http://business.theglobeandmail.com/...l_gam_mostview
JOHN PARTRIDGE
Globe and Mail Update
December 1, 2008 at 8:46 AM EST
Cash-strapped Air Canada will receive about $70-million in accelerated payments from the Aeroplan loyalty program, the airline said Monday.
Air Canada said in a news release it has struck a deal with Groupe Aeroplan Inc. to speed up payments on tickets issued up to May 29, 2009 so that it will receive the money by the end of this month.
The development will not affect Aeroplan members, it said.
The airline characterized the move as a step in the implementation of a strategy to improve its short and longer term liquidity “through both traditional and non-traditional means.”
Air Canada added that the deal with Aeroplan has been done under “commercial terms that are beneficial to both parties.”
The airline, Canada's largest, reported early last month that it lost $132-million in the third quarter, compared with a year-earlier profit of $273-million, hit hard by losses on fuel-hedging contracts and foreign exchange. It also is burdened by a widening shortfall in its employee pension plan.
The company also reported it had just over $1-billion in cash at the end of October. This concerned analyst Cameron Doerksen at investment dealer Versant Partners Inc. in Montreal because, it was “less than 10 per cent of trailing 12-month revenue, well below what we consider a comfort level of 20 per cent.”
Air Canada is controlled by ACE Aviation Holdings Inc., which currently owns 75 per cent of the carrier. ACE, which is seeking to wind itself down, said earlier this year that it wanted to find a private equity firm to buy the airline, but the global financial and economic crunch appears to have scuppered this plan.
The Globe and Mail reported recently that instead, ACE is now looking at issuing new ACE shares in a stock swap with shareholders who own the minority stake in the airline.
Air Canada shares have taken a thrashing. They closed on the Toronto Stock Exchange Friday at $2.15, down 13 cents from the previous close and well below a 52-week high of $12.53 a year ago.