ACE sells part of Aeroplan, Jazz stakes

Brick Head · Post by **Brick Head** » Mon Oct 01, 2007 4:39 pm

http://www.reportonbusiness.com/servlet ... bNews/home

Dockjock · Post by **Dockjock** » Tue Oct 02, 2007 8:26 am

Guessing there won't exactly be a long lineup of buyers for those Jazz units.

Valhalla · Post by **Valhalla** » Tue Oct 02, 2007 9:36 am

unlinke mainline, Jazz actually makes a profit...

tonysoprano · Post by **tonysoprano** » Tue Oct 02, 2007 9:48 am

unlinke mainline, Jazz actually makes a profit...

not that again.....
:smt073

Flightlevels · Post by **Flightlevels** » Tue Oct 02, 2007 9:59 am

ha, knew you couldn't stay away Tony!

tonysoprano · Post by **tonysoprano** » Tue Oct 02, 2007 10:01 am

Oh hey FL. Just passing through. I see things are still the same around here.

Flightlevels · Post by **Flightlevels** » Tue Oct 02, 2007 10:38 am

right on!, hope you bought some of your stock when she was down...sure is on a lift! I cashed out my AC today!

tonysoprano · Post by **tonysoprano** » Tue Oct 02, 2007 11:09 am

Well, I don't have any and to tell you the truth I haven't been paying too much attention to it lately. I guess with the looney at par things are lookin up.

Four1oh · Post by **Four1oh** » Tue Oct 02, 2007 5:58 pm

just when you thought there was nothing left to sell off...:p

Schlem · Post by **Schlem** » Tue Oct 02, 2007 11:07 pm

Gotta do what ever is necessasry to make the ACE numbers look good for the next quarter!

fasteddie · Post by **fasteddie** » Wed Oct 03, 2007 5:51 am

Air Canada parent to sell $750M in stock
Sean Deveau, CanWest News Service; Financial Post
Published: Tuesday, October 02, 2007

http://www.canada.com/nationalpost/fina ... f8&k=67301

The secondary offering is the latest move as ACE whittles down its ownership stake in its mainline Air Canada, Aeroplan, Jazz and maintenance unit ACTS after spinning them off into individual entities to unlock their value following emergence from creditor protection in 2004.

[b][b]Robert Milton, ACE chief executive, told the Financial Post in August that he expects ACE will be completely unwound by the spring of next year, either through distributions, outright sales or share buybacks for its subsidiaries.[/b][/b] All the value unlocked from its subsidiaries, including the proceeds from any sales, would be distributed ACE's shareholders, he said.

[i]Seems that things are happening right on schedule. I think Brickhead explained it the best in his earlier posts. Value will be unlocked and ACE will pay the piper for bankruptcy protection bailouts, then ACE will be unwound.[/i]

Brick Head · Post by **Brick Head** » Wed Oct 03, 2007 6:22 am

ACE NEWS
ACE Aviation Holdings Inc. announces secondary offering of units of Aeroplan Income Fund. ACE Aviation Holdings Inc. yesterday announced that it has entered into an agreement with a group of underwriters to sell an aggregate of 22.0 million trust units (the "Units") of Aeroplan Income Fund at a price of $21.90 per Unit, for gross proceeds of $481.8 million. Aeroplan Income Fund will not receive any of the proceeds from the offering. A preliminary short form prospectus will be filed in each of the provinces and territories of Canada by October 5, 2007. The offering is expected to close on or about October 22, 2007 and is subject to certain conditions including the receipt of all required regulatory approvals. The underwriting syndicate is being led by RBC Capital Markets and CIBC World Markets Inc. Immediately following the offering, ACE Aviation Holdings Inc. will retain 40,285,585 units of Aeroplan Income Fund, representing 20.1 per cent of the 200,000,000 units issued and outstanding.

