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Montreal's Teo Taxi lays off all drivers

The Canadian Press logoThe Canadian Press 2019-01-30 Lia Levesque

A security guard closes the gate of a parking lot of Teo Taxi in Montreal on Tuesday, January 29, 2019. Montreal's Teo Taxi, which sought to take on Uber with a fleet of electric vehicles, has halted operations and laid off all its drivers. THE CANADIAN PRESS/Paul Chiasson: A security guard closes the gate of a parking lot of Teo Taxi in Montreal on Tuesday, January 29, 2019.  © Provided by thecanadianpress.com A security guard closes the gate of a parking lot of Teo Taxi in Montreal on Tuesday, January 29, 2019.  Montreal's Teo Taxi, which sought to take on Uber with a fleet of electric vehicles, halted operations and laid off all its drivers, the company's management said Tuesday.

The company's roughly 400 drivers received layoff notices as they arrived for work from Taxelco, Teo's parent company.

Dominic Becotte, Teo Taxi's interim president, told a news conference that despite increasing revenues in the past 12 months, Teo Taxi remained unprofitable.

"Teo Taxi was launched in 2015 to modernize the taxi industry and to improve mobility in Montreal as much for drivers, users, and of course, the environment," said Becotte.

Despite the closure, it would've been a mistake not to try, Becotte said.

Two major factors dragged down the bottom line: constraining legislation in the Quebec taxi business that doesn't allow adjustment to rates and tariffs, such as during rush hour. Also, the maintenance costs of maintaining a electric fleet proved to be more costly than anticipated, he said.

"From the very beginning, we knew we were bold, ambitious and (initiating) change," Becotte said. "We did great things such as prevent 5,000 tonnes of greenhouse gases."

As for Uber, Becotte said the ride-sharing giant's presence in Quebec played an "an indirect role" in the difficulties faced by Teo Taxi, because "the conditions are not the same for all players in the mobility sector."

Teo Taxi would also no longer be able to count on financial help from the Quebec government, despite a meeting with Economy Minister Pierre Fitzgibbon.

Becotte didn't want to go into Teo Taxi's financial situation as it was a private company, but clarified the public money the company had received amounted to $7.25 million: a $5 million subsidy for electrifying the taxi service, $1.25 million for vehicles and $1 million compensation for taxi permits.

He also didn't explain why partners like the FTQ Solidarity Fund and the Caisse de depot et placement du Quebec didn't want to reinvest more money in the green taxi business, but said they had a great collaboration with the partners.

Becotte said the fact that drivers had unionized last October did not factor in the company's financial woes. The union had yet to negotiate its first collective agreement.

Meanwhile, its 400 drivers were disappointed and dismayed by Tuesday's announcement.

Stephane Lacroix, communications director for the Teamsters, said drivers who showed up before their 4 a.m. shift were the first to learn the news. He said some were met by security guards and others by managers.

A company notice shared with media said a reorganization had become unavoidable because of a lack of support from the company's principal partners, and it was with regret that the drivers were being let go. Lacroix said drivers knew the company was in financial difficulty but thought there was more time to try to save it.

Reports last week said Taxelco, founded by businessman Alexandre Taillefer, was preparing to seek protection from its creditors as part of major restructuring. Neither Taxelco nor its shareholders commented last week.

Taxelco's major shareholder is XPND Croissance, which is part of Taillefer's XPND Capital, a private equity firm. When it launched in 2015, the company said Teo Taxi would position Montreal as "a green, avant-garde city."

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