While it's true that AC has achieved agreements with many (if not most) of their labour unions, and claims to be on-track with their lessors, the rest of the process appears to be in shambles. 1. AC has suffered several setbacks not of their own creation; most notably S.A.R.S. 2. AC has not managed it's affairs well as the result of setbacks not of their own creation; including handling the ebbs and flows of demand in their different markets, including the U.S. and the east-coast black-out. 3. Most tellingly, AC has not managed it's affairs well that were the result of it's OWN CREATION. It shouldn't have happened in the first place and AC dealt with them poorly. Namely the failure of it's network operations center the day after the black-out and a key computer system falling victim to a preventable computer virus the following week. AC has also very poorly managed relationships (and the media) regarding key suppliers such as NavCanada and staffing levels at critical times. Legally, the existing AC is constrained by a swarm of regulation and restrictions: - Competition Bureau Watch Dog rulings (and legislation) on AC's pricing strategies - Legislation governing the maximum foreign ownership restrictions - Numerous agreements (not all have expired) that A.C. agreed to upon the acquisition of CP in 2000. The scenario of liquidating the airline, which would likely entail a single purchaser acquiring the key assets is not all that frightening. With thousands of employees unlikely to find work elsewhere, planes not worth anything anywhere else, along with AC having 65% of the market & a successful loyalty program; re-starting "Air Canada II" is not as daunting as it might seem. GE Capital Canada (the lead DIP financier) wouldn't have entered such an agreement without a backup plan. With GE capital on my c.v., I can attest to this cultural inclination. But the company in the name of fiduciary duty and creditors in a similar vain must go through the dance steps. Air Canada really has done nothing but loose money it's entire existence, and any radical turn-of-events is unlikely, but when other key creditors and the courts tire of this charade, a single phone call will be made and the current incarnation of Air Canada will politely be put to rest. Matthew On Tuesday, September 2, 2003, at 12:08 PM, mgreenwood@xxxxxxxxx wrote: > Why do you feel that Air Canada's creditors are reaching the breaking > point > Matthew? > > Mark > > Quoting Matthew Montano <mmontano@xxxxxxxxx>: > >> Not necessarily true. Most bankruptcy laws protect firms liked United >> Airlines from creditors from taking normal recourse for unpaid debts >> at >> the time of filing. (Hence the term "court-protection".) This means >> leasing companies can't repossess planes. >> >> BUT, to receive that protection, the court must be convinced that the >> firm has a good chance of exiting bankruptcy before being granted such >> protection. This usually means that the firm must file regular updates >> with the court, and usually a reorganization plan within a reasonable >> time. >> >> The way it works with most large firms, like GECAS, ILFC, especially >> in >> a climate like this, is that taking a loss any outstanding bills at >> the >> time of bankruptcy protection filing is worth it in order to maintain >> ongoing business with the firm. >> >> Leasing payments, fuel bills etc incurred after bankruptcy filing are >> usually paid, though quickly negotiated to lower rates (commonly >> retroactively in the case of plane leases.) United can make more money >> for GECAS than GECAS can. >> >> By law, employees are required to be paid. >> >> This requires significant cooperation from the creditors. But there >> sometimes reaches a point where the creditors believe the firm is >> worth >> more dead than alive. I believe Air Canada's creditors are reaching >> that point and will soon ask the court to liquidate the airline. (In >> the US, it's called a Chapter 7 proceeding.) >> >> Matthew >> >> On Monday, September 1, 2003, at 09:29 PM, Alireza Alivandivafa >> wrote: >> >>> They will try anything to avoid paying their bills >> > > > >