1world
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Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 12:37 pm

globeandmail.com, Thursday, February 14, 2002
Canada 3000 plans hit turbulence

By KEITH McARTHUR
From Friday's Globe and Mail
BREAKING NEWS


Efforts to revive Canada 3000 may not get off the ground because potential
investors are worried about Air Canada's plans to expand in the discount market.

Insiders say investors were willing to put up the $75-million in required
start-up capital until Air Canada president and chief executive officer Robert
Milton said last week that he wants Air Canada to become more of a discount
airline.

"That sort of did a lot of damage to the whole process," said Ajay Virmani,
president and chief executive officer of Canada 3000 Cargo Inc., who has said he
wants to invest between $2-million and $10-million in the new carrier.

"I'm a little more of a risk-taker . . ." Mr. Virmani said. "But investors who
are not industry-related are a little bit more skeptical. The biggest fear is
that Air Canada hasn't let anybody survive in this country ever, so why would
they let this one survive?"

Potential investors are worried that Montreal-based Air Canada will continue to
aggressively expand its discount brand Tango, which is aimed at the lower-cost
side of the market, just like the new Canada 3000.

Canada 3000 Inc. of Toronto ceased operations and went bankrupt in November,
stranding an estimated 50,000 passengers as far away as India and Australia.

Angus Kinnear, former president of Canada 3000, has been working on plans to
launch a new carrier using employees and equipment from the failed company and
possibly the Canada 3000 brand name.

The new airline, which goes by the name NewCo, was to start selling tickets in
April to launch service in late May to nine Canadian cities using 10 Airbus
A319s and A320s.

Mr. Virmani said there is a still a good chance that NewCo will get off the
ground, but he said it might be hard to make its target launch date.

"It might be pushed back a bit," Mr. Virmani said. "We're still hoping for May
23, but it's a $75-million investment, give or take, and people are very nervous
about investing their money when they don't know what the rules of the game are.
And I don't blame them, actually."

Mr. Virmani said NewCo officials have been working the phones to try to
persuade investors to stick with the proposed carrier.

Mr. Kinnear did not return calls yesterday. But another former Canada 3000
executive said he is still hoping for a May 23 launch.

"We have a number of investors that we have to manage to put together into a
group that would actually work together," said Don Kennedy, former chief
financial officer of Canada 3000.

In a conference call last week with reporters and analysts, Mr. Milton said Air
Canada's traditional business model has been unable to generate sustainable
profit, unlike the low-cost model pioneered by Dallas-based Southwest Airlines
Co. and adopted in Canada by Calgary-based WestJet Airlines Ltd.

Mr. Milton said he wants Air Canada's domestic product to become more like a
discount carrier. By the summer, Tango will represent 10 per cent of Air
Canada's domestic capacity.

Michel Leblanc, former chairman of Royal Aviation Inc., has also been working
on plans to get his airline back in the skies. Royal was acquired by Canada 3000
before it went bankrupt.

Mr. Leblanc said yesterday that plans are progressing for his new airline. He
said he's not concerned about Air Canada's discount efforts: "I think that's pie
in the sky. You can't be a discount carrier with a high cost structure. That
doesn't happen."

Mr. Leblanc would not say whether he has been able to line up any investors for
his proposed airline.

A former associate said plans for the new Royal are facing the same challenges
as Canada 3000 when it comes to raising capital.

Roland Blais, Royal's former chief financial officer, said investors are
concerned about whether they will be protected from Air Canada's discount brand
Tango.

Mr. Blais, who is not involved with the new Royal, said that if Tango's wings
are clipped, both of the proposed airlines will get off the ground. Otherwise,
neither will launch.

The federal Competition Bureau said it was about to ground Tango for alleged
anti-competitive behaviour when Canada 3000 failed in November. Air Canada said
it did nothing improper with Tango. The dominant carrier said it has only used
the discount brand to match competitors' prices and not to undercut them.

Because the new Canada 3000 would be incorporated as a new company, it would be
insulated from the debts and contracts of the previous Canada 3000. The company
would have to buy any assets and the brand name from Canada 3000's trustee in
bankruptcy.




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Dash8King
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RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 12:50 pm

I thought they were going to be a charter company again?
 
fallingeese
Posts: 2031
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RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 12:51 pm

Nope, scheduled carrier. Any idea what the 9 cities are to be?
Mark McWhirter...Contrails Photography
 
AirCanadaMan
Posts: 458
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RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 12:59 pm

Pure guesses here, however logical.

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tristar2000
Posts: 259
Joined: Mon Dec 11, 2000 8:18 am

RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 1:04 pm

With Royal planning to come back also, and Westjet becoming stronger by the minute, I don't see how Canada3000 is going to get off the ground again.

Personnally, I think they should change name, because with the number of passengers they left stranded when they went bankrupt, people are going to remember!

