New Air Canada shares gaining early altitude

[Blastor]

New Air Canada shares gaining early altitude

By Brent Jang
Tuesday, September 21, 2004 - Page B16


Don't laugh, but new Air Canada shares could be a screaming buy, at least in the early going.

Shares in the airline's new parent company, ACE Aviation Holdings Inc., have surged in over-the-counter trading in the United States.

ACE shares last traded hands at $20.21 (U.S.), as some creditors shuffle their holdings before Air Canada emerges from bankruptcy protection on Sept. 30.

ACE stock hasn't traded in the past three sessions, but last Wednesday, 5,000 ACE shares crossed the over-the-counter market for the equivalent of about $26.21 (Canadian) -- a 31-per-cent premium over their $20 face value to creditors.

Now, after being warned repeatedly to steer clear of the beleaguered airline, investors could be forgiven for being skeptical. After all, the old Air Canada stock stopped trading on Aug. 25 for a measly 6 cents a share and are now virtually worthless, unless you happen to own a whack of shares. If you held 11,894 of the old shares, you're entitled to a single, solitary ACE share.

But that was then, and this is ACE -- a new entity with a sharply lower debt load and a new lease on airline life.

The spike in ACE's share price is the first indication that the stock is poised to soar well above its $20 face value when it begins trading on the Toronto Stock Exchange on Oct. 1.

Trading in ACE stock began Sept. 9 in the over-the-counter market, closing at $18.63 (U.S.), or about $24.17 (Canadian), on volume of 59,500 shares. In total, 189,500 shares have traded since Sept. 9.

History tells us that nimble investors, no matter what their long-term views, could post short-term trading gains in ACE.

In March, 2003, US Airways Group Inc. emerged from its first filing for bankruptcy protection, and when its shares began trading on Nasdaq last October, lo and behold, there was a brief but impressive rally.

Air Canada saw its share price temporarily weaken to less than $8 after it acquired Canadian Airlines International Ltd. in early 2000, but then rocket up to a record $21.50 in May that year.

It's unclear whether the feel-good novelty of ACE will quickly wear off, but ACE appears set for takeoff from its base price of $20.

http://www.theglobeandmail.com/

[W5]

Stock to start trading Oct.4:
http://yahoo.reuters.com/financeQuoteCo ... 662_newsml

http://www.newswire.ca/en/releases/arch ... c3198.html