AC gets 70M from Aeroplan

[Kip Powick]

AC gets 70 Million

[conehead]

But have heard that AC is going bankrupt... is this true?

Where the heck did you hear that one???

[Kip Powick]

Not up and the Canadian news across the pond here. But have heard that AC is going bankrupt... is this true?

What about the pensions?

With over 0ne billion in the cash ???????

[AME]

Aren't all the contracts due soon? "Loads are up, yields are down"

[dagger]

With over 0ne billion in the cash ???????

I also keep telling people that ACE has over $850 million in cash and 27% of ACTS, and until it decides to do otherwise, that money also effectively backstops AC.

[Powermatic]

As a result, the airline has said it will explore alternative sources of financing, including selling and leasing back aircraft.

Do they actually own anything to lease back???

[dagger]

Do they actually own anything to lease back???

Absolutely, there is equity - not necessarily 100% - in every Embraer 190 and Boeing 777 except those 777s which have already been the subject of sale-leasebacks. AC has said it has about $800 million of fleet equity, and $800 million of other assets that could be used to secure new debt, and these assets would usually be enough in normal credit markets to get transactions done.

[Guest]

Absolutely, there is equity - not necessarily 100% - in every Embraer 190 and Boeing 777 except those 777s which have already been the subject of sale-leasebacks. AC has said it has about $800 million of fleet equity, and $800 million of other assets that could be used to secure new debt, and these assets would usually be enough in normal credit markets to get transactions done.

What about in these crises filled credit markets? Will it be that easy to sell and lease back?

[dagger]

What about in these crises filled credit markets?  Will it be that easy to sell and lease back?

Right now, not easy. However, there could be some unusual players. Boeing, for example, owes AC for various delays, and compensation could take the form of a guarantee for a sale-leaseback. i.e. if AC defaulted, Boeing would take the plane back at a guaranteed price. This is especially true for the 777s because they are a strong seller. I can envision other sources of capital for asset-secured transactions, just not the usual financial players.

[conehead]

ok... what the lanyards with "walk the line 2009"

Ok. All collective agreements with Air Canada expire in June 2009. We expect some payback for the concessions given for the last 6 years. We are prepared to "strike" if we don't get that payback. Hence, "walk the line in 2009".

[YYC I/C]

Their cash position of $1.1 billion was as of September 30th - it's probably below $1 billion as of today. And barring a major change in the state of the economy/credit crisis or the sale of of what remaining asstes AC has, I can't imagine Air Canada having much more than a few hundred million dollars going into next summer. Certainly getting a $70 million advance can not be perceived as a positive sign in regards to the long-term survival and viability of the airline.

Labour agreements are up next summer, bankruptcy may be a better position to be negotiating from.

[YYC I/C]

Ok. All collective agreements with Air Canada expire in June 2009. We expect some payback for the concessions given for the last 6 years. We are prepared to "strike" if we don't get that payback. Hence, "walk the line in 2009".

Unfortunately, having talked to many of my friends and former colleagues in the flight attendant ranks at AC, there are many with the firmest belief that they will be improving their work contract in 2009 and getting a pay increase. It is this complete dis-connect with the reality of the airline's health and the state of the economy that will, in my opinion, lead to major labour issues at AC next summer.

[mrlupin]

I also keep telling people that ACE has over $850 million in cash and 27% of ACTS, and until it decides to do otherwise, that money also effectively backstops AC.

If KKR has declared a zero value, what does 27% of nothing make? I imagine the zero value is only for accounting purposes? What kind of money is available for ACTS? From the ACE financial reports ACTS made an operating profit of 5 million on revenue of 244 million but the interest expense took most of the profit away.... Would the business be attractive for a sale?

Éric

[DEFCON]

Would anyone be surprised to see a change in the plan of ACE wherein, AC, a separate and distinct entity, entered into a "Capacity Purchase Agreement" with ACE?

[CanadaEH]

Air Canada to get $70M in payments from Aeroplan

Anyone else find it ironic that the very company that was spun off from Air Canada is now providing equity to AC?

And from the article: "The airline has about $1 billion of cash on hand, which is the minimum executives say is needed to keep the airline operating." So there's two negative ways AC can go about business: burn the furniture to keep the house warm or file for CCAA. In the former, you push yourself into territory where negotiations are looming or you go for the latter and do what? What could AC possibly do during another round of CCAA?? The positive way would be for things to turn around and AC's cash position to improve. Can that be done under the current environment?

[skyline]

OK people, Lets not forget that ACE was formed to payback DB, GE Capital and Cerberus after CCAA. That money is separate to all, including AC, Jazz, Aeroplan and ACTS. This is why they are transferring monies from Aeroplan. Equity on aircraft at this time is nil, only an obligation.

Claw back is only a pipe dream for all of us. Second time into CCAA is when huge financial cuts are made, as the first attempt was unsuccessful. I don’t like it either but that is reality, unless some of you have a better grip on all this. My God, where is the scotch!!! Lie to me if you have to.

[Fido]

....the very company that was spun off from Air Canada is now providing equity to AC?

....?

My reading of the AE to AC transaction is a change to when AE would be paying AC for the seats that they buy.

I believe that up till now AE only had to pay for the seats when the passenger travelled. Now they pay when the reservation is made. The same as anyone else does when they make a booking.

The net result is a paltry $70 million catch up payment.