Hi Flygirl, I too have to grin seeing your posting, for once I was a short bit ahead of the other industry watchers.
On the topic of CP under creditor protection, I would think it would be a bit disturbing for CP employees, but at least there's commitments of job security the way this works out.
Anyways, to go into a little discussion on these creditors. I guess this is better described as speculative than opinionated, but here goes:
First of all, I think it should be noted that these creditors are partly secured, but not completely. Also, just my impression, but I think the 3 creditors are basically bankers or bond holders, not aviation companies. I think the relevance of this is that the "future considerations" aren't worth anything to them, as they're not ILFC or GECAS so they don't really care about future financing deals in airlines. They are just bondholders and they want their money. To be honest, however, I personally don't have much sympathy for them. They bought high-risk bonds and got high interest from them, but that's because of the risk that this would happen.
So basically what happened? I could be wrong, but I think it's a matter of playing chicken. I think these bond holders figured Brotto wouldn't invoke CCAA, and hoped to get their money. They maybe figured they could grab the cash and Brotto quietly wouldn't call them on it, he'd just let those few creditors demand payment and wouldn't risk any fallout coming due to CCAA filings. I wonder, though, how they figured on getting $186 million out of CP, when the company has less than $100 million in working capital right now? Maybe they just wanted the collateral to liquidate? It is possible they figured they could make more by grabbing collateral than by accepting any reasonable payment. Or maybe the figured they could get it out of AC coffers? Whatever it was, Brotto and Carty obviously didn't hesitate to pull out CCAA. In fact, when you think about the fact that CCAA was filed only a very very short time after the creditors filed to take their collateral, then I think it's obvious CP was very prepared with paperwork and legal proceedings were ready to go.
Anyways, the National Post today reported that these creditors held as collateral "six spare engines, trucks, baggage and cargo handling equipment, de-icing trucks, power carts, forklifts, trailers for baggage and pallets, delivery vehicles, jet fuel and catering supplies. The notes are also secured by operational centres in Vancouver and Calgary, and by three aircraft hangars in Toronto. The group is a substantial unsecured creditor of Canadian Regional." This almost makes me laugh a bit, when you think about each item they obviously aren't thinking about who they can sell it to. Just because they claim a book value of more than they are owed, I can't see them getting their money out of this stuff better than just accepting their 92% in cash. I'll just touch on each item mentioned.
The spare engines are not the CFM56's as I believe CFM holds them as collateral. The idea that they are DC-10 spares would be somewhat humourous, don't you think? More likely, though, they are either 737 or 747/767 spares. As far as JT8D engines go, a lot of the 737 fleet will be replaced fairly soon, I think, and for other aircraft the JT8D engines are quite commonly availiable. I can't see the JT8D's as being much of a threat if they take them.
Ground equiptment would be interesting to see them try to liquidate. It would reduce the value very much to have to go to the expense of exporting or even just moving the stuff within Canada, and domestically although a few other contractors might be interested, the only operator with significant need for the stuff would be AC. And even if AC did buy some of it back, they would probably pay low prices and wouldn't even buy all of it because they already have a good portion of what they will need for AC/CP operations. The creditors could end up being stuck with ground equipment without a buyer, which should scare them a little, I think.
Jet fuel, well, let's see. They can't touch it for under CCAA for a while now, and I'll bet CP's fuel will mostly be burned up in the next few weeks with any reserves being hedged through AC channels, just to foil these guys.
Now as far as real estate. The YYZ hangars are due to be torn down to make way for the new terminal (makes me kind of laugh at the prospect...). The YYC hangars aren't really critical to operations, but would be quite saleable. They are from the PWA days and really are set up to handle all the operations of a smaller airline, so maybe just building new regional or line hangars at YYC would suit AC/CP better than keeping the existing building anyways. YYC hangars would, I think, generate some interest from WestJet and Spar, however. The YVR base is pretty big and probably couldn't just be let go like the others. But it worse came to worse, they could consolidate into AC's buildings at YVR and lease out some other space elsewhere as well. And in the end, AC might be able to buy the YVR base back for less money the creditors would like, because who else would want such a big facility at YVR?
Also, any shares of Canadian Regional (I think that was collateral, too) would only be worthwhile if they could find a buyer. Basically all this collateral they claim is wonderful, but they could really be risking being saddled with a bunch of stuff while AC/CP simply replace it with other resources at their disposal.
Well, there's some collected thoughts on these creditors actions. Anything to add, Flygirl (or anyone else for that matter)?
One more thing. You're based out of YYZ, right? Just curious if you could comment on how many of the CP aircraft are now painted in Proud Wings or the transitional colours. For the last few weeks here in Winnipeg I would say less than 1/4 of the CP aircraft I've seen have been in old paint, but that's just randomly when I happen to be in the right place and am looking to the sky and see that, and have been surprised at how fast they've been painting. But maybe that's just random selections being unrepresentative, so I was wondering if you could comment on them? Also, are the transitional aircraft being fitted with different interiors? Thanks.