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01-04-2004, 10:56 PM
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#1
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Air Canada: final bankrupcy timer set
The bankrupcy judged extended AC's bankrupcy protection to only April 15th
instead of the 30th as AC had requested.
The federal government has leaked the fact that it had been in talks with
Westjet and others to find out, shoudl Ac be liquidated, how much of AC's
loads they could handle, going as far as allowing Westjet to wet lease
aircraft and crews from US carriers to fill the void.
The problem is that Unions had negotiated wage concessions with the condition
that their pension plan be preserved. That pension plan has a 1.3 billion deficit.
The potential saviour, Victor Li, wants the unions to accept a defined
contribution plan, instead of defined benefit which they have now. The unions
are refusing. The whole restructuring, investment by Li and emergence from
bankrupcy depends on unions agreeing.
Also, AC is about to announce that the wage concessions and restructuring done
so far had not done much to improve its financial situation due to increase in
fuel prices and increased competition from Westjet and Jetsgo.
The bluff has been called. Lets see how the unions deal with it.
This time around, there is no Onex to make tons of promises to unions, knowing
full well that the courts would throw the deal out. The Unions may be
expecting some magic rich uncle to materialise in the last minute and make
promises to save their pension plan. But even the consortium in which Brian
Mulroney is involved is conspicusouly silent on this one. (their offer to save
AC from bankrupcy had been dropped in favour of V. Li's offer).
If Victor Lee were smart, he'd offer an olive branch by offering to not only
kill the $20 million gift to Milton, but also fire Milton, something which the
unions have wanted to happen. After all, it is Milton and all his friends in
the past who drove AC into the ground.
What is interesting is that Li intends to buy 31% of Air Canada wioth his
investment. This is way over the limits imposed by law when AC was privatised,
the very limited which had been used to declare Onex's offer to buy both AC
and CP illegal.
I suspect this will be resolved on the 14th at 23:58 EDT.
The two 340-500s are painted and have their tail numbers. But not yet
registered in Canada.
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01-04-2004, 10:57 PM
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#2
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Re: Air Canada: final bankrupcy timer set
See some clarifying and correcting comments below:
nobody <nobody@nobody.org> wrote in message news:<406A7FC0.E5676018@nobody.org>...
> The bankrupcy judged extended AC's bankrupcy protection to only April 15th
> instead of the 30th as AC had requested.
>
True
> The federal government has leaked the fact that it had been in talks with
> Westjet and others to find out, shoudl Ac be liquidated, how much of AC's
> loads they could handle, going as far as allowing Westjet to wet lease
> aircraft and crews from US carriers to fill the void.
>
True
> The problem is that Unions had negotiated wage concessions with the condition
> that their pension plan be preserved. That pension plan has a 1.3 billion deficit.
>
Just to clarify. There are two pension issues: (1). The deficit,
where AC and the unions have agreed to a repayment schedule of 10
years. The government regulator has not yet agreed to this. (2) The
demand by Victor Li that at least some of the pension scheme by
altered from a Defined Benefit (DB) to a Defined Contribution (DC)
plan. (2) does not affect (1) although it could have implications for
pension plan deficits in the future, which is why Li wants to go to a
DC plan to eliminate a good portion of the future risk to the
employer.
> The potential saviour, Victor Li, wants the unions to accept a defined
> contribution plan, instead of defined benefit which they have now. The unions
> are refusing. The whole restructuring, investment by Li and emergence from
> bankrupcy depends on unions agreeing.
>
Maybe. Li is free to adjust his conditional terms. Seeing as 1 union
has now agreed to cooperate to some degree with altering from a DB to
a DC plan, and if more unions follow. The judge could impose the same
terms on any holdout unions that represent a minority of employees,
though I'm sure he'd rather not.
> Also, AC is about to announce that the wage concessions and restructuring done
> so far had not done much to improve its financial situation due to increase in
> fuel prices and increased competition from Westjet and Jetsgo.
>
Actually they have already stated that the labour concessions in
themselves have no yielded the expected savings to date, never mind
other costs.
> The bluff has been called. Lets see how the unions deal with it.
>
> This time around, there is no Onex to make tons of promises to unions, knowing
> full well that the courts would throw the deal out. The Unions may be
> expecting some magic rich uncle to materialise in the last minute and make
> promises to save their pension plan. But even the consortium in which Brian
> Mulroney is involved is conspicusouly silent on this one. (their offer to save
> AC from bankrupcy had been dropped in favour of V. Li's offer).
