Air Canada is scrambling to find a white knight to save it from liquidation after Hong Kong businessman Victor Li said he is withdrawing his C$650 million ($495 million) investment because of the insolvent airline's financial prospects and a row with unions over their pension plan. The offer is to expire 30 April and Li says it will not be extended.
Some of Canada's largest pension funds have been approached by the airline to fill the void after Li claimed that the airline had not met projected financial forecasts and unions refused key changes to their pension plans. The unions have already agreed to cost cuts valued at C$1 billion, but refuse to budge on pension reforms. The unions agreed to the concessions on the condition that their pensions not be touched. The unions are also talking to potential investors about investing in the airline, which began restructuring in April 2003.
In addition to pension funds, some of Air Canada's larger creditors could also step forward to fill the gap left by Li's Trinity Time Investments. Two of the biggest creditors are Deutsche Bank and GE Capital Aviation Services, although GE says it will not extend any more financial assistance to Air Canada.
Some of the airline's bondholders, who hold about C$1 billion of paper, may be willing to step forward to fill the void left by Li. Air Canada president Robert Milton says he is not looking for help from Ottawa, adding that it is a private sector problem that requires a private sector solution.
BRIAN DUNN / MONTREAL
Source: Flight International
