Canadian low-cost airline Lynx Air will be officially shutting down next week and has filed for creditor protection.

The airline confirmed the news on its website, stating its last day of operation will be on Monday, February 26 at 12:01 a.m.

"Tremendous work was put into the growth and expansion of Lynx Air over the past two years, offering Canadians a low-cost, seamless travel experience for Canadians," said the airline on its website.

"However, 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 has posted a "FAQ" page on its website, answering several questions about what the next steps are for passengers who have booked flights with the airline.

For passengers who have purchased tickets for this weekend up to Sunday, February 25, Lynx says they should refer to its flight status information page.

The airline said it will be "operating most flights through to Monday, February 26."

Customers who booked flights after that date will receive a refund through their credit card company.

"If you would like to move to a flight this weekend, reach out to our contact centre and they will do their best to assist you," said Lynx.

Lynx Air shutdown takes place as rumours swirl around merger

Before Lynx posted an official announcement on its website, a memo from company management was reportedly sent to employees on Thursday afternoon and started circulating on social media shortly after.

"I am writing this evening to share some difficult news about this great company we have built. As you are aware, we have been working for some time to secure investment in Lynx to fund our rapid growth and runway to profitability. Unfortunately, we have been unable to secure adequate funding for the airline and today we filed for protection from our creditors under a CCAA filing," reads the memo.

"Over the next three days, we will continue to deliver a great travel experience to our customers, but we will cease flight operations after the completion of Sunday's flight schedule."

In an online statement, Lynx confirmed it has sought creditor protection from the Court of King's Bench of Alberta and noted that it has faced "a number of significant headwinds" over the past year.

Lynx Air's exit from the Canadian market comes after rumours swirled around a possible merger between the carrier and Flair Airlines earlier this month.

The deal would have reportedly seen Flair take over Lynx.

During a February press conference, Flair CEO Steve Jones was asked about the possible deal but declined to comment.

In a statement on Tuesday, Flair Airlines said the airline refrains "from commenting on rumours or speculation" per its company policy.

"Our focus remains on delivering value to our customers and stakeholders through our products and services," said the company. Lynx did not return a request for comment on the matter.

The Alberta-based airline launched in 2022, offering low-cost domestic flights and trips to popular destinations in the US and Mexico.