Air Canada on Wednesday evening filed with the Ontario Superior Court of Justice their plan to emerge from creditor protection under the Companies Creditor Arrangement Act on September 30, 2004.
The brief summary of the plan from filings and other public statements is that the airline will be recapitalized via a $850m rights offering to secured and unsecured creditors to be guaranteed by Deutsche Bank (to constitute approx. 42.06% of the equity in the new corporation) plus a capital investment of $250m to be provided by Cerberus Investment (to constitute approx. 9.16% of the equity in the new corporation). Short term exit financing loan will be provided by GE
Capital. The airline will emerge with ~$2 billion in unrestricted cash.
The company sees an annual capacity increase of 4% to YE2004 and 1% to YE2005. Total revenues are projected to increase 6% to YE2004 and 1% to YE2005. Whereas unit revenues are projected to remain flat, cost savings and efficiencies show a projected improvement in EBITDAR of 64% to YE2004 and 47% to YE2005.
Operationally, the airline will see the termination of its ZIP subsidiary by September 2004 and the incorporation of those operations into mainline. The Boeing 737-200s that constitute ZIP's fleet shall be removed from service entirely by December 2004. All remaining Boeing 747-400 aircraft and 1 additional Boeing 767-200 will also be removed from service by October 2004. Two Airbus 340-500 aircraft will be introduced into the fleet in 2004. Jazz will see the removal of 7 BAe146 aircraft and 3 DHC-8-100 aircraft from its fleet. Jazz will be converted from a wholly owned subsidiary to a limited partnership within the new corporate structure.
In 2005, Air Canada will see the delivery of the first 2 of an ultimate 44 Embraer 190 aircraft for mainline as well as 15 Canadair CRJ-700 regional jets for Jazz. Air Canada will also begin the process of transferring 25 Canadair CRJ-200 regional jets from Air Canada to Jazz to be completed in 2006. The remaining BAe146 aircraft will also be removed from the Jazz fleet in early 2005. Mainline Airbus 320/Airbus 319 fleet will be reduced by 3/0 airframes in 2005, 2/2 airframes in 2006 and 5/0 airframes in 2007 as aircraft are returned to lessor at the termination of lease period.
Total fleet projections show Air Canada/Jazz to operate 199/93 aircraft at YE2004, 193/111 aircraft at YE2005, 183/131 aircraft at YE2006 and 200/125 aircraft at YE2007.
Air Canada Cargo and Aeroplan will both be incorporated as limited partnerships under the new parent corporate structure.
Passenger revenues are currently accrued in the ratio of 39% Domestic, 25% Transborder, 16% Transatlantic, 10% Transpacific and 10% from other operations. Future growth is expected to be seen in Latin American operations as well as in markets with a high volume VFR traffic segment. The airline will continue to maintain and operate hubs in Toronto, Montreal and Vancouver.
The complete document (426 pages, 11.6 MB
PDF file) can be downloaded from here
[Edited 2004-07-01 07:39:44]
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada