Air Canada says revenues plummeting by $1B this year, shares likely worthless Canadian Press Wednesday, June 11, 2003 MONTREAL (CP) - Air Canada's revenues this year will be more than $1 billion lower than in 2002, mostly because of the impact of SARS, airline president and CEO Robert Milton said Wednesday. Air Canada also confirmed that there is unlikely to be any value for shareholders by the time its restructuring is complete. The struggling airline said revenues in May were about $200 million lower than the same month last year and June looks just as bad. "We currently expect the 2003 year-over-year revenue shortfall to be significantly in excess of $1 billion with no expectation of meaningful recovery before the third quarter of 2004," Milton stated. The company, by far Canada's largest airline, has been operating under court protection from creditors since April 1. It had $12.9 billion in long-term debt and leases at the end of 2002 and has been losing $5 million a day. Passenger traffic on the main Air Canada airline fell 26.4 per cent in May compared with the same month last year, while its regional subsidiary Jazz flew 9.5 per cent fewer revenue passenger miles. A major cause of Air Canada's reduced traffic is severe acute respiratory syndrome, which has discouraged travel to Toronto - the airline's main hub, where the disease has killed 33 people - and elsewhere. "As can be seen from our results, the SARS outbreak continues to have a major negative impact on traffic, not only on our Asian routes but on our entire network, and in particular, our main hub at Toronto," Milton said. "Advance international bookings for the summer are weak and we expect that the entire Canadian tourism industry is under similar pressure," he added. "International travellers are avoiding Canada in general." Air Canada also outlined the results of a board meeting Wednesday at which the directors approved a plan to seek $1.35 billion in debt and equity financing needed to emerge from proceedings under the Companies' Creditors Arrangement Act. "In such circumstances," the airline stated, "it is highly likely that a substantial portion of the company's unsecured debt will be converted to new equity and that there will not be any meaningful recovery to existing equity of the company." Air Canada shares (TSX:AC), worth $2 just before the company entered bankruptcy protection, dived as low as 69 cents after the filing but have since revived, trading Wednesday at $1.84. Air Canada's revenues were $9.8 billion last year, when it lost $828 million. It has been striving to cut annual operating costs by at least $2.1 billion through its court-supervised restructuring. Unions have tentatively agreed to $1.1 billion in concessions, including thousands of job cuts. Air Canada is also expected to press creditors, including leasing companies, financial backers and suppliers, to accept similar sacrifices. *************************************************** 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.natalielaughlin.com/ TnT Webdirectory: http://search.co.tt *********************************************************