Yellowknife (Apr 04/03) - Air Canada might be broke but it isn't grounded yet.

The troubled airline filed for bankruptcy Wednesday under the Companies Creditors Arrangement Act (CCAA).

President Robert Milton promised customers there will be no nasty surprises while it restructures.

"Air Canada's customers around the world can continue booking with confidence that their travel plans will not be disrupted," said Milton.

The company lost $428 million in 2002 and started 2003 nearly $13 billion in debt. Rising costs and reduced travel due to the war in Iraq -- and now the SARS respiratory virus -- haven't helped.

Filing for protection under the CCAA allows the company to negotiate new arrangements with its creditors, suppliers, and employees.

The airline's two largest unions agreed earlier in the week to a plan that will cut 2,300 jobs.

The company says it needs to reduce its labour costs by $700 million.

The federal government has refused to consider an Air Canada bailout.

But Transport Minister David Collenette has also said he wants to see the airline survive.

Canadian North spokesperson Kelly Kaylo said in Yellowknife Wednesday that Air Canada's troubles don't directly affect Canadian North routes.

"It has no impact on Canadian North in terms of flights," said Kaylo.

"We haven't been made aware of any changes to Air Canada's schedules and we don't know at this point if they are going to be reducing frequency of flights or routes in future."

First Air reports "business as usual."

"There is no effect at all," said First Air's Tracy Beeman in Ottawa.

"Any customer on First Air who is connecting to Air Canada will be served as usual. There is no change whatsoever."