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Fri, Aug 29, 2008

Low-Cost Carrier Latest Casualty Of Shaky Economy

'Zoom' Comes To Screeching Halt, Stranding Passengers

The latest collapse of an airline stranded hundreds of passengers on both sides of the Atlantic on Wednesday.

Zoom was a low-cost carrier founded by Scottish millionaires John and Hugh Boyle, and operating in the UK and Canada. The airline apparently was behind on its bills... and when Glasgow Airport operator BAA grounded a Zoom flight Wednesday morning for failure to pay air traffic control fees, it started a chain reaction stretching across the ocean.

At about the same time, an inbound Zoom flight was grounded before leaving Canada for failure to pay aircraft leasing and airport fees. Those two cancellations stranded 361 passengers in Glasgow.

Almost immediately, creditors smelled blood in the water, and started moving to seize Zoom's assets. By Thursday afternoon, the airline shut down its website, and declared itself insolvent.

"We deeply regret the fact that we have been forced to cease all Zoom operations," John and Hugh Boyle told the London Times. "It is a tragic day for our passengers and more than 600 staff. We are desperately sorry for the inconvenience that this will cause passengers and those who have booked flights.

"We have... left no stone unturned to secure a refinancing package that would have kept our aircraft flying. Even as late as today we had secured a new investment package but the actions of creditors meant we could not continue flying."

The pair went on to blame a $50 million increase in fuel costs for its ill fortune, and said it will seek bankruptcy protection to allow it to return to normal operation during refinancing. The Boyles point out that Zoom earned a profit last year.

Both British Airways and Virgin Atlantic issued statements Thursday, each saying they would offer discounted fares to customers whose travel plans have been affected by the closure. Zoom also posted a list of carriers operating from airports where its former customers may still be stranded.

FMI: www.flyzoom.com

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