>
No other potential primary investment party can interfere in the
re-org process now. If Cerberus (Mulroney's connection) were to say
anything now they would be in extreme hot water and probably face
contempt of court charges and be liable for massive civil damages.
> If Victor Lee were smart, he'd offer an olive branch by offering to not only
> kill the $20 million gift to Milton, but also fire Milton, something which the
> unions have wanted to happen. After all, it is Milton and all his friends in
> the past who drove AC into the ground.
>
The unions and many others may be happy - but the major creditors
haven't made such a call and would likely see such a move as further
destabilizing the company and threatening its exit for bankruptcy
protection.
> What is interesting is that Li intends to buy 31% of Air Canada wioth his
> investment. This is way over the limits imposed by law when AC was privatised,
> the very limited which had been used to declare Onex's offer to buy both AC
> and CP illegal.
>
>
The applicable section of the Air Canada Public Participation Act was
repealed in 2001.
>
> I suspect this will be resolved on the 14th at 23:58 EDT.
>
> The two 340-500s are painted and have their tail numbers. But not yet
> registered in Canada.
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01-04-2004, 10:57 PM
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#3
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Re: Air Canada: final bankrupcy timer set
Rob Sawatsky wrote:
> plan. (2) does not affect (1) although it could have implications for
> pension plan deficits in the future, which is why Li wants to go to a
> DC plan to eliminate a good portion of the future risk to the
> employer.
Thank for clarification. I thought that the DC was not only to prevent
deficits in future, but also help pay off the accumulated deficit. (is this
deficit the result of AC "stealing" money to pay for other expenses ?)
> No other potential primary investment party can interfere in the
> re-org process now. If Cerberus (Mulroney's connection) were to say
> anything now they would be in extreme hot water and probably face
> contempt of court charges and be liable for massive civil damages.
Why ? If Li threathens to pull out of the deal, isn't it fair to allow other
potential investors who were shunted to the side line to speak out ?
If I could get Uncle Bill Gates to lend me $1 billion from his pocket change
this week, wouldn't I have the right to make some offer on Air Canada ?
> The unions and many others may be happy - but the major creditors
> haven't made such a call and would likely see such a move as further
> destabilizing the company
Well, does anyone really consider that the current management at Air Canada is
worthy of being kept ? After all, it is their actions, policies and
administration which brought AC into self inflicted bankrupcy.
From Victor Li's point of view, he has no choice but to lure Milton with some
$20 million carrot stick since he needs AC management's support for his deal
to go though. If he had openly stated that he'd fire Milton and company right
away, AC may not have chosen his offer.
But if the process is now to the point of no return, perhaps Li could tell
Milton to get lost since AC management's support is no longer necessary.
> The applicable section of the Air Canada Public Participation Act was
> repealed in 2001.
Thanks I hadn't heard of that. INteresting that the very thing that protected
AC from Onex was removed. But it is also the very thing that allows AC to find
a rich uncle to help ot out of self-inflicted wounds.
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02-04-2004, 12:43 PM
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#4
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Re: Air Canada: final bankrupcy timer set
nobody <nobody@nobody.org> wrote in message news:<406B2C64.E810B598@nobody.org>...
> Rob Sawatsky wrote:
> > plan. (2) does not affect (1) although it could have implications for
> > pension plan deficits in the future, which is why Li wants to go to a
> > DC plan to eliminate a good portion of the future risk to the
> > employer.
>
> Thank for clarification. I thought that the DC was not only to prevent
> deficits in future, but also help pay off the accumulated deficit. (is this
> deficit the result of AC "stealing" money to pay for other expenses ?)
>
Sort-of, it is a problem many companies with defined benefit plans
have because the value of the investments made by the pension plan
fell with the losses in the stock market going back a couple of years.
The deficit exists because the company has to now make up the
difference between the current asset value of the pension investments
and the required assets to fund the expected current and future
pension liabilities. The deficit also increased due to suspension of
contributions once AC filed for CCAA protection.
> > No other potential primary investment party can interfere in the
> > re-org process now. If Cerberus (Mulroney's connection) were to say
> > anything now they would be in extreme hot water and probably face
> > contempt of court charges and be liable for massive civil damages.
>
> Why ? If Li threathens to pull out of the deal, isn't it fair to allow other
> potential investors who were shunted to the side line to speak out ?
>
> If I could get Uncle Bill Gates to lend me $1 billion from his pocket change
> this week, wouldn't I have the right to make some offer on Air Canada ?
>
Because the whole thing is a court supervised and very complex
process. You can't have players jumping in left and right with new
proposals unless they have been solicited with the court's approval.
There was a process that chose Victor Li as the primary investor as
his offer was deemed to be the best chance for recovery. Now, if he
backs out, the whole process will start over, which will add huge
delays to the restructuring plan and also places a big chunk of new
money from GE in doubt possibly leading to AC's liquidation. If Li
pulls out, it is highly likely the creditors will get even less
because the losses and pressures on AC have increased in the interim
and there is less competition amongst potential investors with Li out
of the picture.
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02-04-2004, 12:43 PM
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#5
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Re: Air Canada: final bankrupcy timer set
I'm not familiar with Canadian bakruptcy law or practice but I am
booked on Air Canada to London in July. What's likely to happen?
Thanks
On Wed, 31 Mar 2004 04:23:15 -0400, nobody <nobody@nobody.org> wrote:
>The bankrupcy judged extended AC's bankrupcy protection to only April 15th
>instead of the 30th as AC had requested.
>
>The federal government has leaked the fact that it had been in talks with
>Westjet and others to find out, shoudl Ac be liquidated, how much of AC's
>loads they could handle, going as far as allowing Westjet to wet lease
>aircraft and crews from US carriers to fill the void.
>
>The problem is that Unions had negotiated wage concessions with the condition
>that their pension plan be preserved. That pension plan has a 1.3 billion deficit.
>
>The potential saviour, Victor Li, wants the unions to accept a defined
>contribution plan, instead of defined benefit which they have now. The unions
>are refusing. The whole restructuring, investment by Li and emergence from
>bankrupcy depends on unions agreeing.
>
>Also, AC is about to announce that the wage concessions and restructuring done
>so far had not done much to improve its financial situation due to increase in
>fuel prices and increased competition from Westjet and Jetsgo.
>
>The bluff has been called. Lets see how the unions deal with it.
>
>This time around, there is no Onex to make tons of promises to unions, knowing
>full well that the courts would throw the deal out. The Unions may be
>expecting some magic rich uncle to materialise in the last minute and make
>promises to save their pension plan. But even the consortium in which Brian
>Mulroney is involved is conspicusouly silent on this one. (their offer to save
>AC from bankrupcy had been dropped in favour of V. Li's offer).
>
>If Victor Lee were smart, he'd offer an olive branch by offering to not only
>kill the $20 million gift to Milton, but also fire Milton, something which the
>unions have wanted to happen. After all, it is Milton and all his friends in
>the past who drove AC into the ground.
>
>What is interesting is that Li intends to buy 31% of Air Canada wioth his
>investment. This is way over the limits imposed by law when AC was privatised,
>the very limited which had been used to declare Onex's offer to buy both AC
>and CP illegal.
>
>
>
>I suspect this will be resolved on the 14th at 23:58 EDT.
>
>The two 340-500s are painted and have their tail numbers. But not yet
>registered in Canada.
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02-04-2004, 12:43 PM
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#6
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Re: Air Canada: final bankrupcy timer set
Michael wrote:
> I'm not familiar with Canadian bakruptcy law or practice but I am
> booked on Air Canada to London in July. What's likely to happen?
Either way, you'll know in 2 weeks.
If unions reject the deal, they not only lose their jobs, but also their pension.
If unions accept the deal, they get less in their pension, but get a pension
and get to keep their jobs.
And if the deal is accepted, Air Canada will magically become very well (at
least for a while), get 2 new Airbus 340-500s, confirm a big order of flying
skidoos and jungle jets, and the president who caused this bankrupcy will get
a big fat $20 bonus.
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02-04-2004, 12:43 PM
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#7
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Re: Air Canada: final bankrupcy timer set
In article <nbqo6013rgg85fbofnanmbscbelckicptm@4ax.com>,
Michael <mp@pzrdyslzw.com> wrote:
> I'm not familiar with Canadian bakruptcy law or practice but I am
> booked on Air Canada to London in July. What's likely to happen?
there's a chance that the bunkruptcy court could order AC liquidated.
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02-04-2004, 12:43 PM
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#8
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Re: Air Canada: final bankrupcy timer set
On Thu, 01 Apr 2004 16:04:27 -0400, nobody <nobody@nobody.org> wrote:
>and the president who caused this bankrupcy will get
>a big fat $20 bonus.
That would be $20 MILLION bonus. Also the #2 at AC gets $20 million.
andrew [awebber@wwwebbers.com]
--
for PGP public key, send email with "send public key" as subject
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02-04-2004, 12:43 PM
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#9
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Re: Air Canada: final bankrupcy timer set
Not the Karl Orff wrote:
> there's a chance that the bunkruptcy court could order AC liquidated.
I think that liquidation is being used as a threath/bluff to get unions to
fall in line and agree to changes in pension plan.
Does the bankrupcy judge have the power to impose new pension programme on the
employees ?
Perhaps the union leaders would much prefer that the judge impose those
changed pension structures, which would let them off the hook since they would
be seen as fighting for maintained pension benefits to the end and never buckling.
If Union leaders were to agree to those changes today, they would be seen as
weak and not fighting for union members (their customers).
If the judge does not have the right to impose changed pension structure, then
one wonders where this bluff will go. The sooner the better.
IF AC were to be liquidated (small chance in my opinion), would they do as
with Swissair: Get Jazz to buy some of AC mainline assets and recreate Air
Canada from scratch with only minor inconveniences to passengers, but all
employees would be re-hired from scratch with totally different job offers,
pay/benefit scales ?
Or would AC truly disapear, with Westjet/Jetsgo/Transat/Canjet/Skyservice
filling the gap ?
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04-04-2004, 10:51 AM
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#10
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Re: Air Canada: final bankrupcy timer set
nobody muttered....
>
> IF AC were to be liquidated (small chance in my opinion),
Unfamiliar with Canadian corporate bankruptcy statutes, I can only suggest
that the judge after representations by the trustee(s) (or equivalent) in
bankruptcy, could determine that continuing in business under current or
adjusted conditions would be fruitless and leave nothing for creditors, and
that no sale of assets allowing continuing operations with staff, name,
etc. was feasible, (s)he could order liquidation.
> would they
> do as with Swissair: Get Jazz to buy some of AC mainline assets and
> recreate Air Canada from scratch with only minor inconveniences to
> passengers, but all employees would be re-hired from scratch with
> totally different job offers, pay/benefit scales ?
>
> Or would AC truly disapear, with
> Westjet/Jetsgo/Transat/Canjet/Skyservice filling the gap ?
The question to be answered is whether AC is a viable entity for which
accountants and analysts can generate a credible pro forma financial
statement showing potential profits (and as a result of which investors can
be convinced to make a necessary infusion of capital).
One of AC's problems has been the corporate image commitment to subsidize
the operations of all sorts of "flag"/prestige/politically appealing routes
unsupporatble on a cost/benefit basis.
TMO
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11-04-2004, 08:25 PM
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#11
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Re: Air Canada: final bankrupcy timer set
Rob Sawatsky wrote:
>See some clarifying and correcting comments below:
>
>nobody <nobody@nobody.org> wrote in message news:<406A7FC0.E5676018@nobody.org>.../
>
>
>>The federal government has leaked the fact that it had been in talks with
>>Westjet and others to find out, shoudl Ac be liquidated, how much of AC's
>>loads they could handle, going as far as allowing Westjet to wet lease
>>aircraft and crews from US carriers to fill the void.
>>
>>
>
>True
>
>
>
While I can see JetBlue adding Toronto and Montreal to JFK or LGA,
I'm finding it hard to envision a financially-strapped US Big Six or low
fare carrier doing much, never mind take over (even temporarily) any
domestic Canadian routes like Toronto-Winnipeg, Winnipeg-Calgary,
etc.
Is anybody trying to pull in Sir Richard Branson to buy Air Canada
(Virgin Air Canada - it has a nice ring, eh?) and link it to Virgin USA?
US Air might not see Christmas and Delta is looking to go Chapter 11.
AA avoided Chapter 11 a year ago but it isn't smelling like roses ...
gld
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11-04-2004, 08:25 PM
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#12
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Re: Air Canada: final bankrupcy timer set
"Gary L. Dare" wrote:
> While I can see JetBlue adding Toronto and Montreal to JFK or LGA,
> I'm finding it hard to envision a financially-strapped US Big Six or low
> fare carrier doing much, never mind take over (even temporarily) any
> domestic Canadian routes like Toronto-Winnipeg, Winnipeg-Calgary,
Actually, it was considered that Westjet may wet lease aircraft and crews from
US carriers to fill some of the gap left by a liquidated Air Canada. Remember
that US carriers have plenty of planes iddle in the desert and furloughed crews.
Outfits like Air Canada would be really "inconvenienced" if AC were to stop flying.
> Is anybody trying to pull in Sir Richard Branson to buy Air Canada
> (Virgin Air Canada - it has a nice ring, eh?) and link it to Virgin USA?
