More bad news for AC

[Guest lancaster]

http://www.canada.com/national/story.asp?id=77C5309C-8D7F-44FE-88DC-A193A7AE7E2F

[Guest PortTack]

That aint' good!

[Guest JakeYYZ]

Ottawa seeks input on Air Canada plan

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20030925/RAIRC25/TPBusiness/TopStories

[Guest CDB]

"The court doesn't have the competence to make a ruling on effective control."

And I would argue that Collenette doesn't have the competence to do much at all...

[dagger]

I can't recall whether Collenette appointed Deloitte & Touche - or anyone else - to investigate the foreign ownership implications of the Byzantine takeover offer concocted by Schwartz and Don Carty in 1999. When you think of it, had the government done its due diligence on the takeover - and in particular how the deal proposed to circumvent the 15% ownership cap in the Air Canada Act - then the offer never could have gone forward.

So why now, Minister? You weren't very concerned about the law four years ago.

[Guest lancaster]

That's a very good point. And if the government's offices are spending taxpayers money on the hiring of accountants to oversee the accountants that are acting as the monitors, what exactly does that say about the faith to be placed in the monitors ability to act within the current ownership laws as well as AC's ability to act within the current laws. Obviously, the government has suspisions that AC is not acting within the law, otherwise......why would they need to hire a consultant at taxpayers expense! Something smells fishy and the outcome for AC does not send a strong message of resurrection in this watchers opinion!

[dagger]

Frankly, Lancaster, I think your post marks a new low for you. You are insinuating that Air Canada is breaking the law, that the government knows this - even though Air Canada is negotiating with fhree potential investor groups and has no deal to scrutinize. Therefore your insinuations are at best premature and hypothethical if not specious and malicious.

This follows a recent pattern of behaviour on your part. You began this thread with a headline "More bad news for AC" in which you singled out a Canadian Press story written by a night desk reporter which misinterprets the significance of the deficiency issue. Remarkably, none of the other articles in the media today based on the same monitor's report make no mention of the deficiency even though it is plain to all who read the document. These are the same beat reporters who have filed on this story for months now. They know what is new and what isn't, and the deficiency issue is neither new nor a significant concern.

I'd like to ask you why you are suddenly posting every "perceived" bit of bad new for AC - however out of context or divorced from reality it may be. It's as if the process of restructuring is working inexorably to a conclusion reasonably favorable to Air Canada, and that this somehow worries you.

Maybe it's because AC's costs are gradually coming down - 5,500 employees have been let go since CCAA began. There are another 4,500 to go over the next year or two.

And you will soon be losing the man most wedded to a 25% foreign ownership limit - which WJ very much wants to retain. This cannot be the ideal circumstances for WJ, but most of your colleagues are looking forward to increased competition, not dreading it.

[Guest Pull Up]

Amazing how the first time around the Canadian govt. was willing to bypass the rules with a wink and a nudge to find a made in Canada solution offered up by Onex to save the Canadian airline industry (namely, to keep CAI from going bankrupt), even though the bulk of the capital was to come from the U.S. This time they want to make sure that they have a "Made in Canada" solution to save our national carrier, and appoint Deloitte & Touche to make sure AC plays by the rules that they weren't willing to enforce 4 years ago. Makes one think that Onex may in fact be behind this new policy to ensure that they are the "Made in Canada" solution.

[John S.]

Dagger, in replying to Lancaster you write: "They know what is new and what isn't, and the deficiency issue is neither new nor a significant concern. "

To me you say: "Your information is old, incomplete and as such, of NO consequence. "

With apologies for taking only small parts of your postings to make a point, just where do you obtain your knowledge and insight?

With the tone and thrust of your reply you give me the impression that you are angry at Lancaster. If Lancaster (or any other poster for that matter) posts a link that is relevant and IS bad news then so be it.

Once again, please provide facts to back up your statement that ". . . the deficiency issue is neither new nor a significant concern. "

Heck, for some it is the ONLY concern.

[wrench]

IDEA: book a lunch with one of your government buddies and get the straight up story for us. Enough speculation here. I can't take it! I don't know who to believe anymore........sooooo confused. Hey Mitch. Can't you help here??

