Lynx Air, the Canadian ULCC that launched less than two years ago, will cease operations on Feb. 26 citing financial pressure in a competitive market.

The Calgary-based airline blamed “rising operating costs, high fuel prices, increasing airport charges and a difficult economic and regulatory environment” for the decision to suspend flights. It operates 10 domestic routes across Canada, as well as flights to the U.S. and more recently Mexico.

An initial order for creditor protection has been obtained, with FTI Consulting Canada appointed to oversee and report to the Court and creditors during the insolvency process. Service will continue to operate over the weekend until 12.01 a.m. (Mountain Time) on Feb. 26 when flights will be grounded.

“Despite substantial growth in the business, ongoing operational improvements, cost reductions and efforts to explore a sale or merger, the challenges facing the company's business have become too significant to overcome,” the airline said in a statement.

Lynx has been without a permanent CEO since last September when former Tigerair Australia chief Merren McArthur stepped down from the role. COO Jim Sullivan, previously Vice President of Flight Operations at JetBlue Airways, has undertaken CEO duties on an interim basis since then.

It is understood that executives had been pursuing a potential merger with counterpart Flair Airlines in recent weeks as part of efforts to save the carrier.

An internal memo to staff from Sullivan, seen by Aviation Week Network, says “this was not how our story was intended to play out.” 

It adds: “For the most part, we have been doing everything right over the past two years to build our brand, grow the company and expand to new markets and destinations. We've been part of a transformational time in the airline industry, having built the initial business case for this airline pre-COVID-19 pandemic and we surpassed expectations when travelers returned to the skies once travel restrictions were lifted.

“The compounding financial pressures associated with inflation, fuel costs, exchange rates, cost of capital, regulatory costs and competitive tension in the Canadian market have ultimately proven too steep a mountain for our organization to overcome.”

Lynx was previously known as Enerjet, a charter airline based in Calgary that specialized in flying oil-sands workers to job sites in Alberta, as well as undertaking contracts for tour operators.

However, in late 2018 it announced plans to transform itself into a ULCC, backed by Canadian investors and Bill Franke’s private equity firm Indigo Partners, which is behind success stories such as Frontier Airlines and Wizz Air.

Lynx commenced flights in April 2022 and has grown to operate a fleet of nine Boeing 737-8 aircraft, with a further 37 on order. According to data provided by OAG Schedules Analyser, the airline serves eight destinations in Canada, six in the U.S. and one in Mexico. Service to Cancun—its first destination in Mexico—only began on Feb. 15.

For the week commencing Feb. 19, Lynx’s route network comprises 24 nonstop routes, 184 flights and almost 35,000 available seats. Analysis of the schedule reveals that the ULCC faced direct competition on all 24 routes—eight of which are operated by four or more carriers. The fiercest competition is on its newest sector between Toronto Pearson and Cancun, served by six other airlines.

In Canada's domestic market, the OAG data shows that Lynx was the fifth-largest provider of capacity, accounting for about 2.1% of seats in the market. Air Canada is the largest in February 2024 with a 45.7% share, followed by WestJet on 26.5%, Porter Airlines on 9.7% and Flair on 2.7%.

Lynx said “every effort” was being made to assist passengers and advised customers with existing bookings to contact their credit card company to secure refunds for pre-booked travel.