Air Canada needs concessions from pilots, new capital: monitor Last Updated Thu, 29 May 2003 12:08:55 MONTREAL - Air Canada (TSX:AC) needs its pilots' agreement to cut costs and= =20 an infusion of new capital, its court-appointed bankruptcy monitor said=20 Thursday. The airline has reached tentative cost-cutting deals with its=20 unions and non-unionized employees that will save it $788 million a year,=20 but without an agreement with the pilots, it's not enough, Ernst & Young=20 said in a report to the court. The company and pilots were talking=20 Wednesday, but nothing has been resolved. However, the airline has moved up= =20 a board meeting to Thursday from the weekend, perhaps to discuss how to=20 deal with the pilots. The monitor also said that between April 1, when it= =20 obtained bankruptcy protection, and May 26, new financial obligations=20 exceeded the cash on hand by nearly $238 million. The airline has access=20 to capital, but won't use it to cover operating losses until it has deals=20 with all its employee groups, the report said. That means it "will require= =20 access to substantial amounts of new capital." Meanwhile, Air Canada's=20 first-quarter report paints a dismal picture of a business beset by=20 shrinking revenues and high costs, with the period after the quarter =96=20 which ended March 31 =96 looking grim. Severe acute respiratory syndrome (SARS) cost the airline more than $125=20 million in lost revenue in April alone, it said. The operating loss for the month is expected to be $152 million, or over $5= =20 million a day, up from $29 million last year, because Air Canada couldn't=20 cut costs as fast as revenue fell. Bookings for May, June and July were=20 down by 20 to 25 per cent, year-over-year. "Based on May 2003 traffic and=20 on forward bookings to date, these adverse revenue and traffic trends are=20 expected to continue, which further underscores the urgency to=20 restructure," the airline said While revenue fell, costs rose 5 per cent=20 from the first quarter of 2002, with salaries, wages and benefits rising=20 $31 million or 4 per cent, and fuel jumping $53 million or 18 per cent and= =20 maintenance materials and supplies increasing $25 million or 21 per=20 cent. For the three months March 31, 2003, Air Canada reported an=20 operating loss of $354 million =96 nearly $4 million a day =96 compared with= =20 $160 million last year. The net loss was $270 million, compared with $219=20 million in the first quarter of 2002. The company outlined its plans to cut its operations: =B7 reducing overall capacity by 17 per cent year-over-year for June,= =20 July and maybe August, with Asian and transborder routes being the brunt,=20 being cut by 60 per cent and 25 per cent reduction, respectively; =B7 canceling or temporarily suspending services on 13 city pair= routes; =B7 grounding about 40 aircraft. But that may not be enough, said analyst Rick Erickson of RP Erickson and=20 Associates. He suggested routes could be cut by up to 20 per cent, so the eight=20 Calgary-Toronto daily flights could fall to six. 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/ Mas Site: www.tntisland.com/tntrecords/mas2003/ Site of the Week: http://www.caribbeanfloral.com TnT Webdirectory: http://search.co.tt *********************************************************