Hope it gets better.Attention Business Editors:
Trinity will not seek extension of Air Canada Investment Agreement
TORONTO, April 2 /CNW/ - Trinity Time Investments Limited announced today
that it will not seek extension of its Investment Agreement with Air Canada
which expires on 30th April, and that it has released Air Canada from its
exclusivity obligations under the Agreement with effect from today. Trinity
has also confirmed to General Electric Capital Corporation and Deutsche Bank
Securities Inc. that it will not seek to extend agreements with them which
would expire concurrently.
Harold Gordon, a director of Trinity, said:
"We are of course disappointed in this outcome. We have decided that we
will not seek extension of the Investment Agreement in the present
circumstances in light of several factors.
"Firstly, it has become apparent from the review conducted with our
advisers and partners, Goldman Sachs, that despite industry leading management
initiatives under Robert Milton and much good progress in the CCAA re-
structuring, Air Canada's financial performance is somewhat weaker than had
been expected under plans previously reviewed by us during the equity
solicitation process. In particular, labour cost and productivity savings
promised by Air Canada's unions under Air Canada's collective agreements are
not being fully achieved, while at the same time yields and margins remain
under pressure and fuel costs are at all time highs. Air Canada's earnings
outlook is adverse to our expectations, reflecting among other things a more
intense competitive environment generally and a higher level of domestic
capacity and competition than expected.
"More importantly, Trinity believes that in the current industry
environment, Air Canada's organized labour structures impair its ability to
succeed. We applaud the recent initiative of Air Canada's management and
District 140 of the IAMAW relative to pension structure. This represents a
meaningful step away from the confrontational approach adopted by Air Canada's
union leaders to date. Regretfully, this step is not reflective of the
positions taken by union leaders representing more than two-thirds of Air
Canada's employees. We have concluded from this that without a change in the
manner in which Air Canada's employees are organized and their interests
represented, Air Canada will not likely achieve a sufficient fresh start to
prosper and grow in the competitive environment which it faces after emerging
from CCAA protection. We deeply respect the commitment and professionalism of
Air Canada's management and its employees. We sincerely hope they will be able
to complete the re-structuring and do not rule out a continued participation
if circumstances change sufficiently."
For further information: Trinity Time Investments
