The Rape Continues...

[W5]

This the one you were looking for?:

http://watch.bnn.ca/trading-day/Decembe ... clip119165

[yyz monkey]

"Air Canada, in my view, is not a viable airline for the long run because it spun off the commuter unit, the maintenance unit and the mileage point unit. Those were the most profitable units within Air Canada."

Thank you Uncle Robbie..

[twinpratts]

[Four1oh]

didn't we have some semblance of this discussion only a couple months after CCAA?

[aroundthewing]

"Air Canada, in my view, is not a viable airline for the long run because it spun off the commuter unit, the maintenance unit and the mileage point unit. Those were the most profitable units within Air Canada."

Thank you Uncle Robbie..

Remember that song...the one Milton wrote for The Steve Miller Band? What was the name of that tune??

[tonysoprano]

When Swissair went under the governement held the execs resposible. I believe some are still behind bars today. Somehow I don't think that will happen here. Our guys will just take the money and run.

[rigpiggy]

Don't worry, Uncle Miltie, Cousin Monty and the rest will still get there pensions/bonuses. They wouldn't screw the rest of you guys would they?

[tonysoprano]

This really sounds like alot of fun to some. I bet that as the years go by, we'll still be doing this. The never ending saga of the sinking ship. Enjoy.

[Brick Head]

"Air Canada, in my view, is not a viable airline for the long run because it spun off the commuter unit, the maintenance unit and the mileage point unit. Those were the most profitable units within Air Canada."

Clearly that quote makes me wonder if the author really understands AC. Yes true of Aeroplan. ACTS now Aveos profitable? KKR has written its value in the company to zero. Jazz makes money true. Would they though if their contract was industry standard?

It is all about the pension folks.

In AC's Q3 results they project their pension obligations at 456 million for 2009, based on last years valuation on the fund. Projections are that the deficit has now ballooned from 1.15B to 4B.

It is not do able IMO.

ACE, the 75% owner of AC, is sitting their with 824million in the bank from the sale of AC assets. Why hasn't it been distributed to the share holders like everything else? Why have they not rolled them selves into AC yet? Why has AC been so delinquent in raising liquidty levels? Every other carrier in NA has been diligently preparing for the liquidity issue since spring. Why has AC done nothing? Why is AC the worst positioned airline in NA when it comes to liquidity?

They are going to use this crisis to their advantage. My bets are that ACE will withhold money/delay folding itself into AC, until we talk pension reform. The threat will be if you don't......they walk with the cash.

Everyone knows the unions will never give up their pensions easily. It will take a very serious crisis to make it happen. One just fell into ACE's lap and they will make full use of it.

[tonysoprano]

This pension thing has been a thorn at their sides for years. Didn't RM claim that it was the main reason for taking us to CCAA? What do they care? RM, Cerberus and GE will all be gone when the time is right.

[yyz monkey]

until we talk pension reform

Is there any reason we shouldn't be talking about it?

[Brick Head]

What do they care? RM, Cerberus and GE will all be gone when the time is right.

You hit the problem for them straight on Tony. They can't go cause they can't sell us. The time will never come when someone will take on that deficit.

AC is worthless in its present state. The stock reflects that. They didn't get it sold off in time.

Da reason they care? They want more money. We take the hit on getting rid of the deficit. The value of AC goes up. They sell. But us being stubborn little employees, getting that past us without a gun to our head is .........well rather difficult.

YYZ Monkey,

Nope. We must talk about it. We will have to act on it. Although we must be careful not to line their pockets further when swallowing their obligation.

[Brick Head]

Although we must be careful not to line their pockets further when swallowing their obligation.

Just proof read what I wrote. That statement is impossible. The only way they will get nothing out of pension reform is if AC fails. If we agree to pension reform they will make money from it. It is that simple. Ah capitalism at its best. What I meant, but didn't say is, we have to make sure we also benefit from any share holder added value since we will be footing the bill for the value.

IOW WE CAN BE OWNERS TOO

But we won't do the adds

[tonysoprano]

Somehow I think the pension problem will overshadow the salary problem next year. They win again! Actually, to be fair, if something is unsustainable, it has to be changed. We may have to find another way to buy boats and cottages in retirement. Those two acronyms DB and DC will once again be at the forefront. Is this a bad time to talk to Stephen Harper?

