Air Canada 1988 - Filed for Bankruptcy on April 1, 2003

Air Canada 1988 - Filed for Bankruptcy on April 1, 2003

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Air Canada 1988 - Filed for Bankruptcy on April 1, 2003
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Beautifully engraved Specimen Certificate from Air Canada printed in 1988. This historic document was printed by the Canadian Banknote Company and has vignettes of airplanes, a crew and a jet engine. This item has the printed signatures of the company's officers is over 12 years old. This Certificate was printed at the time of their Initial Public Offering in 1988. Air Canada to Restructure Under CCAA - Business as usual for airline and subsidiaries; all operations and customer programs, including Aeroplan to continue without interruption - $1.05 Billion (CDN) DIP Financing arranged from General Electric Capital Canada Inc. - New holding company to be created for Air Canada family of companies MONTREAL, April 1 /CNW Telbec/ - Air Canada announced today that it has filed for protection under the Companies' Creditors Arrangement Act (CCAA) in order to facilitate its operational, commercial, financial and corporate restructuring. The success of this massive transformation is dependent on fundamental labour cost restructuring with amendments to collective agreements, work rules and wages. The CCAA process will allow Air Canada to restructure its balance sheet and costs to complete its transformation into a leaner, more efficient, lower cost airline through savings obtained mainly from aircraft lessors, lenders, bondholders and labour groups. "Clearly, while not our preferred course of action, a CCAA filing is necessary to allow Air Canada to make the required changes to compete effectively and profitably in a changed environment," said Robert Milton, President and Chief Executive Officer. "Air Canada's customers around the world can continue booking with confidence that their travel plans will not be disrupted. It has been repeatedly demonstrated that the action we have taken today to restructure will not create a disruption to service nor should it impact in any way our commitment to safety and customer service - this has been demonstrated by US Airways and United Airlines in recent months. Aeroplan members will have continued access to the benefits associated with our frequent flyer program throughout the restructuring process and beyond. Employees, upon whom we depend upon to continue delivering the safe and reliable customer service Air Canada is renowned for around the world, will continue to be paid on their regular payroll schedule. Suppliers will be paid in the ordinary course for goods and services provided going forward after the filing date. "While we were able to generate in excess of $1 billion in liquidity through the DIP facility to finance our restructuring and transformation, in view of falling revenues as a result of world events it would be irresponsible to continue without a process in place to bring costs in line with the new environment. I stress that this is not just about restructuring our balance sheet - this is about restructuring our operational costs, including labour and fleet; restructuring commercially to better meet the needs of our customers and restructuring the corporation to better focus on the development of stand-alone businesses. The business model is broken and it must be fixed without burning any more furniture. Air Canada and our people need to embrace a culture change and a new way of doing business," said Milton. Filing of Petition Air Canada obtained today an order from the Supreme Court of Ontario providing creditor protection under the Companies' Creditors Arrangement Act (CCAA). The company is also making a concurrent petition under section 304 of the U.S. Bankruptcy Code. The filing includes Air Canada (including all of its divisions such as Air Canada Technical Services), Air Canada Jazz, ZIP Air Inc. and Air Canada Capital. Aeroplan, Air Canada Vacations (ACV) and Destina are not included and these three subsidiaries will continue dealing with their creditors on a normal basis. Debtor-In- Possession (DIP) Financing In conjunction with its filing the Corporation has arranged for a USD $700 million (or an equivalent amount in Canadian dollars not to exceed $1.05 billion) debtor-in-possession (DIP) secured financing facility from General Electric Capital Canada Inc. The facility will be secured by all of the unencumbered assets of Air Canada, and will be available in two stages. The first tranche is a term loan in the amount of USD $400 million. The remaining USD $300 million will be made available as a revolving term credit facility. The loan will have a term of up to 18 months. In addition to our unrestricted cash on hand of approximately $375 million, the DIP financing will provide adequate liquidity to meet all of the anticipated needs of Air Canada and its operating units to continue normal operations throughout the CCAA process. Exit Financing Air Canada is in discussion with major financial investors with respect to permanent financing upon exit from the restructuring process. The outcome of these discussions is contingent upon a number of factors, including labour cost restructuring and the prevailing Canadian regulatory environment. Onex Corporation has confirmed its intent to proceed with its offer to acquire a 35 per cent interest in Aeroplan from Air Canada and has agreed to a 30-day exclusive negotiating period to restructure the transaction, to close upon the airline's emergence from CCAA. Contributing Factors Over the past three years, airlines around the world have faced a number of significant challenges which have battered the industry. The high tech meltdown starting in 2000, the economic slowdown of 2001, the terrorist attacks of September 11, 2001, the growth of low cost competition, high oil prices and, now, the war in Iraq have all contributed to the situation that Air Canada, and several other airlines, face today. While Air Canada has dealt aggressively with many of these issues and outperformed North American industry peers for the past three years, those achievements are not enough to overcome the significant cost and liquidity challen


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