 Smile
 
Dash8King
Posts: 2657
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RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 1:09 pm

Yeah I would change the name, the general public aren't going to know that newco is being run by the same company, CANADA3000 just screams it.
 
captaingomes
Posts: 6251
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RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 1:18 pm

Nah, let them come back under Canada 3000. I want the money they owe me back! And I don't care what they say, it will be easier to sue them under the name of Canada 3000 than another name. hehehe. That's the only reason I want to see them return, just to get paid.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
slawko
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RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 1:39 pm

I agree with Captaingomes, let them come back as C3, then they can hire all of those idiot FA's back who think that ANgUS is god, the rest of us sane people can sue them for all the money that they owe all of us, employees and passengers!

I cant say that I will loose any sleep over ANgUS's second failure in aviation...infact I will probably sleep better knowing that his plans the screw with the industry again have failed!
"Clive Beddoe says he favours competition, but his actions do not support that idea." Robert Milton - CEO Air Canada
 
tristar2000
Posts: 259
Joined: Mon Dec 11, 2000 8:18 am

RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 1:54 pm

That's another interesting way to look at things I guess... hehehe

In any case, Sale and Pelletier won the Gold.  Big thumbs up
 
1world
Topic Author
Posts: 198
Joined: Mon Jan 28, 2002 9:15 am

RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 2:29 pm

The most interesting part of this article is that C3 needs help to stop Tango in order to start up but Michel Leblanc isn't really worried about it.

The past is the past and now if you want to start an airline you will have to compete with whats out their - Tango.

I am in no way saying that it won't be difficult but that you have to adjust to the market in order to get some market share.

Royal was always a good name and hope it would return but it seems that it will not.

ROYAL 2 all the way.
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ywg777
Posts: 1240
Joined: Wed Oct 13, 1999 9:40 am

RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 2:37 pm

I hope C3 and Royal take the skies. AC can't monoplise the skies in this country. I am sure you are right on the 9 cities Air Canada man. Those were actually my predictions as well. Here in YWG we have plenty of room to accomidate both airlines if they go through.
YWG777
 
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RE: Canada 3000 Plans Hit Turbulence

Fri Feb 15, 2002 11:38 pm

So, let me get this straight. Robert Milton looks upon Air Canada as being the nations flag carrier, yet his wish is to transform Air Canada into more of a discount airline? Oh yeah, the pride and joy of Canada...........
Air Costco, proudly flying the polyester Maple Leaf.

Don't get me wrong, I'm all for cost effective-cutting, route slashing, etc, as we all know Air Canada is a bloated mess, But......let's at least retain SOME class and finesse, especially given the fact AC is performing on the "world stage".

Will Robert Milton PLEASE find himself in a rapid decompression!

Canadi>nBoy
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captaingomes
Posts: 6251
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RE: Canada 3000 Plans Hit Turbulence

Sat Feb 16, 2002 1:32 am

Canadi>nBoy, you crack me up! While I wonder what you've been smoking once in a while, I do agree with your posts! hehehe.

I think that we all, and especially Canadi>nBoy should donate all the stuff we have, such as blankets, silverwear, trays, and anything else we've "accumulated" over the years from airplanes, and donate them to the first airline with a proper plan to come into the market and provide a meaninful service. Don't you agree with me Canadi>nBoy? This will surely decrease the startup costs. So there will be multicolour blankets from different airlines! And trays and silverwear from all over the world. Hey, the airline will be "world class".

Well, that was just a thought. I'd like to see one of these goofs come back, especially Leblanc, but still want Kinnear to take a shot at it, so I can sue!
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
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yyz717
Posts: 15689
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RE: Canada 3000 Plans Hit Turbulence

Sat Feb 16, 2002 1:19 pm

Which bankers in their right minds would lend ANgUS any money for a new airline??? He is a FAILED airline manager.

Ah jeez.....I'm forgetting. Canadian bankers lent $ to Argentina & Enron.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
BWIA330
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RE: Canada 3000 Plans Hit Turbulence

Sat Feb 16, 2002 3:19 pm

Hey CaptainGomes,

Sorry to break the news to ya but you cannot sue an airline that has filed chapter 11 bankruptcy protection. Even if Canada 3000 comes back as Canada 3000, you cannot sue them. They filed chapter 11 bankruptcy with their trustee Deloite and Touche, but now the case has been handed over to Price WaterHouse Coopers.

