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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: kidl who wrote (149582)	3/2/2009 8:35:46 PM
From: GC	Respond to of 313478

>How do they dare to put out good news?> Its a set up :) , books are cooked :)

To: kidl who wrote (149582)	3/2/2009 9:03:51 PM
From: Rocket Red	Read Replies (1) \| Respond to of 313478

Air Canada to shrink after $1-billion loss BRENT JANG Friday, February 13, 2009 Air Canada plans to further shrink its network after losing $1-billion last year, raising concerns about its ability to combat the recession, fund its pension plan and meet union demands. Canada's largest carrier, which cancelled and scaled back dozens of routes in 2008, expects to reduce worldwide seat capacity by between 2.5 and 3.5 per cent this year. Air Canada also disclosed Friday that its pension fund solvency deficit soared 167 per cent to $3.2-billion at the start of 2009 from $1.2-billion on Jan. 1, 2008. "While 2009 promises to be challenging, we believe we are well-positioned to manage through the economic downturn," Air Canada chief executive officer Montie Brewer said in a conference call. Last year's red ink marked the airline's largest annual loss since 2003, when it filed for bankruptcy protection. Analysts and union leaders are worried about the Montreal-based carrier, fretting that weakening travel demand, the pension deficit and a portion of fuel contracts locked in at higher prices will place enormous pressure the company. Air Canada has hedged about 35 per cent of its fuel requirements at roughly $86 (U.S.) to $100 a barrel this year. U.S. oil prices closed yesterday at $37.51 a barrel. Jacques Kavafian, an analyst at Research Capital Corp., said the airline will still benefit from lower fuel bills over all. However, he's pessimistic because its six-year labour contracts are set to expire midyear. Even if there isn't a strike, some consumers will switch to rivals such as WestJet Airlines Ltd. because of fears of labour disruptions, Mr. Kavafian said. He said Air Canada's cash reserves have slid to $1-billion (Canadian) from $2.1-billion in 2006, so there isn't much of a cushion to weather tough times and navigate through a difficult labour environment. The carrier plans to temporarily lay off up to 345 flight attendants on March 2, following 2,000 job cuts last year. Mr. Kavafian said Air Canada's cash crunch could lead it to make another trip through creditor protection, but other analysts believe the carrier has lined up enough new lenders to survive any potential credit crisis. ACE Aviation Holdings Inc., which owns 75 per cent of Air Canada, posted a $633-million loss last year. ACE, created in 2004 after the airline emerged from 18 months of bankruptcy protection, plans to redeem $84-million in preferred shares, leaving the holding company with $328-million in cash. "Air Canada is in bad shape," said Dave Ritchie, general vice-president of the International Association of Machinists and Aerospace Workers, which represents mechanics. Mr. Ritchie said his union and four others want ACE to earmark any leftover cash for the airline's pension plan, not for ACE common shareholders. He said employees are upset that ACE chairman Robert Milton spun off valued assets such as loyalty program Aeroplan and regional carrier Jazz. Investors exited Air Canada stock Friday, sending the shares down 25 per cent to $1.45, just shy of their record low of $1.25 in mid-December. Air Canada stock has fallen 93 per cent from its initial public offering of $21 in 2006. "The underlying performance of Air Canada's operations has deteriorated markedly," said Jim Stanford, economist with the Canadian Auto Workers, noting the carrier's fourth-quarter loss of $727-million. The carrier had a $35-million profit in the year-earlier period. Air Canada's loss amounted to $7.27 a share, compared to a gain of 35 cents last year. Revenue was nearly flat at $2.49-billion, against $2.51-billion. The machinists union and CAW, which represents airport customer service agents and call centre staff, are considering legal challenges to block ACE's planned dissolution. © Copyright The Globe and Mail