Air Canada's creditors voted over-whelmingly on Tuesday to approve a restructuring plan, paving the way for the airline's emergence from bankruptcy-court shelter after more than a year.
The vote was 99.6 percent in favor, the Montreal-based airline announced after a special meeting.
"The strong support for Air Canada's restructuring plan received from creditors today is appre-ciated," said chief executive officer Robert Milton.
"This positive response from creditors represents by far the most critical vote of confidence in the strength of our business plan and the airline's prospects going forward," Milton said.
The airline plans to emerge from creditor protection on Sept. 30, af-ter approval by the court overseeing its restructuring at a hearing scheduled for Aug. 23 in Toronto.
Air Canada accepted in June a US$183 million investment proposal from New York firm Cerberus Capital Management for a 9.2 percent stake in the struggling airline.
The Cerberus investment is in convertible preference shares of Air Canada, which has been undergoing court supervised bankruptcy restructuring since April last year.
The investment, in addition to the US$621 million raised through an equity offering to be underwritten by Deutsche Bank, brings the total equity raised by Air Canada to around US$803 million.
The plan will see creditors receive just pennies on the dollar for their debts.
Air Canada, which has been operating under creditor protection since April last year, has said potential claims were whittled down from US$78 billion to as little as US$6.1 billion.
The airline estimated that if total claims were US$7.5 billion, creditors would recover about US$0.925 for every dollar owed.
But the main value for the creditors will be in the equity they will receive in the restructured airline. That may be worth plenty if Air Canada's plan succeeds.
As part of its restructuring plan, the new Air Canada holding company plans to establish several units as stand-alone businesses.
In addition to regional subsidiary Jazz and online travel business Destina which are already established as on their own, Air Canada plans to spin off its technical services, cargo and ground handling operations into separate busi-nesses or limited partnerships.
The company is forecasting operating profits of US$823 million on revenue of US$6.6 billion for this year, and US$1.2 billion on US$6.8 billion next year.
But it now has to deal with soaring fuel prices. In reporting the second-quarter results earlier this month, Air Canada said fuel costs rose 28 percent from a year earlier to US$281 million.
After slashing costs, debts and thousands of jobs, Air Canada may be on course to exit creditor protection on Sept. 30, but nothing can protect it from record crude-oil prices -- or from possible future shocks ranging from an economic recession to terrorism.
Last week, Air Canada named former premiers Frank McKenna and Pierre Marc Johnson to the board of directors that will oversee the airline after its restructuring, a move analysts say may help smooth its way in Ottawa.
A Chinese aircraft carrier group entered Japan’s economic waters over the weekend, before exiting to conduct drills involving fighter jets, the Japanese Ministry of Defense said yesterday. The Liaoning aircraft carrier, two missile destroyers and one fast combat supply ship sailed about 300km southwest of Japan’s easternmost island of Minamitori on Saturday, a ministry statement said. It was the first time a Chinese aircraft carrier had entered that part of Japan’s exclusive economic zone (EEZ), a ministry spokesman said. “We think the Chinese military is trying to improve its operational capability and ability to conduct operations in distant areas,” the spokesman said. China’s growing
BUILDUP: US General Dan Caine said Chinese military maneuvers are not routine exercises, but instead are ‘rehearsals for a forced unification’ with Taiwan China poses an increasingly aggressive threat to the US and deterring Beijing is the Pentagon’s top regional priority amid its rapid military buildup and invasion drills near Taiwan, US Secretary of Defense Pete Hegseth said on Tuesday. “Our pacing threat is communist China,” Hegseth told the US House of Representatives Appropriations Subcommittee on Defense during an oversight hearing with US General Dan Caine, chairman of the Joint Chiefs of Staff. “Beijing is preparing for war in the Indo-Pacific as part of its broader strategy to dominate that region and then the world,” Hegseth said, adding that if it succeeds, it could derail
COMPLIANCE: The SEF has helped more than 3,900 Chinese verify documents, indicating that most of those affected are willing to cooperate, the MAC said More than 3,100 spouses from China have submitted proof of renunciation of their Chinese household registration, the Mainland Affairs Council (MAC) said yesterday. The National Immigration Agency has since April issued notices to spouses to submit proof that they had renounced their Chinese household registration on or before June 30 or their Taiwanese household registration would be revoked. People having difficulties obtaining such a document can request an extension of the deadline or submit a written affidavit in lieu of it. The council said it would hold a briefing at 2:30pm on Friday at the immigration agency’s Taichung office in cooperation with the
The government-funded human papillomavirus (HPV) vaccination is to be expanded to boys at junior-high school starting in September, the Health Promotion Administration (HPA) said yesterday. The Taiwan Society of Otorhinolaryngology, Head and Neck Surgery, the Taiwan Association of Obstetrics and Gynecology, the Taiwan Immunization Vision and Strategy, the Infectious Diseases Society of Taiwan, the Taiwan Head and Neck Society, the Formosa Cancer Foundation and the National Alliance of Presidents of Parents Associations held a joint news conference in Taipei yesterday to raise public awareness about the risks of HPV infection, regardless of gender. Invited to give an address, HPA Director-General Wu Chao-chun
RSS