[Brick Head]

Somehow I think the pension problem will overshadow the salary problem next year.

I must say I don't like what I am seeing. The above may be way too rosy.

There could be a much more sinister reason ACE has neither dispersed it's nest egg from the sale of AC assets or folded back into AC as of yet

There is a lot of upside for ACE to put AC back into CCAA.

Even in this environment of no credit, ACE has 824million sitting in the bank that could be used for DIPP and exit financing.

Also keep in mind CCAA is a considered a viable business exercise for some of our owners.

It would allow for an:

Attack on employee contracts.
Attack on pensions
Extricate AC from the Jazz CPA
extricate AC from the Aveos contract
Reset the debt
Lessors will likely not go after aircraft in this environment.
There will likely be no competition for AC out the far side of CCAA due the present economic environment.

ACE then IPO's AC when times are better.


Here's hoping rose colored glasses win.

[tonysoprano]

It would take alot of guts on their part, but that's one scenario and I certainly wouldn't put it past them. However, the same guys from the last CCAA circus are still around today. I would suggest that it would be in their best interest to avoid using that one again as it would look pretty bad on them as much as us. We seem to be in a merger or buyout euphoria these days. In my opinion, they will have to try their best to make us look as attractive as possible for a sale and one last quick buck in their pockets before they fly off somewhere else. Whatever happens, it seems a major change is in the works and we'll have to live with it, like it or not.

[Jaques Strappe]

If they are going to attack salaries again, then I am very hopeful that the employees will call their bluff and say " last one out, shut off the lights."

The new business model of " Discount Airlines" has openly displayed that employee salaries are not the crucial make it or break it catalyst that Air Canada claims.

Examples would be Air Tran or Southwest. Some of the highest paid pilots for their type, in the world. Air Canada management however has displayed that they could not make an airline profitable even if all the employees worked for free, yet they truly believe they are worth their record high compensations. How long does it take for employees and shareholders to get poorer and poorer while executives get richer and richer before some figures out why?

While I do believe that a DB pension is a dinosaur, I also believe that the rape continues because we allow it to. It does not matter what we give them on this round, they will simply look for something else on the next, all the while making themselves richer. I hope the unions will talk turkey when it comes to pension reform but also make it very clear that if management has any intention of putting a gun to our heads, then they might as well pull the trigger because we are now numb to their threats and thereby challenge them to shoot the Goose sitting on the proverbial golden pension egg.

The public does not seem to care that Pilots are now making less than TTC drivers and token collectors, nor that without Air Canada, the GTAA and most other airports would feel the strain as Air Canada represents 80% of their business. I think a light needs to be shone on these American Execs running off with money earned from the sale of Canadian assets and now is the time to do it, while the public still has a hate on for all the execs who just ran off with parachutes lined with retirement savings.

There is a possible opportunity here to highlight and put a stop to this corporate theft. The fact that our last quarter results would have shown a profit if not for the direct acts of management, should say something.

[tonysoprano]

Have a quick look at the Globe & Mail buisness section of today. Seems RM wants to please certain shareholders AND boost AC as well. Interesting. I don't think I was too far off in my prediction. Unless RM is blowing smoke again.

[Jaques Strappe]

Hey Tony

I can't seem to find the article. What is the gist of it?

[tonysoprano]

Milton charts final flight path for ACE
CEO would use deal to ease credit crunch at Air Canada; parent company had $824-million in cash at the end of September
Article Comments (8) BRENT JANG

From Tuesday's Globe and Mail

December 9, 2008 at 1:10 AM EST

Robert Milton has battled Ottawa, unions and WestJet Airlines Ltd. over the years, but his latest opponent is bigger than anything he's ever encountered – the global credit crisis.

Earlier this year, before financing for deals dried up, he was exploring potential outside bids for Air Canada [AC.A-T] from private equity players. Now, he's charting a new exit path for Air Canada's parent, throttling down ACE Aviation Holdings Inc. [ACE.A-T] and ending his 16-year career in the Canadian airline business.

Mr. Milton, ACE's chief executive officer, said in an interview that the task of closing the holding company hinges on satisfying three classes of ACE stakeholders.

