Air Canada files for bankruptcy
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MONTREAL, Canada (CNN) -- Air Canada filed for bankruptcy protection Tuesday, blaming the economic slowdown, the threat of terrorism, higher fuel costs and the need for changes in labor agreements for big losses over the past two years.
Air Canada ended 2002 with a loss of $295 million (US), bringing its losses to $1.1 billion (US) since its last profitable year in 1999. The airline said the war in Iraq and the recent outbreak of Severe Acute Respiratory Syndrome, or SARS, have made recovery more difficult.
A "radical wholesale revision" of work rules for Air Canada's 30,000 unionized employees is essential for survival, the news release said.
The company announced agreement with one of its unions, the Canadian Auto Workers (CAW) Airline Division, for the layoff of 1,000 surplus customer sales & service agents and a delay in a pay hike scheduled for this week.
Air Canada will continue flying during reorganization but flights between Canada and Hong Kong, Beijing and Shanghai will be reduced in reaction to fewer bookings in the wake of SARS, which has hit those areas, said airline spokeswoman Laura Cooke.
Canadian Transport Minister David Collenette said Monday the government is considering ways to assist, but ruled out a cash bailout. Air Canada is by far the country's largest airline and the only scheduled Canadian carrier with an extensive route network connecting to the United States and other international destinations.
Air Canada arranged for $700 million (US) in loans from General Electric Capital Canada Inc. to help it operate during restructuring, the news release said.
