Air Canada facing second bankruptcy filing
26 / 05 / 2009
AIR Canada is facing a second bankruptcy in six years after posting a C$400-million loss (US$345 million) in the first quarter. This is a significant blow for the airline as it had already reported a C$727-million loss ($565 million) for 2008’s fourth quarter.
At the time, then chief executive Montie Brewer said that the airline aimed to reduce costs by another C$100 million ($81 million) in 2009 by reducing its capacity by up to 3.5 per cent, as well as saving C$40 million ($35 million) in concessions from its suppliers and cutting 2,000 jobs.
“Our objective is to avoid any filing,” said new chief executive Calin Rovinescu. “We need to have labour stability as we put the financing structures in place to avoid a filing. The recession is the common enemy here,” he said. “The common ally is keeping this thing out of a second filing.”
Rovinescu said that the carrier still has “dozens of planes” it can leverage through sale-leasebacks.
Although new to the post, Rovinescu was involved in the airline’s privatisation back in 1988 and its previous bankruptcy restructuring six years ago, as well as helping defend it from a hostile takeover by Onex.
The carrier is currently renegotiating its pensions payments. It has started talks with the unions asking for a one-year moratorium and then looser restrictions for the following five years.
The response from the unions was apparently a complete rejection of the initial offer but they say that they are open to “temporary and balanced” solutions.