

Currently released so far... 12648 / 251,287
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
2011/02/12
2011/02/13
2011/02/14
2011/02/15
2011/02/16
2011/02/17
2011/02/18
2011/02/19
2011/02/20
2011/02/21
2011/02/22
2011/02/23
2011/02/24
2011/02/25
2011/02/26
2011/02/27
2011/02/28
2011/03/01
2011/03/02
2011/03/03
2011/03/04
2011/03/05
2011/03/06
2011/03/07
2011/03/08
2011/03/09
2011/03/10
2011/03/11
2011/03/13
2011/03/14
2011/03/15
2011/03/16
2011/03/17
2011/03/18
2011/03/19
2011/03/20
2011/03/21
2011/03/22
2011/03/23
2011/03/24
2011/03/25
2011/03/26
2011/03/27
2011/03/28
2011/03/29
2011/03/30
2011/03/31
2011/04/01
2011/04/02
2011/04/03
2011/04/04
2011/04/05
2011/04/06
2011/04/07
2011/04/08
2011/04/09
2011/04/10
2011/04/11
2011/04/12
2011/04/13
2011/04/14
2011/04/15
2011/04/16
2011/04/17
2011/04/18
2011/04/19
2011/04/20
2011/04/21
2011/04/22
2011/04/23
2011/04/24
2011/04/25
2011/04/26
2011/04/27
2011/04/28
2011/04/29
2011/04/30
2011/05/01
2011/05/02
2011/05/03
2011/05/04
2011/05/05
2011/05/06
2011/05/07
2011/05/08
2011/05/09
2011/05/10
2011/05/11
2011/05/12
2011/05/13
2011/05/14
2011/05/15
2011/05/16
2011/05/17
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Apia
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Auckland
Consulate Amsterdam
Consulate Adana
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belmopan
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Ciudad Juarez
Consulate Chennai
Consulate Casablanca
Consulate Cape Town
Consulate Calgary
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dili
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Helsinki
Embassy Harare
Embassy Hanoi
Consulate Ho Chi Minh City
Consulate Hermosillo
Consulate Hamilton
Consulate Hamburg
Consulate Halifax
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kingston
Embassy Kigali
Embassy Khartoum
Embassy Kathmandu
Embassy Kampala
Embassy Kabul
Consulate Kolkata
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Ljubljana
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lahore
Consulate Lagos
Mission USOSCE
Mission USNATO
Mission UNESCO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Mbabane
Embassy Maputo
Embassy Manila
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Mumbai
Consulate Montreal
Consulate Monterrey
Consulate Milan
Consulate Melbourne
Embassy Nicosia
Embassy Niamey
Embassy New Delhi
Embassy Ndjamena
Embassy Nassau
Embassy Nairobi
Consulate Naples
Consulate Naha
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Of Spain
Embassy Port Louis
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Suva
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate St Petersburg
Consulate Shenyang
Consulate Shanghai
Consulate Sapporo
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
Consulate Toronto
Consulate Tijuana
USUN New York
USEU Brussels
US Office Almaty
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Embassy Vilnius
Embassy Vienna
Embassy Vatican
Embassy Valletta
Consulate Vladivostok
Consulate Vancouver
Browse by tag
AORC
AF
AU
ASEC
AMGT
AS
APER
AR
AG
ARF
AJ
AA
AINF
APECO
AODE
ABLD
AMG
ATPDEA
AE
AEMR
AMED
AGAO
AFIN
AL
ASUP
