five" banks and hedge funds, mostly from the U.S.; for its part, ACE Aviation Holdings, the parent company of Air Canada, reportedly had its own ownership in Aveos reduced to about 17%.[28]
By some reports, Aveos and Aeroman are both owned by Aero Technical Support & Services Holdings, based in Luxembourg.[29] [30] According to one report, that company in turn has as shareholders Sageview Capital and KKR (Kohlberg Kravis Roberts) Private Equity Investors.[30]
Aeromantenimiento, S.A. (SV06143009830016) is majority owned by Kingsland Holdings Limited (BS92210B) who is majority owned by the Kriete Family (WW*905298174) Synergy Aerospace Corp (51.53% shares), Kingsland Holdings (14.46% shares), and (19+) Others (34.01 shares) own Avianca Holdings, S.A. (PA728981RPP)(4,361 mil USD)(AVH on NYSE).
