Business History Books » Business Plans » Some AC bankrupcy tidbits
Some AC bankrupcy tidbits
Question:
heard a commentator: "Air Canada’s bankrupcy may mean the demise of the rubber chicken business"
Response:
> Mayor of Edmonton has publicly called for AC management to be ousted because > theyr are incompetent. > AC owes Edmonton Airport 2.5 million dollars.
Maybe. But that’s not the real issue. Serving Deadmonton has been a lousy business proposition. As a result, AC had been cutting service big time and they were all very upset already. Just getting even.
Response:
> > AC owes $1 million to St Johns Airport. (unpaid fees for a while) > What will happen to passengers who have already paid for tickets but for > whom the AIF’s are not being remitted to their airport’s on their behalf? > Will the airports be setting up booths to force payment of these fees (since > AC isn’t paying them on their behalf)?
They can’t do anything, which is the whole reason for filing for protection under the Companies’ Creditors Arrangements Act (CCAA). You can’t extort the fee from 3rd parties if it was AC that holds the financial liability. > Serious shortfall in AC’s pension plan. Will need to be renegotiated > downwards. The regulation agencies had noticed this in January and > degradation > of the situation was one of the main reasons for forcing AC into > bankrupcy. > How much is $200 million in terms of AC’s pension fund? How large of a > ‘hit’ does it really represent.
Almost every pension fund has taken serious hits due to stock market losses over the last year or so. The problem with AC was that they don’t have any resources to provide security for the unfunded liability associated with the pension plan until such time as the investments start providing a better return (we all hope). I read something about their pension fund being worth $2.6B a year and a half ago. AC indicated that additional payments of $20M – $30M would be required per year at the current underfunding levels. If that was what tipped AC into bankruptcy protection, they really getting short of cash. > A mention that ZIP may go regional jets. (so, why not merge it with Jazz > (aka: Ac Regional aka Air Nova) > Why? AC doesn’t need any more aircraft, even with the 737’s, 146’s, > 767-200’s, and 747’s gone. All of the Zip flying can easily be picked up > with the existing A319/A320 fleet, or simply dropped. > It really does seem like the bankrupcy protection lasts only one month. AC > has > to reorganise within that time. > But full reorg may not happen until next fall. > Will the creditors allow this to drag on that long?
AC by no means has to restructure within 30 days. The initial court order gives them 30 days to come up with a reasonable outline of how their restructuring plans are going, show that they have financing to continue operations as restructuring proceeds, and basically show a good faith effort to restructure with reasonable protection of their creditors. The court will almost always grant an extension to the initial period if the preceeding is demonstrated. Restructuring a corporation the size of AC will almost certainly take months. > Analysts say that AC will have considerable disruption (less telephone > agents, > disrupted schedules etc).
It all depends on how customers react (take more business elsewhere) and whether the aircraft and other assets could be at risk of seizure from foreign creditors in jurisdictions where they may not be extended protection.
Response:
One of the groups of creditors are airports. Besides airport charges for landings, space etc., it appears that AC collected Passenger Improvement Fees from passengers and didn’t remit these to the airports. Perhaps airports which collected the fees themselves (Vancouver, Montreal) were right; irritating though this practice is to passengers. AC are alleged to owe St. John’s, NF about one million dollars, Winnipeg two million, and Ottawa over four million. Toronto is being hammered with an ice storm. Many flights through Pearson are being delayed. CBC radio reports Pearson is running low on de-icing fluid and is ordering emergency supplies from as far away as Chicago, by truck! Trucks are also being delayed on ice slick roads. —
Response:
Mayor of Edmonton has publicly called for AC management to be ousted because theyr are incompetent. AC owes Edmonton Airport 2.5 million dollars.
Response:
Air Canada has stopped sending the airports the airport inprovement fees it collects when selling tickets (Winnipeg, Montreal and others now have the airlines collect their airport fees). Many of those airport had undertaken significant work and without those revenus, it will hurt a lot.
Response:
> Air Canada has stopped sending the airports the airport inprovement fees it > collects when selling tickets (Winnipeg, Montreal and others now have the > airlines collect their airport fees). > Many of those airport had undertaken significant work and without those > revenus, it will hurt a lot.
Are you saying that they are still collecting them, but they keep the cash???
Response:
> AC owes $1 million to St Johns Airport. (unpaid fees for a while)
What will happen to passengers who have already paid for tickets but for whom the AIF’s are not being remitted to their airport’s on their behalf? Will the airports be setting up booths to force payment of these fees (since AC isn’t paying them on their behalf)? > Serious shortfall in AC’s pension plan. Will need to be renegotiated > downwards. The regulation agencies had noticed this in January and degradation > of the situation was one of the main reasons for forcing AC into
bankrupcy. How much is $200 million in terms of AC’s pension fund? How large of a ‘hit’ does it really represent. > A mention that ZIP may go regional jets. (so, why not merge it with Jazz > (aka: Ac Regional aka Air Nova)
Why? AC doesn’t need any more aircraft, even with the 737’s, 146’s, 767-200’s, and 747’s gone. All of the Zip flying can easily be picked up with the existing A319/A320 fleet, or simply dropped. > It really does seem like the bankrupcy protection lasts only one month. AC has > to reorganise within that time. > But full reorg may not happen until next fall.
Will the creditors allow this to drag on that long? – Hide quoted text — Show quoted text -> Analysts say that AC will have considerable disruption (less telephone agents, > disrupted schedules etc).
Response:
What are tidbits?
Response:
> What are tidbits?
Tidbits are Westjet meals.
Response:
> What are tidbits?
See JF’s message? Those were tidbits. regards, Dairenn Lombard
Response:
> > What are tidbits?
Do we really have to add this to the RTA faq? tid