Air Canada has appointed Paul Farrar, a restructuring specialist, as Canadian's new chairman. Paul Brotto becomes chief operating officer. Symbolic of the change, Air Canada is painting over Canadian's livery with its own distinctive maple leaf logo.
Canadian's long-suffering creditors are feeling the full force of the changes. Air Canada is insisting that they agree to restructure the C$3.5 billion ($2.4 billion) that Canadian owes them or else accept responsibility for its collapse and the loss of 16,000 Canadian jobs. Air Canada is willing to repay Canadian's debts, but only if they are refinanced on more favourable terms.
GE Capital Aviation Services (GECAS), one of the largest creditors, is the first to agree. It will restructure lease payments on 18 jets. The new restructuring team next plans to meet lessors in San Francisco and Japan.
Pending these talks, it has suspended payment on C$135 million in debts and plans to resume payments under a revised schedule in late April.
Air Canada also is integrating flight schedules, centralising more flights at its Toronto hub and seeking authority to take over many of Canadian's overseas routes.
A major reshuffle of regional airlines is under way. Air Canada has merged its regional units, AirBC, Air Ontario and Air Nova, into a single regional carrier. Inter-Canadian, which was affiliated with Canadian but not owned by it, remains grounded. Plans are afoot by local carriers to replace it.
Meanwhile, oneworld says it will drop Canadian as an alliance partner from this summer. American Airlines, in response to Canadian's doubtful future in Asia, is seeking US approval to codeshare with Cathay Pacific. That, with its codeshares with a growing number of other Asian airlines, will cut its reliance on Canadian for Asian access.
WestJet and Canada 3000 are seeking to fill the vacuum left by Canadian. WestJet is opening an eastern Canada hub in Hamilton, Ontario in March. This will serve six cities later this year.
Source: Airline Business
