Months of speculation about the ability of Air Canada to weather the financial difficulties that have brought about the demise of several other carriers recently ended yesterday when the country’s biggest carrier was granted bankruptcy protection.
The filing allows Air Canada to continue flying while restructuring its finances under the protection of the Companies’ Creditors Arrangement Act.
“This is a day none of us would ever want for Air Canada,” Air Canada chief executive officer Robert Milton told analysts and reporters during a conference call.
Air Canada’s inability to come to terms with some of its unions over job cuts the carrier said were vital to its survival prompted the filing for bankruptcy protection.
As many other air carrier CEOs, Milton also blamed the fallout from the Sept. 11 terrorist attacks and the global economic downturn for playing a major role in the company’s financial woes.
“The business model is broken and it must be fixed without burning any more furniture,” he said in calling for his employees to "embrace a culture change and a new way of doing business.”
Recent international statistics have suggested the global airline industry has lost $31-billion (U.S.) over the last two years, with the outbreak of war in Iraq resulting in the loss of another $10-billion in international traffic.
“It appears the only successful airlines today are the original low-cost carriers or restructured mainline carriers,” Milton said.
Federal Transportation Minister David Collenette has said that Ottawa was committed to the airline’s survival, even though it has also been suggested that it wouldn’t give the carrier a cash bailout.
In Ottawa, Collenette reiterated that position again Tuesday during question period.
“I made statements in the house yesterday that the government was not interested in participating in a cash bailout of Air Canada but we would help in the restructuring process,” he said. “I have nothing further to add at this time.”
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