Investor Presentaiton
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On September 30, 2004, Air Canada and the other Applicants emerged from creditor protection under the CCAA
and implemented the Plan. The purpose of the Plan, together with Air Canada's new business strategy, was to
restructure the capitalization, operations and cost structure of Air Canada. The Plan and the new business strategy were
designed to:
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reduce Air Canada's operating costs to a competitive level through the renegotiation of collective bargaining
agreements, aircraft leases, real property leases and various other commercial agreements;
implement a fleet renewal program to achieve the appropriate number, size and mix of aircraft for Air
Canada's route network;
complete a restructuring of Air Canada's debt and lease obligations;
redefine Air Canada's core product offerings to enable it to compete effectively in the current and future
airline industry environment; and
• reorganize Air Canada's corporate structure to enable certain key businesses to better compete for third party
business and generate value for their stakeholders.
The implementation of the Plan reduced Air Canada's debt (net of cash and cash equivalents) and lease obligations
(on a present value basis) to approximately $4 billion as at December 31, 2004 compared to $12 billion as at December
31, 2002, prior to Air Canada's filing for protection under the CCAA. Also, as part of the implementation of the Plan,
all the preferred shares of Air Canada were cancelled and all of the holders of common shares and Class A non-voting
shares of Air Canada exchanged their shares for voting shares and variable voting shares of ACE. Pursuant to such
exchange, the former holders of common shares and Class A non-voting shares of Air Canada received 0.01% of the
fully diluted equity of ACE upon emergence from the CCAA proceedings.
On September 30, 2004, as part of the implementation of the Plan, Air Canada reorganized its corporate structure.
Pursuant to such corporate reorganization, APLN Limited Partnership (a predecessor to Aeroplan), Jazz Air Inc. (the
predecessor to Jazz Air Limited Partnership and Jazz LP) and Touram Inc. (the predecessor to Air Canada Vacations),
which were already established as stand-alone entities under Air Canada, became stand-alone entities under ACE,
while ACTS Limited Partnership (the predecessor to ACTS LP ("ACTS")), Air Canada Cargo and Air Canada Ground
Handling were established as stand-alone limited partnerships under ACE.
Rights Offering
As part of the Plan, ACE offered rights to Air Canada's creditors with proven claims to subscribe for up to $850
million of voting shares and/or variable voting shares of ACE. Pursuant to its standby purchase agreement with Air
Canada, Deutsche Bank Securities Inc. ("Deutsche Bank") agreed to act as the exclusive standby purchaser in respect
of the rights offering. Deutsche Bank and the participants in its syndicate subscribed for all the voting shares and/or
variable voting shares of ACE not otherwise subscribed for by the creditors.
GECC Lease Restructuring and Financing
In 2003 and 2004, agreements were signed between General Electric Capital Corporation ("GECC") and Air
Canada which provided for:
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the restructuring of existing arrangements for 106 aircraft which included lease rate reductions on 47 aircraft,
termination of obligations with respect to 20 parked aircraft, the cancellation of four future aircraft lease
commitments and the restructuring of the overall obligations of six aircraft;
exit financing totaling approximately US$681 million in three tranches for use upon emergence from the
CCAA proceedings. The loan was repaid in full prior to maturity on April 6, 2005;
a financing commitment of up to US$950 million to be used for acquisitions of new regional jet aircraft. On
exit from CCAA, the parties agreed to reduce the commitment to US$500 million; and
the purchase from GECC by Air Canada on September 30, 2004 of two Boeing 747-400 Combi aircraftView entire presentation