Sir Ricky is busy with his own startup of a USA carrier. He doesn't have 700
million in spare change to prop up Air Canada. And he'd inherit a whole mess
with unions.
> US Air might not see Christmas and Delta is looking to go Chapter 11.
> AA avoided Chapter 11 a year ago but it isn't smelling like roses ...
Delta's problems (and I suspect Continental will have them too) is that it
didn't threathen bankrupcy in order to get union concessions big enough to
make a big difference. If/when UA comes back, it, and AA will have an "unfair"
advantage over DL and CO who will still have higher employee costs.
In terms of Air Canada, it seems that while the unions have stated on Monday
that they will not make concessions on pension plan, they will try to work to
bring in investors. Already, they have lured two of the country's largest
pension funds, (Québec and Ontario).
But it is one thing to have some outfits looking at your broken down house,
and another thing to have them make a firm offer to rebuilt the house without
first destroying it.
However, because elections are about to be called, I am fairly certain that
the government will make sure that if AC is to falter, it will be after they
have been re-elected, so it is safe to assume that bankrupcy protection will
be extended.
On the other side of the coin, both Li and the unions know that an election is
about to be called, and perhaps they were motivated to stage this event to
force the government to provide some help to avoid liquidation during
election campaign, which means that Unions might get what they want and Li may
not have to pay for it.
And for Martin, it might look good for the government to find a solution that
would allow "private sector" to rescue Air Canada (with the govt's help only
providing garantees on the AC employees pension fund), and then Martin could
go and brag about it during his election campaign.
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11-04-2004, 08:26 PM
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#13
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Re: Air Canada: final bankrupcy timer set
nobody <nobody@nobody.org> wrote in message news:<406C88A2.94AD4A7E@nobody.org>...
> Not the Karl Orff wrote:
> > there's a chance that the bunkruptcy court could order AC liquidated.
>
> I think that liquidation is being used as a threath/bluff to get unions to
> fall in line and agree to changes in pension plan.
>
There are only two results possible for exiting bankruptcy protection
(CCAA in Canada):
1. Reorganized company with new capital and business plan carrying on
business as a new entity or absorbed by another company.
2. Liquidation.
Right now, there is no sure source of new capital. So, liquidation is
not a threat but the only possible option until if and when an
investor is found.
> Does the bankrupcy judge have the power to impose new pension programme on the
> employees ?
>
Possibly under limited circumstances. For example, if the majority of
unions agreed but a significant portion didn't, he could attempt to
force a broad agreement. But it seems Canadian law is not specific in
this matter.
> Perhaps the union leaders would much prefer that the judge impose those
> changed pension structures, which would let them off the hook since they would
> be seen as fighting for maintained pension benefits to the end and never buckling.
>
> If Union leaders were to agree to those changes today, they would be seen as
> weak and not fighting for union members (their customers).
>
Or they could actually ask their union members to vote on it.
> If the judge does not have the right to impose changed pension structure, then
> one wonders where this bluff will go. The sooner the better.
>
Not a bluff - see above. It will be a problem for any investor to
reconcile since it places risk on the employer, AC doesn't needs to
minimize risk for a new investor not add to it. If no one steps up,
it is because AC does not have a viable business plan or its debt is
too big to support even after a lot of renegotiating of leases and
other debt repayments for the cash-flow to support.
> IF AC were to be liquidated (small chance in my opinion), would they do as
> with Swissair: Get Jazz to buy some of AC mainline assets and recreate Air
> Canada from scratch with only minor inconveniences to passengers, but all
> employees would be re-hired from scratch with totally different job offers,
> pay/benefit scales ?
>
> Or would AC truly disapear, with Westjet/Jetsgo/Transat/Canjet/Skyservice
> filling the gap ?
Jazz and Zip are part of the "applicant" group - so if AC goes, so do
they - at least in their current corporate entities. Transport Canada
has already had discussions with Westjet and maybe others about
filling a possible gap - including wet-leasing US aircraft and crew.
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11-04-2004, 08:27 PM
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#14
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Re: Air Canada: final bankrupcy timer set
Rob Sawatsky wrote:
> Right now, there is no sure source of new capital. So, liquidation is
> not a threat but the only possible option until if and when an
> investor is found.
But the real question is whether the judge sees hope enough to justify
extending the bankrupcy protection, or whether he decides that it is pointless
to extend protection any further.