ASECKFRDCVISKIRFPHUMSMIGEG
AID
ASCH
AM
AORL
ASEAN
APEC
ADM
AFSI
AFSN
ADCO
ABUD
AN
AY
AIT
AGR
ACOA
ANET
ASIG
AMCHAMS
AGMT
AADP
ADPM
ATRN
ALOW
ACS
APCS
AFFAIRS
ADANA
AECL
ACAO
AORG
AROC
AO
ACABQ
AX
AMEX
AFGHANISTAN
AZ
AND
ARM
AQ
ATFN
AMBASSADOR
ACBAQ
AC
AUC
ASEX
AER
AVERY
AGRICULTURE
AFU
BR
BTIO
BY
BO
BA
BU
BL
BN
BM
BF
BEXP
BK
BG
BB
BTIU
BBSR
BRUSSELS
BD
BIDEN
BE
BH
BILAT
BC
BX
BT
BP
BMGT
BWC
CS
CA
CH
CD
CO
CE
CU
CVIS
CASC
CJAN
CI
CPAS
CMGT
CDG
CIC
CAC
CBW
CWC
COUNTER
CW
CT
CY
CNARC
CACM
CG
CB
CM
CV
CIDA
CLINTON
CHR
COE
CR
CIS
CDC
CONS
CF
CODEL
COPUOS
CIA
CFED
CARSON
CL
CROS
CAPC
CTR
CACS
CN
CBSA
CEUDA
COM
CONDOLEEZZA
CICTE
COUNTRY
CBE
CKGR
CVR
COUNTERTERRORISM
CITEL
CLEARANCE
CARICOM
CSW
CITT
CDB
CJUS
CTM
CAN
CLMT
CBC
EAID
ECON
EFIS
ETRD
EC
ENRG
EINV
EFIN
EAGR
ETTC
ECPS
EINT
ES
EIND
EAIR
EU
EUN
EG
EPET
ELAB
EWWT
EMIN
ECIN
ESA
ER
ETRDEINVECINPGOVCS
EAIG
ET
ETRO
ELTN
EI
EN
EUR
EK
EUMEM
EPA
ENGR
EXTERNAL
EUREM
ELN
EUC
ENERG
ENIV
EZ
ERD
EFTA
ETRC
ETRN
EINVECONSENVCSJA
EEPET
EUNCH
ESENV
ENNP
ENVI
ETRDECONWTOCS
ECINECONCS
EFINECONCS
ELECTIONS
ENVR
EXIM
ERNG
ECA
EINVEFIN
ETC
EAP
ECONOMY
EINN
ECONOMIC
EXBS
ECUN
ENGY
ECONOMICS
EIAR
EINDETRD
ECONEFIN
EURN
EDU
ETRDEINVTINTCS
ECIP
EFIM
EAIDS
EREL
EINVETC
ECONCS
ETRA
IC
IV
IAEA
IR
IO
IT
IN
IS
IZ
IMO
IPR
IWC
ICAO
ILO
ID
ICTY
ICJ
INMARSAT
INDO
IL
IMF
IRS
IQ
IA
ICRC
IDA
IAHRC
IBRD
ISLAMISTS
IGAD
ILC
ITU
ITF
INRA
INRO
IDP
ICTR
IEFIN
IRC
ITRA
ITALY
INRB
INTELSAT
IBET
IRAQI
ISRAELI
IIP
ITPGOV
ITALIAN
INTERNAL
INTERPOL
IEA
INR
IZPREL
IRAJ
IF
ITPHUM
ISRAEL
IACI
KBTR
KPAO
KOMC
KCRM
KDEM
KHIV
KBIO
KTIA
KMDR
KNNP
KSCA
KTIP
KWMN
KIPR
KCOR
KRVC
KFRD
KPAL
KWBG
KE
KTDB
KUNR
KSPR
KJUS
KGHG
KAWC
KCFE
KGCC
KOLY
KSUM
KACT
KISL
KTFN
KFLU
KSTH
KMPI
KHDP
KS
KHLS
KMRS
KID
KN
KU
KAWK
KSAC
KCOM
KAID
KIRC
KWMNCS
KMCA
KNEI
KCRS
KPKO
KICC
KPOA
KV
KDRG
KIRF
KSEO
KVPR
KSEP
KTER
KBCT
KFIN
KGIC
KCIP
KZ
KG
KWAC
KRAD
KPRP
KTEX
KNAR
KPLS
KPAK
KSTC
KFLO
KSCI
KIDE
KOMS
KHSA
KSAF
KPWR
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KFSC
KRIM
KVRP
KENV
KNSD
KCGC
KDDG
KPRV
KTBT
KWMM
KMFO
KMOC
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KPAI
KO
KVIR
KREC
KX
KR
KCRCM
KBTS
KOCI
KGIT
KNUP
KPAONZ
KNUC
KNNPMNUC
KERG
KTLA
KCSY
KTRD
KNPP
KJUST
KCMR
KRCM
KCFC
KCHG
KREL
KFTFN
KLIG
KDEMAF
KICA
KHUM
KSEC
KPIN
KESS
KDEV
KWWMN
KOM
KWNM
KRFD
KMIG
KRGY
KIFR
MARR
MOPS
MASS
MX
MNUC
MCAP
MO
MR
MEPP
MTCRE
MAPP
MEPN
MZ
MT
ML
MA
MY
MIL
MD
MASSMNUC
MU
MK
MTCR
MUCN
MAS
MEDIA
MAR
MC
MI
MQADHAFI
MPOS
MTRE
MASC
MG
MARAD
MRCRE
MW
MP
MOPPS
MTS
MLS
MILI
MEPI
MEETINGS
MERCOSUR
MCC
MIK
MAPS
MV
MILITARY
MDC
NATO
NZ
NL
NO
NK
NU
NPT
NI
NG
NEW
NSF
NA
NPG
NSG
NE
NSSP
NS
NDP
NSC
NAFTA
NH
NV
NP
NPA
NSFO
NT
NW
NASA
NORAD
NATIONAL
NGO
NR
NIPP
NZUS
NC
NRR
NAR
NATOPREL
OEXC
OTRA
OPRC
OVIP
OAS
OIIP
OSCE
OREP
OPIC
OFDP
OMIG
ODIP
OVP
OSCI
OIC
OECD
OIE
OPDC
ON
OCII
OPAD
OBSP
OFFICIALS
OPCW
OHUM
OES
OCS
OTR
OSAC
OFDA
PGOV
PREL
PM
PHUM
PTER
PINR
PINS
PREF
PARM
PL
PK
PU
PBTS
PBIO
PHSA
PE
PO
PROP
PA
PNAT
POL
PLN
POLITICAL
PARTIES
PCUL
PAK
PGGV
PAO
PSA
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
PAS
PGIV
PHUMPREL
PCI
PG
POGOV
PHUMPGOV
PEL
POLITICS
POLICY
PINL
PP
PREO
PAHO
PBT
PMIL
POV
PRL
PDOV
PTBS
PRAM
PREFA
PSI
PAIGH
POSTS
