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Gold/Mining/Energy : Air Canada is taking off? -- Ignore unavailable to you. Want to Upgrade?

To: John Sladek who wrote (922)	10/19/1999 11:43:00 PM
From: Mike	Respond to of 1033

My views on the current AC deals. Both deals are contingent on what the new shares will be valued at. Onex offers 8.25$ a share for 50% of your shares, and AC offer 12$ a share for (less), 33% of your shares. The new shares of both COs, then are the determinents of the rest of the value for the offers. ACs deal in terms of the restructuring is more valuable though for numerous reasons. Firstly, they will receive more support from their employees, as they will be cutting less jobs and the brunt of those jobs will be from CA. Secondly, they are leaving the two COs seperate which will enable them to reduce some of their debt obligations with CA. Regardless of this, my opinion is that ACs bid is a dummy bid. They know that the competition board will never accept this, and they will take months to ever come back with their decision. AC hopes they will look at it. In the mean time, CAs load factors are dropping. Who would book with them? Think about it, They will own all the major airlines in Canada, they will own all the regionals and guess what they're also going to start going after the charters who have caused them enough trouble in the past. Great move by them, to delay this ordeal and send CA under. On another note, Onex will come back with a counter offer (guaranteed). AMR is financing the bulk of this deal, and believe me that Onex is getting some fat fees for this regardless. Also, this is essentially a battle of the two major alliances: star and one world. After these two proposed restructerings, there will be only one Canadian scheduled carrier. United gets 200 million from there relationship and AMR gets at least that from CA per year. Both groups cannot go without a canadian code sharing partner. My opinion is that these two will battle it out and one will end up paying far too much, only because they cant afford not to. My guess is that shareholders are not going to see a solution before next year, and that is why the price performed so poorly today. Any thoughts? Mike