Yet another analysis:
Sun, April 4, 2004
AirCan headwind 'unnerving'
Expert warns airline's uncertain financial footing could hurt business
By MICHELLE MARK, CALGARY SUN
Faith in the immediate future of Air Canada is plummeting fast as the beleaguered airline faces more turbulence. Barry Prentice, director of the University of Manitoba-based Transportation Institute, says consumers will be reluctant to fly Air Canada anytime soon for fear of being stranded if the airline goes belly up.
"This is unnerving for consumers," he said.
"It's certainly possible people will be worried about booking with Air Canada due to the possibility of being stranded someplace."
Trinity Time Investments, the airline's current proposed major investor, said Friday it will not extend an April 30 deadline for the airline to emerge from creditor protection and plans to walk away from its $650-million investment.
The company, headed by Hong Kong businessman Victor Li, said it was also releasing Air Canada from the exclusivity obligations of their investment deal -- a move that will allow the airline to seek out another investor willing to fill the void left by Trinity.
"It's hard to say at this point if this is just hard-nosed tactics in trying to get the best deal, but it could be a fundamental tipping point in the story," Prentice said, adding if Li pulls his support, it could mean the end of Air Canada.
"If Mr. Li walks away at this point, I can't see anybody else walking in and offering them more money," he said.
But Air Canada's woes could be good news for Canada's other growing airlines such as Jetsgo and WestJet.
"This couldn't be happening at a more opportune time for them," he said.
"They have airplanes that they have to fill and if people are more uncertain, they may start looking at these airlines as an alternative."
Meanwhile, the monitor overseeing Air Canada's restructuring says the bankruptcy court should extend the airline's creditor protection to give it more time to find a new investor.
Air Canada has said it has enough cash in its bank accounts and through its credit facilities to continue operating as usual while it seeks alternative partners. Air Canada has been under creditor protection since April 1 last year.
http://www.canoe.ca/NewsStand/Calgar...04/408089.html