Air Canada losing millions per day, cash eroding MONTREAL (Reuters) =97 Air Canada is losing C$3 million ($2 million U.S.) a= =20 day and its cash reserves could dwindle to C$75 million by July 4,=20 according to bankruptcy court documents made available Monday. In its first= =20 report to an Ontario court, court-appointed monitor Ernst & Young said the= =20 Montreal-based airline obtained bankruptcy protection on April 1 with C$424= =20 million of cash reserves. The airline is expected to burn through C$205=20 million of cash by July 4, which, after cash inflows, would leave it with=20 C$249 million. If all aircraft lease payments due after the 60-day=20 moratorium on such disbursements are made, Air Canada's cash reserves by=20 July 4 could dwindle to just C$75 million, the monitor said. Ernst & Young= =20 noted that Air Canada's daily operating loss of C$3 million in its first=20 quarter was higher than the C$2 million estimated earlier this month by=20 Robert Peterson, the airline's chief financial officer. While under=20 creditor protection, Air Canada is trying to restructure roughly C$13=20 billion of debt and aircraft lease commitments and slash labor costs in=20 hopes of emerging as a leaner, profitable carrier. The airline had about=20 40,000 employees on April 1, but plans to cut that to about 36,600 by the=20 end of May. Air Canada obtained $700 million of debtor-in-possession=20 financing from General Electric Capital Canada Inc. to keep operating=20 during its restructuring. The airline's bankruptcy protection in Canada is set to expire on May 1. An= =20 Ontario Superior Court justice is expected to decide Tuesday whether to=20 grant the airline's request to extend protection to June 30. In its report= =20 to the court, Ernst & Young recommended granting Air Canada's request. From= =20 April 1 to 11, Air Canada had a net cash inflow of about C$31 million,=20 Ernst & Young said. But the airline was hard hit by the effects of the SARS= =20 outbreak in Asia and Canada, an April ice storm in Toronto and a technical= =20 foul-up that took its operations and flight planning computer systems=20 offline for three hours, the monitor said. Air Canada estimates that reduced traffic on its Asian routes and domestic= =20 flights connecting to Asian routes because of the outbreak of Severe Acute= =20 Respiratory Syndrome has cost it more than C$20 million in lost revenues.=20 Worldwide, 209 people have died of SARS, most of them in China and Hong=20 Kong, since the outbreak started in late November. Some 25 countries are=20 affected by SARS. In Canada, the only country outside Asia where people=20 have died of SARS, 14 people have succumbed to the deadly virus. Canada has= =20 309 probable and suspect cases of SARS, mostly in the Toronto area. Ernst &= =20 Young said a severe ice storm on April 4 and 5 in Toronto shut down Pearson= =20 International Airport, Canada's busiest, causing the cancellation of 30=20 flights and delaying 190 others. On April 13, International Business=20 Machines Corp. had begun a planned power outage of Air Canada's operations= =20 and flight planning computer systems when the computer company's=20 uninterrupted power supply support system failed to immediately engage,=20 Ernst & Young said. Air Canada lost C$1.3 million as it then had to=20 complete operations and flight planning functions manually for three hours,= =20 the monitor said. *************************************************** 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.pscutt.com TnT Webdirectory: http://search.co.tt *********************************************************