PALESTINIAN
PARMS
PROG
PTERE
PRGOV
PORG
PS
PGOF
PKFK
PSOE
PEPR
PPA
PINT
PMAR
PRELP
PINF
PNG
PFOR
PUNE
PGOVLO
PHUMBA
PSEPC
PNR
POLINT
PGOVE
PHALANAGE
PARTY
PDEM
PECON
PROV
PGOC
PY
PHUH
PF
PHUS
RU
RS
RO
RW
RP
RFE
REGION
REACTION
REPORT
ROOD
RCMP
RM
RSO
ROBERT
RICE
RSP
RF
RIGHTS
RIGHTSPOLMIL
RUPREL
RELATIONS
SENV
SU
SCUL
SOCI
SNAR
SL
SW
SMIG
SP
SY
SA
SHUM
SZ
SYRIA
SF
SR
SO
SARS
SN
SC
SIPRS
SI
SYR
SEVN
SG
SPCE
SK
STEINBERG
SH
SNARCS
SAARC
SCRS
SENVKGHG
SAN
ST
SIPDIS
SNARIZ
SNARN
SSA
SPCVIS
SOFA
SEN
SANC
SWE
SHI
TW
TU
TBIO
TSPL
TPHY
TRGY
TC
TT
TSPA
TINT
TERRORISM
TX
TR
TS
TN
TD
TH
TIP
TNGD
TI
TZ
THPY
TP
TBID
TF
TL
TV
TK
TO
TRSY
TURKEY
TFIN
TAGS
UN
UK
UNSC
UNGA
US
UNESCO
UP
UNHRC
UNAUS
USTR
UNDP
UNEP
UY
UNCHR
UG
UZ
UNPUOS
USEU
UNMIK
UNDC
UNICEF
UV
UNHCR
UNCHC
UNCSD
USOAS
UNFCYP
USUN
USNC
UNIDROIT
UNO
UNCND
USPS
USAID
UE
UNVIE
UAE
UNODC
UNCHS
UNFICYP
UNDESCO
UNC
Browse by classification
Community resources
courage is contagious
Viewing cable 03MONTREAL553, Air Canada Bankruptcy and Restructuring
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #03MONTREAL553.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
03MONTREAL553 | 2003-04-30 13:06 | 2011-04-28 00:00 | UNCLASSIFIED | Consulate Montreal |
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 03 MONTREAL 000553
SIPDIS
STATE FOR WHA/CAN - PATRICIA NORMAN, EB/TRA - SUSAN PARSON
STATE PASS USTR FOR SAGE CHANDLER
USDOT FOR JEFF SHANE AND SUSAN MCDERMOTT
FAA FOR KRISTA BEREQUIST
TSA FOR SUSAN WILLIAMS
SIPDIS
USDOC FOR 6310/ITA/TD/TM/OFFICE OF AEROSPACE/TLARGAY
E.O. 12958: N/A
TAGS: EAIR ETRD EFIN ECON CA
SUBJECT: Air Canada Bankruptcy and Restructuring
Ref: (A) Ottawa 00385 (Air Canada financial woes)
(B) Ottawa 00612 (Transportation Strategy Aviation)
(C) 2002 Ottawa 2824 (Report suggests liberalization)
(D) 2002 Montreal 1248 (Air Canada going Discount)
¶1. SUMMARY: Air Canada's recent filing for bankruptcy
protection follows efforts over the past several months to
restructure its operations and lower its costs in order to
remain competitive during a difficult time in the airline
industry. However, a combination of its own business
decisions, the rise of low-cost competitors, and several
devastating events beyond its control helped bring the
airline to this point. The bankruptcy protection will
provide the airline time to develop a long-term strategy
that might allow it to compete in a changed market. The
Canadian government has indicated a willingness to provide
loan guarantees to Air Canada, but there are currently no
plans for a cash bailout. END SUMMARY
¶2. On April 1, 2003 Air Canada sought protection under the
Companies' Creditors Arrangement Act (CCAA), Canada's
equivalent to Chapter 11. Even before the bankruptcy
filing, Air Canada had declared a Force Majeur, citing the
war in Iraq, in order to find relief from some contractual
obligations and to justify the impending layoffs of 3,600
workers, about 10 percent of its total workforce. The Force
Majeur declaration prompted a swift negative reaction from
many of the airline's unions, which had already agreed to
work with the company to save C$650 million annually in
labor costs.