[dagger]

A deficiency is an accounting term for the shortfall in cash required to meet obligations, but it is used merely to inform creditors of the likelihood of being able to collect on that deficiency in the event of a liquidation. Air Canada has $700 million in the bank right now, reflecting cash it had at the time of CCAA, plus several hundred minutes in forward ticket sales. Those forward ticket sales are added to the deficiency to present a picture of creditor exposure in the event of a liquidation.

Rather than me engaging anyone but Lancaster in a selective issue by issue dissection of the Monitor's report, here's a bit of advice. Go read the entire 28-page report on aircanada.ca. You will pick up information in a lot of areas, such as evidence that AC's market is stabilizing and starting to recover, especially internationally, and that AC has repudiated/renegotiated leases and contracts for hundreds of millions of dollars in annualized savings.

[Mitch Cronin]

Me?... Sure... Dagger want's AC to do well, so he'll almost always take the positive side to spin... Lancaster on the other hand, always wants to point to the negative for AC. Being a Die-Hard Danny Dog fan, he'll always espouse the dog's point of view... hoping all the while that his negative spin will help to divert one or two more "guests" their way.

Did that help?

[dagger]

A deficiency is an accounting term for the shortfall in cash required to meet obligations, but it is used merely to inform creditors of the likelihood of being able to collect on that deficiency in the event of a liquidation. Air Canada has $700 million in the bank right now, reflecting cash it had at the time of CCAA, plus $400 million-plus in forward ticket sales. Those forward ticket sales are added to the deficiency to present a picture of creditor exposure in the event of a liquidation.

Rather than me engaging any further in a selective issue by issue dissection of the Monitor's report through the media, here's a bit of advice. Go read the entire 28-page report on aircanada.ca. You will pick up information in a lot of areas, such as evidence that AC's market is stabilizing and starting to recover, especially internationally, and that AC has repudiated/renegotiated leases and contracts for hundreds of millions of dollars in annualized savings. There is a great deal happening on a lot of fronts, some good, some possibly not so good (thanks OPEC), and you have to deal with it as a totality. That was my objection to Lancaster's original post, as well as the spirit in which it was offered. But you don't have to take his word or mine or a particular journalist on any of this... Go read the monitor's report.

[wrench]

thanks Mitch. I've calmed down a lot.

[LongTimer V]

I find it strange that here at Air Canada cargo,its business as usual except with less front line staff,(a lot less)but management ranks have stayed the same and in some cases have risen if you include the acting people.If our full time staff have been cut by around 30% why hasn't the pain been spread out.I see no panic here,yet the numbers would suggest that Air Canada better act soon or its all over.

[Guest Stone]

I'm with you on this one Dagger. I would go further and suggest that people read all 10 Monitor's Reports and compare them with each other. Some very interesting, enlightening and sometimes scary reading. On the whole it appears that the restructuring is going well and in the right direction.

Most people however will be too lazy to read the reports, even though they are readily available on the Air Canada website. They will just continue to read snippets in the media and form their opinions from a fraction of the information that is available to them.

Stone

[Don Hudson]

Dagger;

Re, "So why now, Minister? You weren't very concerned about the law four years ago."

While Collenette has studiously avoided all discussion of this monumental act of collusion (for which, I say still, people should be in jail for), that he and others have graduated to the level of saint-hood in their pious demand that the process "respect" the 25% rule is as close to proof as anything we'll get that collusion occurred and that Collenette tried to use Air Canada's equity to make a political problem in the West go away. There is no other explanation, even if one dismisses Occam's Razor and tries to stretch credulity. It can't be done.

The dastardly part of all this, notwithstanding the abdication of honor, integrity and honesty, which of course is impossible to expect, is that the process cuts out the very shareholders who rely on some modicum of accessibility to reality as opposed to crooked backroom work by senior government and business officials. How does one "invest" in such circumstances? What's up, even now? I thought the Globe and Mail article the other day was very good.

I hear someone is writing "The Book". Can't wait. Any bets on the title?

Don

[Don Hudson]

Dagger;

Re, "So why now, Minister? You weren't very concerned about the law four years ago."

While Collenette has studiously avoided all discussion of this "arrangement" with Schwartz et al, (for which I think people should be in jail), that he and others have graduated to the level of saint-hood in their pious demand that the process "respect" the 25% rule is as close to proof as anything we'll get that collusion occurred and that Collenette tried to use Air Canada's equity to make a political problem in the West go away.

There is no other explanation which does not challenge credulity to the limit.