Considering that Cerberus had founght hard to try to get in, and that there
are hints that quebec and ontario pension funds might joins in, and
considering the pre-election period, it seems to be that the logical avenue is
to extend the bankrupcy protection until at least after the election.
If Li had been the only bidder and there was truly nobody on the horizon, then
the judge might be justified in finally pulling the plug.
> Or they could actually ask their union members to vote on it.
Which the unions steadfastely refused to do. They knew that the deal would
have been accepted. What this tells me is that the unions and Li knew that by
cancelling the whole deal, they might get the government to help financially
(or providing some garantees)
> Not a bluff - see above. It will be a problem for any investor to
> reconcile since it places risk on the employer,
The bluff was granting protection only to April 15 instead of the requested
April 30, combined with the leaked reports that the government was looking at
the impact of liquidation.
> minimize risk for a new investor not add to it. If no one steps up,
> it is because AC does not have a viable business plan or its debt is
> too big to support even after a lot of renegotiating of leases
Seems to me that AC had worked the numbers and was ready to emerge with only
670 million bucks additional investment.
If it took that long for Li to wake up to the fact that leaving the same
management team at AC would result in the same bad decisions and no real
improvement, then that is his fault. But fact remains that with good
management, AC could be turned around.
> Jazz and Zip are part of the "applicant" group - so if AC goes, so do
> they - at least in their current corporate entities.
But when AC declared bankrupcy last year, didn't ZIP make a statement that it
would not be directly affected and continue operations unaffected ? Does the
bankrupcy judge have a say on day to day decisions by Zip as it does for AC ?
I think that Jazz may be a special case with government intervention due to
the fact that they serve some communities that rely on air service and has no
other airline serving it.
> Transport Canada
> has already had discussions with Westjet and maybe others about
> filling a possible gap - including wet-leasing US aircraft and crew.
But that may have been part of the plan to put pressure on the unions,
especially since the story was leaked at the right time. My guess is that
transport canada did that work last year as soon as AC declared bankrupcy, and
leaked it this year, perhaps with some work to update the numbers (since both
Westjet and Jetsgo have added planes to their fleet, and I think canjet added also).
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11-04-2004, 08:28 PM
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#15
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Re: Air Canada: final bankrupcy timer set
I found the list of subsidiaries included in the bankrupcy protection:
3838722 Canada Inc.
Air Canada Capital Ltd.
Jazz Air Inc.
Manoir Int’l Finance Inc.
Simco Leasing Ltd.
Wingco Leasing Inc.
Zip Air Inc.
Also, I found the monitor's reports at:
http://www.aircanada.ca/notice/documents.html#report
There are quite interesting because they are worded in plain english for the
most part. Report 22 is most interesting, dating just before the pull out of
Trinity, and discusses the 340-500 financiang issues and the claims the lessor
would have made should AC not have taken delivery.
However, while AC bragged in recent days about having $900 million in cash,
most of it is from credit extended by the various creditors such as GECAS,
Trinity, Deutche Bank. In the April reports, there is no mention if any of the
cash would need to be returned to Trinity in April 30th when the agreement is
allowed to lapse/terminate. If creditors ask for their cash back, there
wouldn't be much left.
Air Canada has repudiaded leases on a number of aircraft (eg: failed to
reached agreement). Some include A330s. Not sure how this will impact summer
schedule if they must return some aircraft.
The good news is that operationally, AC is cash positive. However, as it
starts to pay aircraft leases upon renegotiation, the lease payments increase,
reducing the net cash input.
What is interesting about the Trinity deal is that they had specified many
items including pension reforms and specific performance metrics that if not
reached, woudl breach the agreement.
Part of the reason AC didn't achieve empoloyee cost reductions that had been
expected is that they actually increased capacity in february , resulting in
greater wages to more staff.
Also, the famous deals where employees accepted wage cuts in exchange for
pension garantees had been signed in May 2003, but Trinity got into the
picture in December 2003. Trinity would have known that his deal would require
breaking the agreement that had been reached in may 2003.
The unions refused to negotiate with Trinity, until forced by a judge in march.
In the post April 2 reports, there is no mention of the fate of the 340-500s.
Those would have been received prior to AC emerging from Bankrupcy, but the
deals were contingent on Trinity agreeing to them.
The Post April 1 reports do recoment that the protection be extended. The last
report recommends a one month extension to May 16th which would allow AC to
prepare a plan of action to seek replacement investor. (i.e. AC would take one
month not to seek a new investor, but to outline how it would seek it).
Presumably, they would then ask for another extension allowing the courting of
potential investors.
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