Air Canada saidon Friday that while it
regrets the decision by Trinity Time Investments Limited to not seek
extension of its Investment Agreement beyond April 30, 2004, it remains
focused on completing its restructuring and emerging successfully from CCAA
protection as soon as possible. As a result of Trinity’s announcement, Air
Canada is free to pursue alternative equity financing arrangements and is
doing so. In that regard, Air Canada has contacted General Electric Capital
Corporation and Deutsche Bank Securities, both of whom have substantial
financing commitments to the Corporation to discuss alternatives resulting
from Trinity’s announcement.“Our restructuring has become more challenging as a result of record high
fuel prices, increased domestic capacity by our low cost competitors and the
geopolitical issues faced by the airline industry as a whole,” said Robert
Milton, President and Chief Executive Officer. “However, our 2004 revenues are
tracking in line with what we projected in our business plan last October
during the equity solicitation process. We are seeing year over year unit cost
declines in the range of 14 per cent. Our cash balances are healthy with over
$900 million in cash on hand and close to another $500 million of additional
credit available. We have made major progress on important aspects of our
restructuring, including a significant fleet, debt and lease restructuring,
major reductions in supplier arrangements and changes to our fare structures
and distribution channels.
“Trinity’s announcement expressly states that investment in Air Canada
remains a possibility if circumstances change sufficiently to meet the
concerns identified by Trinity, especially relating to arrangements with Air
Canada’s labour unions. We are well positioned to carry on business
effectively while considering the concerns raised by Trinity as well as
alternative equity arrangements. We trust that our unions and other
stakeholders will recognize the urgency of resolving the remaining obstacles
to our exit from CCAA, particularly since the arrangements with GE and
Deutsche Bank also expire at the end of April, unless extended by agreement.
“I want to reassure our customers and employees that it’s business as
usual at Air Canada as it has been throughout our restructuring, especially as
we go into our strongest travel period of the year, with very strong liquidity
“The stakeholders in Air Canada’s restructuring, including our largest
creditors have reconfirmed their support in ensuring the airline’s survival.
The progress achieved in Air Canada’s restructuring to date clearly justifies
our continued resolve to overcome this latest challenge.”
The Air Canada Ad Hoc Unsecured Creditors Committee has indicated that it
is disappointed with the adverse developments in the Trinity equity
initiative. At the same time, the UCC confirmed its desire to continue to work
with Air Canada management and the Monitor to establish an appropriate new
equity solicitation process as a component of a successful restructuring and
emergence from CCAA, subject to the satisfactory resolution of the fundamental
issues that adversely affected the Trinity Time initiative.
In addition, GE, the corporation’s largest aircraft lessor and exit
financing lendor, has indicated that given the dynamic competitive environment
in the airline industry, its priority remains the successful completion of the
CCAA process as soon as possible. GE has indicated that it is supportive of
management’s efforts to find constructive solutions and is committed to
working with Air Canada and to maintain an open dialogue with all stakeholders
to find an urgent resolution.
“When we announced our restructuring one year ago, we predicted that the
task before us would be painful and the challenges daunting. We have clearly
reached the point where our unions and the employees they represent need to
voice loudly and clearly that there is a will and a way to ensure our cost
competitiveness and convince Victor Li or any other investor that Air Canada’s
people accept that the world has changed.
“The year has been particularly difficult for our employees and I thank
them for their hard work and dedication in taking care of our customers whose
continued support has been heartening.
“The remaining hurdles are surmountable and with goodwill and cooperation
on the part of all parties, I remain convinced Air Canada will emerge from
CCAA protection a much stronger airline,” concluded Mr. Milton.