¶3. During 2002 Air Canada lost C$428 million, most of that
amount in the final quarter. Since 1999, Air Canada has
lost C$1.7 billion and is currently losing about C$3 million
per day. It has over C$13 billion of accumulated debt,
approximately C$8 billion of which resulted from the 1999
acquisition of Canadian Airlines (then its main rival),
which was purchased primarily for its profitable Asian
routes. Air Canada's pension liability is also C$1.3
billion. It is the third major North American airline to
seek protection from its creditors in the past 18 months,
after United Airlines and USAIR.
¶4. As recently as 2000, Air Canada carried about 80 percent
of Canada's domestic passenger traffic. The company's
overwhelmingly dominant market share has led rivals to
accuse it of predatory pricing. Predatory or not, the
airline's strategies have evidently not been successful: in
the last 12 months, Air Canada has lost 12 percent of its
domestic market share to its low-cost competitors,
principally Calgary-based WestJet. Cameron Doerksen,
aerospace analyst for Dlouhy Merchant Group, a Montreal-
based investment bank, told post "they [Air Canada] simply
cannot compete in the low-cost carrier market with a big
airline budget," a view echoed by Michel LeBlanc, CEO of
Montreal-based low-cost carrier Jetsgo.
¶5. Over the past two years, Air Canada has tried to compete
with its low-cost rivals by dividing its business into the
main Air Canada brand and four new subsidiaries and brand
names: Zip, Tango, Jazz and Jetz (REFTEL D). Most operate
on a lower wage/cost structure, but growth potential is
limited by union contracts to a relatively small scale of
operation, lest they cannibalize the main Air Canada
operations and their higher-wage jobs. Doerksen asserts
that despite these efforts to compete in the low-cost
market, where it might be difficult for a traditionally high-
cost carrier ever to compete effectively, Air Canada will
need to focus on its primary strength: long-haul
international business travel.
¶6. While Air Canada prepares a restructuring plan, expected
in the middle of May, financial services company GE Capital
has extended a C$1 billion line of credit to the airline.
Air Canada CEO Robert Milton has also called on the Canadian
government to provide loan guarantees during the
restructuring, claiming it is impossible for Air Canada to
compete with U.S.-based carriers that received a large
financial package from the U.S. government following the
terrorist attacks of September 11, 2001. Transport Minister
David Collenette has previously indicated a willingness to
consider loan guarantees, but no grants. Meanwhile, the
Parliamentary Committee on Airlines recently called for the
federal government to assist all Canadian airlines by
suspending airport rents and security fee collections for
two years. Both LeBlanc of Jetsgo and Clive Bedoe, CEO of
WestJet, agree that all domestic airlines are vulnerable to
current market conditions and believe that a national
bailout should apply to all airlines, not just Air Canada.
¶7. Air Canada returned to Ontario Superior court on April
¶22. In a hearing attended by attorneys from its labor
unions and over 100 creditors seeking payment, Air Canada
requested an extension of its restructuring window to June
30, permission to delay its annual meeting until a
restructuring plan is complete, and approval to renegotiate
some of its labor agreements. Air Canada had tentatively
been permitted to suspend some of its contractual
obligations when it made its CCAA filing on April 1. Unlike
U.S. Chapter 11, the CCAA has not historically permitted
companies to void collective bargaining agreements. On
April 22, Ontario Justice James Farley rescinded some of the
protections given Air Canada on April 1, but encouraged the
airline and its unions to continue negotiations that would
allow Air Canada to produce a viable restructuring plan.