The dastardly part of all this, notwithstanding the abdication of honor, integrity and honesty, (which of course is impossible to expect), is that the process cuts out the very shareholders who rely on some modicum of accessibility to reality as opposed to "backroom" work by senior government and business officials.

How does one "invest" in such circumstances?

What's up, even now?

I thought the Globe and Mail article the other day was very good in assessing present circumstances, but there is much afoot, in my opinion.

I hear someone is writing "The Book". Any bets that the title will resemble Stevie Cameron's work of a few years ago?

Don

[Don Hudson]

August 28th, 1999

Cabinet team hatched airline plan

Secret committee knew companies were set for bid

By William Walker

Toronto Star Ottawa Bureau Chief

OTTAWA - A secret Liberal cabinet committee has been meeting for the past two months plotting government strategy over a potential Canadian Airlines-Air Canada merger or takeover.

The ad hoc panel, chaired by Transport Minister David Collenette, was privy to information that private-sector companies were poised to make a bid for the airlines.

And it eventually concluded that the most likely route for Canada would be to have one major international airline and a number of regional carriers competing for domestic fares.

Collenette and Onex Corp. CEO Gerry Schwartz have admitted the government was informed - before the public announcement this week - of the company's planned $5.7 billion bid to purchase both airlines and merge them.

In fact, Collenette made it clear earlier this week that the government waived Section 47 of the Canada Transportation Act on Aug. 13 to open the door for such a deal to come forward.

That part of the act contains competition restrictions that must be waived in order for any deal to take place that would result in Canada having only one major international air carrier.

The secret cabinet committee was formed after the federal government became increasingly concerned that Canadian Airlines was near bankruptcy and the government had to act.

The committee is made up of Collenette, Justice Minister Anne McLellan, Environment Minister David Anderson, former Treasury Board president Marcel Massé and Public Works Minister Alfonso Gagliano.

Ottawa poured more than $190 million into Canadian to keep it afloat in 1997, but this time it was clear that more taxpayer dollars were not the answer.

The committee eventually came to the conclusion that Canada, with an enormous land mass and relatively small population, would likely have to arrive at the model of countries such as Germany, France and Australia.

All of those countries all have only one major international airline and a number of regional airlines competing for domestic fares.

Opponents of the Onex deal, including those aligned with Air Canada - which views it as a hostile takeover - have been suggesting that Finance Minister Paul Martin is the major player behind it on the government side.

Schwartz was one of the largest fundraisers for Martin's failed Liberal leadership bid in 1990 and remains closely aligned with Martin.

But government officials - and there is a news blackout on on-the-record comments until a business agreement is in place - say that the finance minister has had virtually no involvement in the process.

Martin was not a part of the ad hoc committee studying the airlines and he did not attend any of the secret meetings.

Nor has Martin tried to influence Collenette on the issue, sources said.

``I can tell you categorically, he (Martin) has not been a part of this at all,'' one official said.

Martin was unavailable for comment.

Any future deal among Canadian and Air Canada shareholders, whether it's the proposal by Onex - a Toronto-based buyout specialist - or a rumoured deal from Air Canada involving United Airlines and Lufthansa, would be handled under the Canada Transportation Act.

Lobbyists working for both Canadian and Air Canada are aware of the growing split within federal Liberal ranks over the issue of Prime Minister Jean Chrétien's leadership.

In the recent cabinet shuffle, Chrétien's office let it be known that the Prime Minister was sending a signal to Martin loyalists to tone down leadership campaign activities because the PM was miffed.

In Ottawa, the airlines issue is being handled by a group of cabinet ministers who are seen to be Chrétien loyalists, the most ardent of the group being Collenette, with Gagliano running a close second.

That means that Schwartz's close ties to Martin won't count for much in the great airline sweepstakes, Liberal insiders say.

``Within Liberal politics Collenette is a PM guy and Schwartz is a Martinite, so I wouldn't read a lot into it,'' one source remarked.

Collenette and Schwartz know each other, but the transport minister was not one of 11 cabinet ministers to whom Schwartz donated $5,000 apiece during the last election.

Only after a business agreement is in place and after the Competition Bureau studies the deal and provides advice to the government would the finance minister become involved in considering a final decision along with other members of the cabinet.

[Don Hudson]

Watchdog idle in face of airline monopoly

Government allows Competition Bureau no clear role in Onex proposal

Rick Mofina

The Ottawa Citizen

August 27, 1999

The agency mandated to ensure competitive service for Canadians has been sidelined -- for now -- as players take the stage for what could be the creation of a huge domestic airline monopoly.

