This is so boring. The Bloomberg article reached into the risk factors section of the MD
&A that was written a month ago, and all businesses are required to express great candor in discussing risks. It's part of the boiler-plate of financial documents in this era of full disclosure. That doesn't mean that the risks are probables... Nor did Bloomberg discuss all risks, for example, a stronger than expected Canadian dollar. They discussed theoretical delays in the fleet restructuring - sure, it's theoretically possible that Embraer could be late delivering the E175 or E190. You have to state that risk. And the discussion of debt is automatic. However, just today, AC
announced a new debt/equity issue and line of credit that actually lowers its interest costs and adds to its cash reserves, bringing them up to the C$2 billion level even after AC
has made progress payments and equity payments on the regional jets delivered and being manufactured.
Of significance, AC
said it still hopes to make its EBITDAR and is taking action to generate additional cost savings/revenues. AC
could miss its EBITDAR but still make money, only less money than it had forecast.
Of significance, the MD
&A was written before Jetsgo went under.
So it's wildly premature, even ridiculous, to take the MD
&A risk analysis and spin that into a money losing year or discussion of a return to creditor protection.
And the reason the stock is off today is just as obvious: the issuance of new shares always dilutes everyone else's holdings.
Think of it another way. A consortium of leading Canadian financial institutions today entered into a pair of transactions to give AC
a combination C$1 billion in new equity and investment grade debt and credit (not junk rates). There aren't two many airlines, certainly not traditional airlines, that can say that.