Court And Creditors Signs Off On Reorganization

It's the end of the most turbulent chapter in Air Canada history. An Ontario judge Monday signed off on the carrier's reorganization plan, almost 17 months after it filed for bankruptcy. As of next month, Air Canada will have fewer planes and fewer workers, fewer subsidiaries and more international routes.

Air Canada's creditors, faced with few choices, voted 99-percent to accept the plan. They'll get just pennies on the dollar, but went along with the airline's plan on the theory something is better than nothing. Air Canada was able to pare down creditor claims from $6.1 billion to as little as $78 million.

The airline will emerge from bankruptcy with a $621 million investment from Deutsche Bank and $183 million from Cerberus Capital Management.

But as Air Canada loses debt, it will also lose substance. After already spinning off its Jazz subsidiary as well as its online reservation system, Destina. Under the court-approved plan, the airline will also divest its technical services, group handling and cargo operations.

Already, things are looking up for Air Canada. The carrier forecasts a profit of $823 million this year and $1.2 billion next year.

FMI: www.aircanada.ca