Air Canada gets $1B in backing

[yycflyguy]

This "loan" will make the government all kinds of revenue. Show me how else you can make 12.75% in today's market.

Well off topic a bit, but since you asked:

http://www.globefund.com/servlet/Page/d ... 2633977694

Price for Stone & Co. Flagship Grwth & Inc. A is currently $2.30 per unit. Monthly dividend payback is $.045 per unit. This equals 1.96% per month return or aproximately 23.5% per annum. Probably wont help AC much, but like I said- you asked.

I got excited and actually checked it.
Fund Price: $2.30 (as at July 31, 2009) 1-day chg: $.0197 0.85% YTD: 8.50%

Pretty good... but not 12.75%

Get a 100M $ loan and don't pay it back is a good return.

You are missing the point that Air Canada wont default the loan. It is a money maker for the government.

[Mrs.Robinson]

Sepia

You are going to tell me that secured creditors have never lost money in bankruptcy ever?

[tonysoprano]

yep, the writing's on the wall. the taxpayer is gonna get screwed on this one. ever wonder what AC pays the government in taxes? oh wait, they probably can't even pay that. right?

[sepia]

Sepia

You are going to tell me that secured creditors have never lost money in bankruptcy ever?

Hard to lose money when you've assigned fire sale prices to the assets that are securing the debts. Anything else you would like a short lesson on?

[Mrs.Robinson]

http://alhambrainvestments.com/blog/200 ... tcy-court/


Well sepia, if secured creditors did not loose money why would they have sue in the above scenario.

How much secured debt (A) does Air Canada versus there assets(B)? Maybe you can teach me.
If A is bigger then B then A , secured creditor will be screwed. Since you know so much you can teach me. I admit, there lots I do not know but I have feeling they have more debt then assets. Didn't they already transfer ownership of a few 777's to GE and are leasing them back.

[sepia]

There were portions of Chrysler's debt that wasn't secured. Almost all of the money that the Ontario government was going to loan was to be unsecured. The creditors to Chrysler were trying to make sure that with the addition of all the new financing they would still have something to secure the debt. If you're trying to compare the massive multi-national bailout of the entire North American auto industry, you might want to look for a better comparator group.

[tonysoprano]

Mrs. R.
There are other assets, ie slots and other types of aircraft. I think your assumption is one that AC WILL default on this loan. The payback schedule begins in 2010 with payments of $30M per quarter and a lump sum of $150M(approx) on the fifth anniversary of this loan. From an employee perspective, and I have to be quite real about this, I think AC can handle this repayment barring another perfect storm. Also consider the fact that half way through the loan period, the 787s will be delivered. Those assets alone can cover all of the remaining term at that time.One more thing, do you honestly believe that GE financing, ACE, Aeroplan and the EDC branch of the Canadian government would stick their necks out if AC can't cover at least most of the loan? Nahh, don't think so.

[KAG]

Air Canada going under would be a huge kick in the balls for the Canadian Aviation industry. We would lose those routes, and the high end jobs a lot of pilots strive for would be lost to foreign carriers.
I would much rather see a Canadian competitor succeed rather then commute to Dubai or Hong Kong to go to work.
Good luck AC.
The rest be careful what you wish for.

[Spokes]

This "loan" will make the government all kinds of revenue. Show me how else you can make 12.75% in today's market.

Well off topic a bit, but since you asked:

http://www.globefund.com/servlet/Page/d ... 2633977694

Price for Stone & Co. Flagship Grwth & Inc. A is currently $2.30 per unit. Monthly dividend payback is $.045 per unit. This equals 1.96% per month return or aproximately 23.5% per annum. Probably wont help AC much, but like I said- you asked.

I got excited and actually checked it.
Fund Price: $2.30 (as at July 31, 2009) 1-day chg: $.0197 0.85% YTD: 8.50%

Pretty good... but not 12.75%

Yes, it is good. 8.5% for half a year is in the neighbourhood of 16% for the year. The actual fund price is down about 5% this year so far, but the return you quoted includes the dividend payout. Also keep in mind, the fund value will increase with time, so as long as you do not sell, the payout will be 23%.

All you have to do is invest some of your home equity, these loans can be had at a very low rate, and the intrest is tax free. By into this (or one of the many like it - I am in 6 different ones) fund and use the dividend to make the loan payment.

Sorry for the highjack, I now return you to your regularly scheduled program....