Let's discuss the propaganda that is being put out by AMR-Onex that their offer is really worth something in the order of $12 to $12.50 a share.
First of all, I think Schwartz seized on this after he read it somewhere, possibly on this site, and the AMR-Onex duo has been trumpeting this fiction ever since. Air Canada is worth at least $12 a share, but once you combine it with Canadian into one entity, its value would decline significantly. Let's take a hockey analogy to make the point. If you take an all-star who regularly scores 50 goals a season (not likely in today's NHL...however)and put him on a bad team, despite his talent, he will no longer be as productive, and will be lucky to score 30.
The same scenario will happen with Air Canada, its productivity will be impacted, its balance sheet will deteriorate and Air Canada will slowly regress to reflect the influence of the lowest denominator.
Why let it happen? Canadian has bad management and this management was put in place by AMR. Kevin Benson made a mess of things as he did in the early 90s when he was put in place at Trizec to try and rescue it. At Trizec he ended up spending over $40 million on insurance to protect himself and his officers against liability. That was money Trizec could ill afford to waste.
Back then it was common shareholders, today it's Air Canada, its employees and shareholders who are being made the sacrificial lambs. The sad thing is many at Air Canada will lose their jobs through no fault of their own, in order to salvage one man's ego and one company's folly. The fact is if Air Canada is merged with Canadian, Air Canada's employees will be forced to share the burden that has befallen Canadian because of its own incompetence, neglect and lack of foresight. Is that fair? Is this what capitalism has come to in this country?
When governments start meddling in free markets, you get boondoggles like Sysco Steel and Canadian. Now they're proposing to add another member to the club -- Air Onex.
Don't let it happen. Onex is already over leveraged and will be hard pressed to produce enough CF to cover interest payments.
What a shame. |
