The End is Near...?

[Guest TonkaJet]

Investment community seems to believe that Bankruptcy protection is fast approaching.

Air Canada shares plunge on restructuring concerns

MONTREAL, March 31 (Reuters) - Shares of Air Canada (Toronto:AC.TO - News) dropped 18 percent on Monday on concerns the carrier may have to restructure under bankruptcy protection to obtain government aid and turn around its eroding finances, analysts said.

Air Canada's share fell 48 cents to C$2.02 on the Toronto Stock Exchange (News - Websites) soon after the opening before recovering slightly to C$2.09.

There are mounting concerns Air Canada, the largest airline in Canada and world No. 11, may not be able to turn its fortunes around without seeking bankruptcy protection.

"That is definitely a possibility," said Cameron Doerksen, analyst at Dlouhy Merchant.

"Any help that they are going to get from the government is going to have to be for the industry and not necessarily specific to Air Canada."

Air Canada spokeswoman Isabelle Arthur said the airline had no plans for an announcement on Monday.

She would not comment on speculative questions about a bankruptcy filing or restructuring plan, but said there had been no talks with the Canadian government on funds linked to a restructuring of the airline.

"We have not engaged in discussions with the government on this issue," she said.

Citing unnamed sources, the Toronto Star newspaper said Ottawa was preparing a multimillion dollar bailout for Air Canada, but was linking the funds to a restructuring of the airline.

The Montreal-based airline is talking with its key unions on cutting its annual labor costs by C$650 million ($442 million) or 23 percent.

But analyst have said the money-losing airline needs to sell assets and cut costs quickly if it is to surmount the C$12 billion of debt and aircraft lease obligations that are weighing it down.

The carrier is burning through its cash reserves -- C$558 million on Dec. 31 -- at an estimated C$2 million a day.

Ben Cherniavsky, analyst at Raymond James in Vancouver, issued a detailed report on Friday in which he said Air Canada shares were essentially "worthless" because of its uncertain outlook.

Montreal-based Air Canada is facing a slump in air travel and a vicious domestic fare war with rivals WestJet Airlines Ltd. (Toronto:WJA.TO - News) and closely-held Jetsgo and CanJet Airlines.

Dlouhy Merchant's Doerksen said Air Canada is likely also being affected by concerns about the outbreak of Severe Acute Respiratory Syndrome (SARS), a deadly pneumonia virus that has killed 61 people worldwide, including four in Canada.

People fearful of coming down with SARS are postponing trips to Asia, a lucrative destination for Air Canada.

"That's another thing that is weighing on the entire sector," Doerksen said.

($1=$1.47 Canadian)

[Guest V1]

I had a look at some loads and this is a puzzle to me. Some routes are operating with 20-30% booked loads and we are doing multiple flights sometimes within a few hours of eachother.
Why are we not cancelling and consolidating flights.
You could remove 10 Ottawa flights and not in convience anyone by more than one hour, and if you phone them before most likely wouldn't care. Tell them they rebooked either plus or minus one hour. Big deal.
LAX plus or minus 3 hours and save atleast one turn.

I can't imagine why this is not being aggesssively done.
There is more than appears, methinks.

[Guest b52er]

What are you going to do with the excess bodies ready to man these cancelled flights?

[Guest V1]

Whatever you do with them it is cheaper than putting them on empty airplanes and flying around.