ACE Aviation Holdings Inc. announces secondary offering of units of Jazz Air Income Fund. ACE Aviation Holdings Inc. also announced that it has entered into an agreement with a group of underwriters to sell an aggregate of 35.5 million trust units (the "Units") of Jazz Air Income Fund at a price of $7.75 per Unit, for gross proceeds of $275.1 million. Jazz Air Income Fund will not receive any of the proceeds from the offering. A preliminary short form prospectus will be filed in each of the provinces and territories of Canada by October 5, 2007. The offering is expected to close on or about October 22, 2007 and is subject to certain conditions including the receipt of all required regulatory approvals. The underwriting syndicate is being led by RBC Capital Markets and CIBC World Markets Inc. Immediately following the offering, ACE Aviation Holdings Inc. will retain 24,726,920 units of Jazz Air Income Fund, representing 20.1 per cent of the 122,865,143 units issued and outstanding.

WF9F · Post by **WF9F** » Wed Oct 03, 2007 9:18 am

Pretty soon their will only be a Commercial agreement with JAZZ to ptovide feed, just like it was years ago. LOU 18 will be gone in 09 and pass priority will change as well, Lots of change coming for everyone. No wonder evryone is leaving for WestJet or anywhere else. The picture at JAZZ is becoming not so good.IMO

Brick Head · Post by **Brick Head** » Wed Oct 03, 2007 9:34 am

tonysoprano wrote:

not that again.....

No kidding...........

:smt073

They are unloading the 2 companies at what they feel is their peak. Aeroplan has done very well. I am a little concerned that Jazz is being unloaded at its present valuation simply because that must mean they have gotten all they can get out of it.

Air Canada is not being unloaded yet, simply because it hasn't peaked in there opinion.

I was about to say start looking for AC to start pushing their shares up. If you remember earlier posts about consolidated numbers. The inaccuracies of trying to determine Air Canada's true costs. Hidden cost that would suddenly, and miraculously correct themselves, driving share prices up just as ACE was about to exit?

Well what do you know. Apparently costs are dropping for no specified reason. Imagine that!

Air Canada Shares Up On View That Costs To Fall

October 3, 2007
Air Canada shares surged on Tuesday, riding an airline industry wave and rising 5.7 percent on expectations that Canada's biggest carrier will enjoy lower costs in the second half of the year.

Air Canada's class A shares rose 79 Canadian cents to CAD$14.59 on the Toronto Stock Exchange. Nearly a million shares changed hands, almost five times the three month average.

It was the third straight day of gains for Air Canada, and comes amid expectations that its expenses are moderating.

"The expectation is that (costs in) the second half of their year will be lower than the first half," said Cam Doerksen, an analyst at Versant Partners. "That's improved sentiment on the stock."

The rising share price also reflected strengthening airline stocks in the United States and elsewhere.

"If you look at all the airlines, around the world they are up," said Ben Cherniavsky, an analyst at Raymond James. "We've got a sector move here."

Cherniavsky pointed to AMR, parent of American Airlines, whose New York Stock Exchange shares were up nearly 4 percent, and Continental Airlines, which was also up 4 percent in afternoon trading.

ACE Aviation, said on Monday it would sell off partial stakes in a regional airline and the trust that controls Air Canada's frequent-flyer program to raise CAD$756.9 million. Analysts said the divestiture had little effect on the airline's shares.

fasteddie · Post by **fasteddie** » Wed Oct 03, 2007 9:39 am

WF9F,

I believe you are correct that the relationship between Jazz and Air Canada will only be that of a service provider, however I don't think the future is bad for Jazz.

The downside is that jazz will have to fight to keep the CPA year after year. The upside is that Jazz is well positioned to do this with it's existing infrastructure, experience and tacit knowledge of the operation.

Keen management could do great things with Jazz's great brand and product. We'll see if they earn their bonuses in the coming years.

As far as the pass benefits go. That works two ways, remember Jazz has more domestic destinations than Air Canada and just as many Air Canada employees commute and travel domestically as Jazz employees. No matter the relationship between the two companies, the pass benefits are still a win/win. However, I could see a scenario where each airline loads it's own employees first, and then the others. That would be rough for commuters from both companies.

Two cents from a former Jazzer, now AC'er.

rudder · Post by **rudder** » Wed Oct 03, 2007 10:22 am

fasteddie wrote:WF9F,

As far as the pass benefits go. That works two ways, remember Jazz has more domestic destinations than Air Canada and just as many Air Canada employees commute and travel domestically as Jazz employees. No matter the relationship between the two companies, the pass benefits are still a win/win. However, I could see a scenario where each airline loads it's own employees first, and then the others. That would be rough for commuters from both companies.

