Air Canada files for bankruptcy protection Last Updated Tue, 01 Apr 2003 13:36:14 MONTREAL - Air Canada's struggle to stay airborne took a dramatic new turn= =20 Tuesday as it formally asked the courts for protection from its many=20 creditors =96 a move commonly known as filing for bankruptcy=20 protection. "Air Canada is determined to do all in its power to=20 restructure itself through this process and emerge as a world-class=20 competitive and profitable airline," an airline affidavit filed with=20 Ontario Superior Court of Justice said. The move clears the way for a=20 major restructuring the airline hopes will allow it to dig itself out from= =20 under a mountain of debt. Air Canada said it will keep flying while the=20 restructuring is in progress, saying it has lined up $700 million in=20 special "debtor-in-possession" financing to keep operating while it=20 restructures. Filing for protection under the Companies' Creditors=20 Arrangement Act (CCAA) gives companies time to reorganize their operations= =20 and hold talks with their major stakeholders =96 creditors, bond-holders,=20 unions and suppliers. While CCAA protection is in place, all creditors are= =20 prevented from taking any action against the airline. Federal loan guarantees likely Federal help is likely; Transport Minister David Collenette is expected to= =20 make an announcement later in the day. Ottawa has previously ruled out a=20 cash bailout for the airline, but has said it is open to offering some kind= =20 of assistance. Federal sources have told CBC News the aid is likely to take= =20 the form of loan guarantees worth at least $300 million. The bankruptcy filing comes as the airline faces major debt repayment=20 deadlines and dwindling cash reserves which analysts said might run out in= =20 just three months. Air Canada has been struggling with more than $12=20 billion in debt, part of which it acquired in its successful 1999 takeover= =20 of Canadian Airlines. Troubles deepened after the economic downturn in 2000= =20 and 2001 ate into its lucrative business travel. And then came the attacks= =20 of Sept. 11. They devastated airline business around the world. Air Canada= =20 has also been busy trying to fend off competition from discount upstarts=20 like WestJet and CanJet. A series of fare wars delighted passengers but=20 hurt its bottom line as it fought for market share with rivals that had=20 much lower labour costs. The airline's competitors accused Air Canada of=20 trying to drive them out of business by unfairly undercutting them on=20 routes on which they competed. High fuel prices didn't help either, and=20 the war in Iraq further cut back on passenger traffic. On March 20, Air Canada cited the war as one of the reasons why it was=20 cutting 3,600 of its 35,000 jobs. Those cuts were on top of $650 million it= =20 wants to slash from its annual labour bill. But talks with several of its= =20 unions have met with mixed results. As of late Monday, the Canadian Auto=20 Workers had agreed to job cuts =96 1,060 interim layoffs among the 9,500=20 passenger agents it represents. The CAW also agreed to defer a 2.5 per cent= =20 wage increase. Air Canada is just the latest North American carrier to=20 file for bankruptcy protection. US Airways, United Airlines' parent UAL,=20 and Hawaiian Airlines have all filed for Chapter 11 in the United States =96= =20 the American equivalent of a CCAA filing. There are also rumours that AMR,= =20 parent of American Airlines, is days away from filing for Chapter 11. The= =20 lobby group for U.S. airlines estimates that 10,000 airline jobs=20 disappeared in the first week of the Iraq war. Trading in Air Canada's=20 shares was halted on the Toronto Stock Exchange before the market opened on= =20 Tuesday. They last traded at $2.10 =96 a 17-month low. Shareholders in Air= =20 Canada may not fare well in any restructuring. Often, CCAA talks see=20 debtholders agreeing to swap their debt for new equity in the troubled=20 company. Written by CBC News Online staff *************************************************** 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 *********************************************************