One day after American Airlines narrowly avoided a Chapter 11 filing by securing major contract concessions from its labor unions,

Air Canada

filed for bankruptcy after failing to do the same.

Canada's largest airline filed for bankruptcy in a Toronto courtroom. A court filing listed the airline's debt and lease obligations at 12 billion Canadian dollars.

In order to keep its planes flying, Air Canada is getting $700 million in emergency financing from GE Capital, the finance arm of

General Electric

(GE) - Get Report

. GE is one of Air Canada's largest creditors.

If American had filed for bankruptcy, there was speculation that GE Capital might help provide $1.5 billion in emergency financing, along with

Citigroup

TheStreet Recommends

(C) - Get Report

,

J.P. Morgan Chase

(JPM) - Get Report

and

CIT Group

(CIT) - Get Report

.

Air Canada has suffered from the same problems that have plagued airline carriers in the U.S. since the Sept. 11 terror attacks. Canadians are traveling less frequently and the airline expects travel to fall even further because of the war in Iraq.

The carrier, meanwhile, is struggling to reduce its overhead and expenses. Prior to the bankruptcy filing, Air Canada had cut nearly 5,000 jobs over the past year.

Shares of Air Canada trade on the Toronto Stock Exchange.