The edict for travel priority harmonisation came straight from the desk of Robert Milton. It will be interesting in the wake of his departure to see whether or not Montie Brewer decides to undo that directive.

WF9F · Post by **WF9F** » Wed Oct 03, 2007 11:31 am

I agree fasteddy. but i think it will go back to the way it was, Jazz priority on Jazz flts and AC priority on AC. I also think that Jazz may go back to more service to smaller centers. I am sure there are runs out west and in central Canada that whoever does just like there are runs way out east that could be done with a Dash 8. I also think Jazz would do better utilizing Dash8-400 instead of clapped out RJ's on a lot of routes.

fasteddie · Post by **fasteddie** » Wed Oct 03, 2007 12:33 pm

Good points, both of you. I did not know about Milton's position on passes. I think you're right about maximizing the service to some of the smaller markets. Toronto Island, Detroit and Kingston come to mind in Ontario, I guess Abbottsford out west as well.

Brick Head · Post by **Brick Head** » Wed Oct 03, 2007 12:51 pm

Busy week.

ACE shifts Vacations stake to Air Canada
BRENT JANG

October 3, 2007

ACE Aviation Holdings Inc. has transferred its 49-per-cent stake in Air Canada Vacations to Air Canada. Air Canada spokesman Peter Fitzpatrick said yesterday the deal means the airline now wholly owns the tour operator. ACE is unwinding as a holding company, soon to own just one-fifth stakes in Aeroplan Income Fund and Jazz Air Income Fund. UBS Securities Canada Inc. analyst Fadi Chamoun said ACE may repurchase the 25-per-cent stake in Air Canada that it doesn't already own as a tax avoidance strategy, eventually leaving Air Canada as ACE's sole asset. Proceeds from Aeroplan and Jazz secondary offerings, as well as the sale of a majority stake in Air Canada Technical Services, could raise ACE's cash balance to $1.9-billion, he said. ACE.B (TSX) rose $1.92 to $28.77. AC.B (TSX) rose 83 cents to $14.67. JAZ.UN (TSX) fell 30 cents to $7.65. AER.UN (TSX) rose $1.20 to $23.50.

rudder · Post by **rudder** » Thu Oct 04, 2007 3:51 pm

Dockjock wrote:Guessing there won't exactly be a long lineup of buyers for those Jazz units.

Doesn't matter - it was a 'bought' deal.

Dockjock · Post by **Dockjock** » Thu Oct 04, 2007 5:36 pm

"Bought" by the dealers, who then go about unloading it in the market, which will have a hugely dilutive effect for anyone already owning units. Good for ACE, bad for anyone holding units. SELL SELL SELL!!

Airband · Post by **Airband** » Thu Oct 04, 2007 5:56 pm

Dockjock wrote:...which will have a hugely dilutive effect for anyone already owning units.

These are existing shares owned by ACE. No dilution, the total number of shares remains the same.

.

tonysoprano · Post by **tonysoprano** » Thu Oct 04, 2007 5:59 pm

ACE will have 1.9 Billion in the bank after this deal is done. Gee, I can't really decide if this is good or bad.

Smitty · Post by **Smitty** » Fri Oct 05, 2007 6:31 am

I guess it depends on what the plan is to wind down ACE. Does the money get pumped in to AC, or does it just get distributed to shareholders when ACE is dissolved?

rudder · Post by **rudder** » Fri Oct 05, 2007 7:12 am

The question now is what ACE Aviation does with the embarrassing amount of cash in its coffers - it will soon hit $1.9-billion - as Mr. Milton strives to reach his goal without incurring a whopping tax bill. UBS Securities analyst Fadi Chamoun noted yesterday that a cash distribution for ACE Aviation would see tax authorities extract a 50-per-cent tariff.

"We believe ACE will use the cash to repurchase its own shares to distribute value to shareholders," Mr. Chamoun said. "Ultimately, ACE may repurchase the 25-per-cent interest in Air Canada that it doesn't own currently as a tax-avoidance strategy, which would yield a final outcome where ACE would consist solely of Air Canada."

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