Air Canada stock plunges amid reports of multimillion dollar federal bailout Canadian Press Monday, March 31, 2003 OTTAWA (CP) - Air Canada shares plunged to a new 52-week low Monday after a published report the federal government is preparing a multimillion-dollar bailout for Air Canada, conditional on the airline first applying for bankruptcy protection. The Montreal airline's stock dropped more than 17 per cent, or 43 cents, to $2.07 in trading of more than 1.5 million shares by early afternoon on the Toronto Stock Exchange. Investors were reacting to a story in the Toronto Star that a package of short-term loan guarantees and other financial assistance could be unveiled as early as Monday and is thought to be worth between $300 million and $500 million. But before it gets any money, the airline must signal it needs Ottawa's help by filing for bankruptcy protection under the Companies' Creditors Arrangement Act, Liberal sources told Canada's largest circulation daily. "Before the government steps in officially, it has to receive a request from the company," a senior source said. Air Canada spokesperson Isabelle Arthur denied Monday that the airline is seeking any specific help; the company just wants a drop in taxes and charges the same as the rest of the travel industry is begging for, she said. Warren Everson, vice-president of the Air Transport Association of Canada, said the government has to help the airlines through the crisis by cutting back on items like airport and security charges to all the players at once, not just one that happens to be in deep financial trouble. "Extracting, as they do, a quarter billion dollars a year (in charges and taxes) from the airport system, and then talking about giving money back to a specific carrier, it's just perverse," Everson said in an interview. With the airline being battered by a drop in passenger traffic as a result of the Iraq war and fear of exposure to severe acute respiratory syndrome on Asian routes, Air Canada's situation could come to a head this week. The package is meant to keep the airline flying until Air Canada chief executive Robert Milton can restructure the company and arrange new bank financing, sources said. Federal officials have been meeting with Air Canada executives to discuss the company's cash crunch. Transport Minister David Collenette has also been holding private talks with cabinet ministers to consider a bailout package. Last week, Collenette said the government would not let Canada's flagship carrier go under, although he has not said publicly what Ottawa would do to help the airline. Ottawa is not expected to demand an equity stake in Air Canada, a former Crown corporation, given that it is $12.9 billion in debt and was reportedly losing $3.9 million a day before the start of the Iraq war caused a further decline in international and transborder bookings. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week:http://www.ttsailing.org/ TnT Webdirectory: http://search.co.tt *********************************************************