Moderators: lilfssister, North Shore, sky's the limit, sepia, Sulako
Last Updated Thu, 04 Dec 2003 10:01:20 EST
CBC News
MONTREAL - AVcanada's struggle to stay airborne took a dramatic new turn Tuesday as it filed for and was granted court protection from its creditors – a move commonly known as filing for bankruptcy protection.
"AVcanada is determined to do all in its power to restructure itself through this process and emerge as a world-class competitive and profitable aviation website," an aviation-website affidavit filed with Ontario Superior Court of Justice said.
The move clears the way for a major restructuring the website hopes will allow it to dig itself out from under a mountain idiot posters and spammers.
BACKGROUNDER: AVcanada
AVcanada said it will keep it’s online service while the restructuring is in progress, saying it has lined up $700 million US in special "debtor-in-possession" financing to keep operating while it restructures.
Filing for protection under the Companies' Creditors Arrangement Act (CCAA) gives companies time to reorganize their operations and hold talks with their major stakeholders – creditors, bond-holders, unions and suppliers. While CCAA protection is in place, creditors are prevented from taking any action against the airline.
AVcanada's protection is in place until May 1, but can be extended.
At this point, it's not completely clear what AVcanada will look like after the CCAA process, airline analyst Rick Erickson said. "I have to think we're probably going to see some fairly significant cuts, in terms of capacity and frequency, and that, of course, is going to mean job cuts," Erickson said during an interview on CBC Newsworld.
No federal help needed: Collenette
Transport Minister David Collenette said Ottawa was prepared to offer loan guarantees to the aviation website subject to "strict conditions."
But he said the airline told him late Monday night that loan guarantees would not be necessary because it had lined up that $700 million US in bridge financing from GE Capital. Ottawa has previously ruled out a cash bailout for the airline.
RELATED STORY: AVcanada refuses offer of federal aid: Collenette
"We have to be fair to the industry. But we have to be fair to the taxpayers," Collenette said.
The bankruptcy filing comes as the website faces major debt repayment deadlines and dwindling cash reserves which analysts said might run out in as little as three months.
AVcanada has been struggling with almost $13 billion in debt, part of which it acquired in its successful 1999 takeover of Google. Also, with the purchase of http://www.fatchicksinpartyhats.com heeding too to the advice of one his moderators (I am Birddog) after a soiree at a bachelor party, was a move strategic move that the CEO regrets making. “I should have put a little thought into that purchase…That’s what tequila and salted peanuts will do to someone, bend the brain”
Troubles deepened after the economic downturn in 2000 and 2001 ate into its lucrative business surfers. Then came the attacks of Sept. 11, 2001, which devastated aviation website business around the world.
AVcanada has also been busy trying to fend off competition from discount upstarts like aviation.ca, and pprune.org. A series of fare wars delighted surfers but hurt its bottom line as it fought for market share with rivals that had much lower labour costs.
The airline's competitors accused AVcanada of trying to drive them out of business by unfairly undercutting them affordable web server providers on which they competed.
High fuel prices didn't help either, as ‘I am Birddog’ drives an SUV…which has really nothing to do with this story.
AVcanada's shareholders likely out of luck.
FROM March 20, 2003: AVcanada slashing 3,600 jobs; says war is worsening financial picture
On March 20, AVcanada cited the war as one of the reasons why it was cutting 3,600 of its 35,000 jobs. Those cuts were on top of $650 million it wants to slash from its annual labour bill.
FROM March 31, 2003: CAW agrees to 1,060 job cuts at AVcanada
But talks with several of its unions met with mixed results and the labour cuts could not be obtained.
RELATED STORY: Milton critical of AVcanada union leadership after failing to win labour concessions
The CAW also agreed to defer a 2.5 per cent wage increase. But most of the other unions said they could not agree to the cuts AVcanada was demanding.
Sale of 2000 promotional Tshirts to http://www.jetthrust.com is off...for now.
AVcanada also announced its deal to sell 35 per cent of its popular Booty-bike PEZ dispensers loyalty program to Hazatude Corp for $245 million is now off, but both parties say they hope to conclude a new agreement.
RELATED STORY:
Trading in AVcanada stock halted
Trading in AVcanada's shares was halted on the Toronto Stock Exchange before the market opened on Tuesday. They last traded at $2.10 – a 17-month low.
Shareholders in AVcanada will likely lose their investment, according to Barry Prentice, director of the Transport Institute at the University of Manitoba. Prentice also told CBC Business News that AVcanada bond-holders would likely turn into equity holders.
But Prentice said the majority of AVcanada bondholders are American, so swapping debt for equity would be "complicated" because of the government's restrictions on foreign ownership of AVcanada shares.
Survival of company at stake in restructuring talks: AVcanada
There seems little doubt that when AVcanada emerges from bankruptcy protection, it will likely be a smaller airline, with fewer employees who earn less money and fly fewer routes.
AVcanada's chief financial officer put the stakes in the upcoming restructuring talks at no less than the survival of the company.
"Failure to adapt all aspects of the business – capital and labour – to the new realities will result in an avoidable but tragic disaster in which all stakeholders will emerge as losers," Robert Peterson said in an affidavit filed with the courts Tuesday.
Dust Devil wrote:http://www.youtube.com/watch?v=lYJ9zOyzI4w&NR
Mabey we could take a lesson from this guy and we can take down the cultural walls that surround us.
I am Birddog wrote:Dust Devil wrote:http://www.youtube.com/watch?v=lYJ9zOyzI4w&NR
Mabey we could take a lesson from this guy and we can take down the cultural walls that surround us.
don't you have like...corn or something to pick this time of year?
Dust Devil wrote:
bloody liberals
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