Canadian travel firm FlightHub seeks creditor protection
Montreal-based travel firm FlightHub is seeking protection from its creditors amid the COVID-19 pandemic that has wiped out demand for travel.
The company operates two main brands, FlightHub in Canada and JustFly in the U.S.
Founded in Montreal in 2012, the company has grown to become a major player in the travel industry, selling more than $3 billion worth of vacation packages to five million customers last year. The company works with more than 200 different airlines, and makes money by getting a cut of every ticket sale the airlines get from their booking platform.
Just as airlines have been hit hard by the collapse in demand for travel caused by COVID-19, so has FlightHub.
The company filed for protection from its creditors under the Companies’ Creditors Arrangement Act, the section of Canadian law that deals with insolvent companies.
In court filings, the company says it turned a profit in each of the past three years, up until the COVID-19 pandemic, which it described as “catastrophic” to its business. Travel restrictions have caused revenues to plummet by more than 90 per cent in just two months, and the company lost $8 million in the first quarter of 2020.
The losses show no sign of dissipating, either.
“In addition to the significant reduction in revenues from new reservations, many of the previous reservations made by customers prior to the COVID-19 outbreak have been cancelled, leading to a significant loss in previously recorded revenues,” FlightHub said.
The company says it has recently laid off about half of its staff in Montreal, and 90 per cent of its U.S.-based employees. In total, that’s 108 jobs cut from its previous work force of 200 people — 180 in Canada and 20 in the U.S.