Both sides tried to interpret this outcome as a victory; the
unions because Justice Farley denied Air Canada's request to
bypass its agreements, and Air Canada because it may have
obtained more flexibility in dealing with its unions than
many companies have in the past. Air Canada's decision to
make its CCAA filing in Ontario is believed by some analysts
to have been influenced by a recent Quebec court ruling in
the case of Quebec mining company Jeffrey Mine, Inc., that
collective agreements are protected during a restructuring
period.
¶8. In order to raise cash, Air Canada has in recent months
attempted to sell some of its key holdings. In February
2003, it sold a 35 percent stake in Aeroplan, the airline's
frequent flyer program, for C$245 million, and recently
renegotiated an agreement with the Canadian International
Bank of Commerce (CIBC) that will allow it to generate cash
by selling frequent-flyer miles to retailers and insurance
companies. The Jazz subsidiary, a pan-Canadian domestic
carrier, has been put up for sale, as has Air Canada
Technical Services (ACTS). ACTS may have a potential buyer
in La Federation des travailleurs du Quebec (FTQ), which has
2,500 members working at ACTS in Quebec. Andre Viau,
portfolio manager for aerospace with the FTQ pension fund
management group, told post "the deal is not yet clear.
While we have a double interest in saving jobs and making
some money, we might be looking to take on a small stake."
Selling Jazz may prove more difficult; unlike some of the
new subsidiaries, Jazz is burdened with older equipment and
high labor costs, making it a relatively unattractive
property in a slow airline market. In addition, federal law
restricting foreign ownership of Canadian airlines to 25
percent limits the pool of potential buyers. CEO Milton and
other industry insiders have called on Transport Minister
Collenette to amend this law, but he has stated that it
would remain in place until the U.S. makes the same change.
¶9. Air Canada's bankruptcy filing has caused short-term
problems for others in the Canadian aviation system.
NavCanada, the Crown Corporation that operates the country's
air-traffic control system, is in financial jeopardy because
Air Canada - its best customer - has failed to make its C$4
million weekly payment since the CCAA filing. Air Canada
owes Aroports de Montreal C$11.5 million for unpaid rents
and services rendered, and the Greater Toronto Airport
Authority has seen its bond ratings lowered by Standard and
Poor's in the wake of the Air Canada bankruptcy filing.
Justice Farley has denied creditors' statutory right to
seize Air Canada's assets until after a restructuring plan
is submitted.
¶10. Air Canada is continuing regular operations during its
restructuring, and the impact on travelers should be
minimal. However, in addition to lingering effects of the
September 11 attacks and the war in Iraq, the recent
outbreak of SARS is affecting Air Canada especially hard;
their most profitable international routes are to Asia,
while Toronto serves as its primary Canadian hub. Even
before the CDC and the World Health Organization issued
travel advisories for Toronto, many people had been avoiding
Toronto's Pearson Airport. Taken together, Air Canada is
experiencing a drop in passenger traffic at a time it can
little afford it. Air Canada several days ago mentioned
that it might look to route some of its international
flights to other airports - in particular Halifax and
Montreal - but no such plan is yet in place.
¶11. In the longer run, prospects may be more encouraging for
both Air Canada and others. Typically, an airline of Air
Canada's size will emerge from bankruptcy protection between
20-30 percent smaller, according to Doerkson. Viau believes
the new Air Canada will be smaller but stronger. "With a
smaller airline, they [Air Canada] will probably look to
increase their outsourcing contracts, which will be good for
the aerospace sector in Montreal," he told post. Milton
recently announced that a restructured Air Canada will have
to shape itself along the lines of the new North American
airline business model, with smaller planes and lower
operating costs. Air Canada has recently joined a
consortium to purchase regional jets from Bombardier; Air
Canada would initially acquire 25 of these jets to serve
short-haul, moneymaking routes. Air Canada recently named
former Bombardier CEO Robert Brown to its board, which
suggests that Bombardier is likely to remain Air Canada's
principal aircraft supplier in this market, as opposed to
its primary competitor, Brazil's Embraer.
¶12. Comment: Air Canada's current predicament appears to be
the result of both its own decisions in recent years and a
number of unfortunate circumstances beyond the company's
control. Like many airlines, Air Canada has sought to lower
its costs, either through changing union contracts or
establishing new business models. These measures have and
will likely continue to generate resistance but are probably
essential to Air Canada's long-term viability. End Comment.
KANTER