Aveos liquidation could ground Air Canada planes

Air Canada has warnedthat some passengers face being stranded after a maintenance supplier, Aveos Fleet Performance, announcedTuesday it'sliquidating its assets and throwing all2,600 of its employees across the country out of work.

The firm, which gets up to 90 per cent of its work from Air Canada,said it was forced to file for creditor protection Monday "due to uncertain work volume across its business lines" from the airline.

Meanwhile, Air Canada has warned that 3,000 passengers could be stranded daily if Aveos doesn't complete the work on some planes.

However, Air Canada added that in order to ensure customers would not be inconvenienced, it would be activating its contingency plan.

"This will ensure that maintenance work continues in full compliance with all regulatory requirements and is consistent with the high standards of Air Canada's maintenance programs," the airline said in a release.

The airline had saidthat three wide-body planes and several narrow-body aircraft were sitting in Aveos facilities across the country, some missing landing gear.

"Since the beginning of the year, (Aveos') principal customer reduced, deferred, and cancelled maintenance work, which resulted in approximately $16 million in lost revenue in less than two months," Aveos said in a news release.

"While Aveos remained ready, willing and able to perform such work, such work did not materialize. This was a devastating blow to Aveos."

Air Canada replied Tuesday, adding that work deferred when Aveos could not comply.

"Work was sent to third parties only when Aveos was unable to perform it and only in accordance with the terms of the commercial agreements between the parties and the applicable collective agreements," the airline said in a release.

Air Canada offered a $15-million financial pledge Monday afternoon to help the company after "months of protracted negotiations," but that did not "appropriately address Aveos challenges" and made "clear that a restructuring under (creditor protection) would not be possible," the release said.

Air Canada said Tuesday it was disappointed in Aveos' decision to reject the emergency financing.

"Aveos has failed to act in the interests of its employees, customers and other stakeholders by abruptly abandoning its business while other viable options to closure were available," Air Canada said in a release.

Aveos has plants across Canada

Aveos shut down three main plants in Vancouver, Winnipeg and Montreal, as well as other facilities in Edmonton, Calgary, Trenton and Mississauga, Ont.

Bill Trbovich, a spokesman forthe union representing Aveos employees, said those affected include1,785 in Montreal, 412 in Winnipeg, and 356 in Vancouver.

The firm said Tuesday it would immediately cease all operations and begin the process of liquidating its assets.

The move means the employees who remained after 1,175 were let go Sunday when Aveos decided to close its airframe repair business will now lose their jobs too.

About 160 employees will oversee the liquidation process but will eventually be out of work as well.

The announcement came on a second day of protests in Montreal by the private company's laid-off workers.

Some workers blocked the street outside the Montreal offices of their company, which also heads to Air Canada's offices, and some tossed projectiles like rocks at riot police when officers moved in.

Police responded with chemical irritants.

One arrested after protests

Const. Daniel Lacoursiere said a police tactical unit moved in to clear a path. Some laid-off employees sat down on the road.

One person was arrested for a municipal bylaw infraction for refusing to leave the street.

"After police received a couple of rocks, we sprayed one shot of CS gas to back off the protesters," Lacoursiere said.

Police then backed off. Protesters left on their own soon after.

Under a court order, laid-off Aveos workers cannot impede access to the company's facilities anywhere in Canada. But protesters say they'll take their message on the road to Quebec City on Wednesday to picket in front of the legislature.

The federal government has said it won't intervene in the issue, calling it a private business decision.

Quebec could sue Air Canada

But the Quebec government appeared to be assessing the grounds for a lawsuit under terms of the legislation that transformed Air Canada from a Crown corporation into a private company in 1988.

"We're looking at the possibility of suing Air Canada in the hope of forcing Air Canada to subcontract with that company and bringing back the workers," Economic Development Minister Sam Hamad told the Quebec national assembly.

Aveos was once Air Canada's technical services division but in 2007 was spun off as a separate company.

Union spokesman Marcel St-Jean said Tuesdaylaid-off employees are upsetthey've been denied access to their former workplace to pick up their tools.

"The employees are as angry as ever, they feel abused and they don't have answers to their questions," St-Jean said in an interview.

"My people need to go get their tools if they want to work again and they won't let them go in to get them."

On its website, Aveos mapped out a schedule for employees seeking to pick up their equipment or looking for other information.