“For the first time, currently, we're watching a lot of stars start to line up, largely because some of those preferred shareholders, note holders and common shareholders want liquidity, and one thing ACE has is cash,” he said.
Mr. Milton declined to elaborate on ACE's plans, but an industry official said ACE is examining paying out note holders with cash and preferred shareholders with cash and new debt instruments. As well, ACE could distribute its Air Canada shares, along with a cash sweetener, to ACE common shareholders.

ACE currently owns 75 per cent of Air Canada.

New York-based Cerberus Capital Management LP, which helped rescue the airline in 2004, owns 6.55 million ACE preferred shares, or 52 per cent of the outstanding preferred stock. Cerberus and other preferred shareholders such as Morgan Stanley Canada Ltd., Polar Capital Investments and GLG Partners LP intend to stay around to help support Air Canada, which is having trouble obtaining a revolving line of credit from traditional lenders, the industry official said. “Cerberus and others aren't going to just take their cash and run away. They will provide financial support after all the machinations are done,” he said. “This would be a nice solution. All parties are trying to make it work, and want to see a healthy airline at the end.”

Cerberus initially held all ACE preferred stock, but has gradually reduced its holdings. ACE has 34.9 million common shares outstanding valued at more than $92-million, 12.5 million preferred shares worth $305-million and convertible notes valued at $323-million.

“As we look at these final steps, we want to make sure that we do the best possible things that we can,” Mr. Milton said. ACE officials are slated to meet this week.

Analysts had speculated that the holding company would issue new ACE shares in a stock swap with Air Canada shareholders who own a 25-per-cent stake in the airline. While that option remains on the table, a “creative alternative” has emerged that could leave Air Canada as the publicly traded entity, said the official.

Mr. Milton declined comment on what transactions are being considered, but “we're hopefully getting something done. We've been trying to figure out how to get a winning outcome for the common shareholders, the preferred shareholders, the note holders of ACE, and ultimately wind up with a strong Air Canada.”

On the timing for closing ACE for good, Mr. Milton said although there are many moving parts, “we're getting closer. The market conditions have been so difficult and adverse to getting things done. It's been a lot longer than we would have liked. You just have to look at the business news any day over the last nine months and it's pretty easy to understand why this has been a challenge.”

The Boston-born executive joined Air Canada in 1992 as a consultant, became CEO in 1999 and led the airline out of bankruptcy protection in 2004. He stepped down as Air Canada chairman at the start of 2008, but has stayed as head of the holding company, maintaining regular contact with Montie Brewer, who became the airline's CEO four years ago.

Mr. Milton guided the breakup of ACE into separate entities. Last May, ACE sold its remaining interests in regional carrier Jazz Air Income Fund and loyalty program Groupe Aeroplan Inc. ACE retains a 27.8-per-cent stake in Aveos Fleet Performance Inc., formerly Air Canada Technical Services (ACTS).

No longer chairman of Air Canada, Jazz, Aeroplan and ACTS, Mr. Milton said the CEOs are putting their own mark on those respective businesses.

Current valuations on the Toronto Stock Exchange are Aeroplan ($1.6-billion), Air Canada ($198-million) and Jazz ($441-million). ACE also sold a majority stake in ACTS to private equity firms in 2007 for $723-million.

[ivanhoe]

It's almost as if Milton and the BOD are TRYING to put Air Canada back in CCAA. Man , I don't even work there and it makes ME mad...



ACE Aviation cleared to dissolve
BRENT JANG


Wednesday, December 10, 2008

ACE Aviation Holdings Inc. has received a favourable advance tax ruling paving the way for distributing Air Canada shares and cash to ACE common shareholders, a move that could avert a showdown with an activist investor.

Montreal-based ACE, which owns 75 per cent of Air Canada, learned on Monday that the Canada Revenue Agency is in a position to approve ACE's plan to pay out to preferred shareholders, without triggering a potential tax liability of more than $150-million.

On Wednesday, ACE's board of directors met in Toronto to discuss ways to dissolve the holding company, which was created in 2004 after Air Canada emerged from bankruptcy protection.

Earlier in the day, ACE said that one of its largest shareholders asked for a special meeting to oust ACE directors.

ACE's “board of directors has received from West Face Long Term Opportunities Limited Partnership, West Face Long Term Opportunities (USA) Limited Partnership and West Face Long Term Opportunities Master Fund LP a formal requisition for a special meeting of the shareholders of ACE,” the airline holding company said in a statement.