Best Regards,

BWIA330
 
slawko
Posts: 3742
Joined: Tue May 25, 1999 7:40 am

RE: Canada 3000 Plans Hit Turbulence

Sun Feb 17, 2002 12:13 am

BWIA330 you need to get your facts straight....you are right you can not sue a company which has filed for Bankruptcy protection...BUT Canada 3000 filed for Chapter 11 protection, but then a day later they declared bankruptcy. Chapter 11 status does not apply because they did declar bankruptcy, what chapter 11 is supposed to do is give a company 30 days protection from their creditors in order to restructure, with the intention of coninuing their business after that 30 day period. C3 had no plan to do that, they filed for chapter 11 and then the next day they declared bankruptcy, and shut their doors. Angus says that he is starting Newco as a new entity, but if he plans on using C3 airplanes, facilities, and equipment, not to mention the same company name, he CAN expect more then one class action against the new company, and I know that lawyers have already been approached for that reason....
"Clive Beddoe says he favours competition, but his actions do not support that idea." Robert Milton - CEO Air Canada
 
layitontheline
Posts: 85
Joined: Mon Jan 28, 2002 11:30 pm

RE: Canada 3000 Plans Hit Turbulence

Sun Feb 17, 2002 2:33 am

I would love to see Royal Airlines take to the sky's again but I am becoming more and more doubtfull. I wish that we could get some concrete information instead of just rumours. Royal Airlines was a very successfull charter airline at one point. I wish that Michel Leblanc would of just stayed charter. If he did, Royal Airlines in all likely hood would of still been flying, they had a 10yr contract with Signature Vacations which is Canada's largest tour company. They also offered a inflight service that could not be compared to any other airline in Canada. Yes, there were delays, and yes the seat pitch was brutual but these things should be expected in a charter airline. The crews were very friendly and enjoyed having fun with the passengers and making them feel welcome. YES, it would be very nice to see them back and I wish them the best of luck!
 
captaingomes
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Joined: Tue Feb 13, 2001 1:33 am

RE: Canada 3000 Plans Hit Turbulence

Sun Feb 17, 2002 6:25 am

Layitontheline, I totally agree with you! Had Royal continued to focus on what they were doing, and taken it easy, but worked to improve their on time performance, and presumably their maintenance, they'd be around for a long time. They had excellent crews like you said, and things were improving immensely. In fact, I remember the number of complaints at Royal in 2000 was comparable to Canada 3000 when comparing company size. There was always this perception that Canada 3000 was better operationally, but passenger complaints didn't seem to reflect this. So much for elitism!

Getting to BWIA330, Slawko is correct. Also, there is no Chapter 11 in Canada, you're confusing that with the U.S. But the ideas are the same. The company is bankrupt, and we can sue now. But more importantly, they want to start over again, and I don't care if it's a "new" company. That's bullcrap, because it's picking up the pieces of the old company by the same people and disregarding past debts. Screw that! Ya, let's start a "new" company with whatever we can milk from the past company and forget about anything that was owed to others. At the same time, what we had is much cheapter now because of the state of the industry. That's rude, inconsiderate and disgusting. I'll see you in court Kinnear! I NEED my money just like you need a man!
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
1world
Topic Author
Posts: 198
Joined: Mon Jan 28, 2002 9:15 am

RE: Canada 3000 Plans Hit Turbulence

Sun Feb 17, 2002 9:21 am

Hey Capt,

Royal 2 is coming back soon. I don't really know what the name will be but it will be in the air by april. People are being hired and things are looking good.

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Marrrty
Posts: 40
Joined: Wed Nov 21, 2001 9:38 am

RE: Canada 3000 Plans Hit Turbulence

Sun Feb 17, 2002 9:29 am

Nice to see Airtransam/Player4keeps/DrHo, etc. come back as Layitontheline.
 
captaingomes
Posts: 6251
Joined: Tue Feb 13, 2001 1:33 am

RE: Canada 3000 Plans Hit Turbulence

Sun Feb 17, 2002 9:33 am

LOL Marrrty, you've been right before, but I believe you're wrong this time. The spelling and grammar are too good!

Anways, 1world, I'm sure I've worked with you before, but don't know for sure! If so, email me some time. So you heard that people are getting hired??? Wow, anything else that you might know? I'm getting very interested!  Smile Thanks.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
Marrrty
Posts: 40
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RE: Canada 3000 Plans Hit Turbulence

Sun Feb 17, 2002 9:43 am

Captaingomes,

You can't tell me the spelling is good in the post above....

 
captaingomes
Posts: 6251
Joined: Tue Feb 13, 2001 1:33 am

RE: Canada 3000 Plans Hit Turbulence

Sun Feb 17, 2002 10:29 am

I would love to see Royal Airlines take to the SKY'S again

Royal Airlines was a very SUCCESSFULL charter airline.

Yes, there were delays, and yes the seat pitch was BRUTUAL


Ok ok ok, you're right Marrrty, I did find the above spelling errors and a few more grammatical errors, but they were a great improvement over what we are accustomed to with Mr. Air Transam/Dr. Ho/Shakespere. To be honest, I didn't notice them while skimming through his post the first time, and that's great! Maybe he's been in school lately? But I do look forward to his posts in the next little while! Always good for a laugh. hehehe.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster

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