The federal Competition Bureau has so far been prevented by a federal government decision from playing a role in Onex Corp's bid to merge Air Canada with Canadian Airlines.

. . . .

(balance of the article available if anyone wants it posted).

[Don Hudson]

Dagger;

Re, "So why now, Minister? You weren't very concerned about the law four years ago."

While Collenette has studiously avoided all discussion of this "arrangement" with Schwartz et al, (which I have always thought and still think people should be in jail for), that he and others have now graduated to the level of saint-hood in their pious if not controlling demand that the process "respect" the 25% rule, is as close to proof as anything we'll get that collusion occurred and that Collenette tried to use Air Canada's equity to make a political problem in the West go away.

There is no other explanation which does not challenge credulity to the limit.

The dastardly part of all this, notwithstanding the abdication of honor, integrity and honesty, (which of course is impossible to expect), is that the process cuts out the very shareholders who rely on at least some minimum level of revelation so that they may make rational investment decisions.

Instead, outside investors are treated to backroom work by senior government and business officials, typical of the period in which other governance issues also arose.

How does one "invest" in such circumstances?

How does one invest, even now?

I thought the Globe and Mail article, (Airline Must Chart a Fine Course - Jacquie McNish, September 22/03), the other day was very good in assessing present circumstances, but there is much afoot, in my opinion.

I hear someone is writing "The Book". Any bets that the title will resemble Stevie Cameron's work of a few years ago?

Don

[Don Hudson]

Dagger;

Re, "So why now, Minister? You weren't very concerned about the law four years ago."

While Collenette has studiously avoided all discussion of this "arrangement" with Schwartz et al, (which I have always thought and still think people should be in jail for), that he and others have now graduated to the level of saint-hood in their pious if not controlling demand that the process "respect" the 25% rule, is as close to proof as anything we'll get that collusion occurred and that Collenette tried to use Air Canada's equity to make a political problem in the West go away.

There is no other explanation which does not challenge credulity to the limit.

The dastardly part of all this, notwithstanding the abdication of honor, integrity and honesty, (which of course is impossible to expect), is that the process cuts out the very shareholders who rely on at least some minimum level of revelation so that they may make rational investment decisions.

Instead, outside investors are treated to backroom work by senior government and business officials, typical of the period in which other governance issues also arose.

How does one "invest" in such circumstances?

How does one invest, even now?

I thought the Globe and Mail article, (Airline Must Chart a Fine Course - Jacquie McNish, September 22/03), the other day was very good in assessing present circumstances, but there is much afoot, in my opinion.

I hear someone is writing "The Book". Any bets that the title will resemble Stevie Cameron's work of a few years ago?

Don

[Fido]

I would be interested and also would like a pointer as to where to find these online. Are they from the old AEF archive site???

[RFL]

JACQUIE McNISH 11/20/1999 The Globe and Mail Metro Page B1

All material copyright Thomson Canada Limited or its licensors. All rights reserved

Two weeks ago, Air Canada's board of directors approved a sale to the caisse of up to

$300-million in debentures that are convertible into the airline's common

stock.Depending on how you calculate the conversion rates, the debentures entitle the caisse to raise its existing 5.6-per-cent stake in Air Canada's voting stock to as much as 30 per cent. The caisse also owns 19.9 per cent of the airline's class A non-voting stock.

[RFL]

Caisse De Depot Boosts Air Canada Stake To 19.62% DOW JONES NEWSWIRES MONTREAL -- Caisse de depot et placement du Quebec (X.CDP) has acquired 60,200 Class A shares of Air Canada (ACNAF), giving it a total of 8,063,782 Class A shares, or a 19.62% stake. In a news release, Caisse de depot said the shares were purchased at an average of C$4.59 each. Caisse de depot also said it holds a C$150 million debenture convertible into common shares. If the debenture was redeemed now, Caisse de depot said it would hold 9,375,000 common shares. After deducting 888,112 common shares borrowed in a short-selling strategy made in the past, the company said its stake would total 8,486,888 common shares, or 9.61%. Caisse de depot said its CDP Gestion mondiale inc. subsidiary also holds for other clients 97,200 common shares of Air Canada. The Quebec pension-fund manager said the Air Canada shares were purchased for investment purposes. Air Canada is an airline operator.