Montreal-based ACE was created in 2004 after Air Canada emerged from bankruptcy protection.

The West Face entities want shareholders “to consider an ordinary resolution to remove from office all of the current directors of ACE” and “set the size of the board of directors of ACE at such number as the shareholders may determine at the meeting,” ACE said.

The holding company said it will examine the request and provide an answer “in due course.”

Robert Milton, ACE's chairman and chief executive officer, said in a recent interview that ACE is in the final stages of winding down operations, keeping in mind the needs of common shareholders, preferred shareholders and note holders.

Greg Boland is CEO of West Face Capital Inc., a Toronto-based institutional investor that controlled 3.9 million ACE class A common shares in early December. Mr. Boland and a West Face entity also owned more than 518,000 ACE class B common shares.

“West Face has recently become concerned about the intentions of ACE management and the current board of directors as to the use of ACE's cash resources and has taken this action to ensure that the board of directors of ACE is sufficiently independent to protect the interests of ACE and its shareholders,” West Face said in a statement Wednesday morning.

Under an investment vehicle called Sunrise Partners, Mr. Boland was one of the financiers behind the restructuring of steel maker Stelco.

ACE has 34.9 million outstanding common shares.

[wallypilot]

Looks like the worst option (from the POV of AC) has happened. 800 million in cash will now be given out to the execs and ACE shareholders. It does seem criminal.

From the Globe & Mail today:

As ACE Aviation Holdings Inc. prepares to shut down after more than four years as Air Canada's parent company, investors have awakened to the realization that the cash-strapped airline won't be inheriting ACE's money.

ACE's board approved the distribution of cash and Air Canada stock to ACE shareholders late Wednesday, giving investors and analysts whiplash Thursday as they watched Air Canada shares plunge to a record low while ACE's stock doubled.

Montreal-based ACE, created in 2004 after the airline emerged from bankruptcy protection, owns 75 per cent of Air Canada.

"ACE threw Air Canada under the bus," said Jacques Kavafian, an analyst at Research Capital Corp. "We're certainly surprised. This is not good for the airline. We thought the best solution would have been for ACE to buy back Air Canada shares and leave the ACE preferred shares and notes alone."

Two industry officials said ACE directors knew that ACE common shareholders were growing anxious about losing control over whatever cash would be left over after accounting for note holders and preferred shareholders. ACE management also canvassed various ACE stakeholders, and there was a frosty reception for buying back Air Canada shares, the officials said.

Activist investor West Face Capital Inc. even couriered a letter to Robert Milton, ACE's chairman and chief executive officer, threatening to turf out the existing directors and install its own board. West Face wanted to ensure that ACE's cash hoard of $811-million — bolstered by a favourable tax ruling on Monday — would be earmarked for note holders, preferred shareholders and common shareholders, leaving Air Canada out in the cold.

see the full article:

http://www.globeinvestor.com/servlet/st ... 1/GIStory/

[tonysoprano]

Why is this such a shock? ACE and RM have always said the shareholders come first. That's business. Now, the ball is in labour's court. How will we deal with this? Probably by accepting reality. At the end of the day, we all just want to go to work and be able to pay our bills. There will be no "lights out". And there will be no effectiveness to a strike because the boys and girls you elected in Ottawa need to get home and WJ just doesn't cut it. We neither have the balls nor the power to get what we want. The dust will settle, pilots will be a little less rich and AC will continue on its 71 year history. Unions will voice their disgust and life will go on. Maybe another CCAA exercise. Snore. If I sound a little resigned it's only because I'm a bit of a history buff. But I'm always happy to be shocked. It sure would be nice to gain back some leverage. I can only hope. Ah well, it sucks to be the only Legacy carrier in the country. The people in Ottawa still have the final say in this company. That's both reassuring and frustrating. In some ways, I sure hope to be proven wrong.

[ourkid2000]

The dust will settle, pilots will be a little less rich and AC will continue on its 71 year history. Unions will voice their disgust and life will go on.

Nahh,

I'll just quit.....most of us can make as a good living working somewhere else. Life is too short to worry about Air Canada. I have no attachment to AC at all.

[tonysoprano]

yah, apparantly you can make more money as a bus driver. But you have have the qualifications Kid. Not so sure you meet the standards. keep the faith brother.