Less than two years after its first flight, Canada Jetlines has grounded its planes and suspended operations amid a cash crisis that has made it the third Canadian airline to cease flying in less than a year.

The low-cost airline, which primarily flew to sunny destinations outside Toronto in addition to charter flights and leisure routes, said on Thursday that it failed to find the necessary capital to stay afloat and plans to file for creditor protection.

Company spokesperson Erica Demond said in a statement, "The company has sought all available financing alternatives, including strategic transactions and equity and debt financing."

"Despite these efforts, the company unfortunately was unable to secure the required funding to continue operations at this time."

The airline said passengers with existing reservations should contact their credit card companies to secure refunds. "Every effort is being made to assist passengers at this time."

Trading of the company's shares was halted on the New York Stock Exchange late Wednesday afternoon.

The closure follows the resignation of four board members on Monday, including Chair and CEO Brigitte Gorsch.

This marks the exit of another airline from Canadian skies following the shutdown of Lynx Air in February and the low-cost carrier Swoop last October, as concerns about local competition continue.

Jack Roy, a professor of transportation management at HEC Montreal, said, "Any time you lose some competition in the Canadian market, it’s somewhat sad for travelers because it puts less pressure on prices."

He noted that Canada Jetlines represented only a small fraction of flights to sunny destinations.

The closure also underscores the challenges of managing an airline in a vast country with a sparse population and few major air travel hubs.

Roy said, "Every time a new player wants to enter the market, there is only one certainty: they will lose money during the first eight, nine, or ten months at least, and possibly more. So, you need a good bank account," noting that leisure travelers are particularly price-sensitive.

He added, "Major airlines will play the game of meeting your fares. And if you lower your fares below your costs, that's a recipe for failure in the near term."

"It’s a tough market."

As of Thursday, Canada Jetlines was operating a few dozen flights monthly from Toronto to Miami and Orlando in Florida, as well as Cancun in Mexico, according to flight tracking company Cirium.

It also operated charter flights, including for three teams from the Canadian Football League. The airline had contracts with the Ottawa Redblacks, Hamilton Tiger-Cats, and Toronto Argonauts that saw players being transported to select away games last season. The Redblacks contract was a three-year deal that may no longer be fulfilled.

Thursday's shutdown leaves only one remaining low-cost airline in Canada - Flair Airlines - alongside other major players: Air Canada, WestJet, Porter Airlines, Air Transat, and WestJet-owned Sunwing Airlines.

Last month, Competition Commissioner Matthew Boswell launched a market study into domestic airline service amid ongoing passenger frustration over prices and quality.

Canada Jetlines faced a series of setbacks even before this week's disruptions, struggling to launch more than a handful of aircraft since its inaugural flight in September 2022.

On June 30, Eddie Doyle stepped down as CEO after taking the position in 2021.

In January 2023, the airline temporarily suspended domestic flights as it refocused on sunny destinations and aircraft leasing, although it stated at the time that it aimed to resume domestic flights in the fall.

In October 2019, the Mississauga, Ontario-based airline announced it was delaying its planned launch in December and laying off most employees after failing to secure the necessary funding and losing investment partners. The delay ended up lasting nearly three years, partly due to the COVID-19 pandemic.

This setback in 2019 came after seven years of fundraising and despite Ottawa raising the foreign ownership cap in Canadian airlines to 49 percent from 25 percent in 2018, allowing for a broader range of investors.

Canada Jetlines lost $14.2 million over the 12 months between March 2023 and March of last year, although it posted a profit in one quarter, according to financial filings. Quarterly revenues ranged between $8 million and $12 million.

In May, the company received a $2 million loan from Square Financial Investment Corp., a Mississauga-based holding company owned by board member Reg Christian, who was appointed as executive vice president as a result.

Canada Jetlines had a deficit of $38.3 million and negative working capital of $14.9 million as of March 31.

On May 10, the company stated in its financial reports that it plans to grow to seven aircraft by the end of the year and 15 aircraft by 2026.