Air Canada files for bankruptcy protection
Tuesday April 1, 3:05 pm ET
By Caroline Daniel in Chicago, Ken Warn in Toronto and Kevin Done in London
Air Canada filed for bankruptcy protection on Tuesday, becoming the latest casualty in an industry whose problems have been exacerbated by further falls in traffic prompted by the war in Iraq.
The debt-laden carrier, the world's 11th largest, was unable to secure concessions from its unions to offset falling revenues. Bookings have been hit by the war, economic weakness and the outbreak of atypical pneumonia, or Sars, which is scaring off business travellers on routes to Asia.
Concerns over Sars grew on Tuesday after Californian officials quarantined an American Airlines aircraft from Tokyo carrying four passengers who reported symptoms of the virus that has killed 63 people.
Air Canada's announcement highlighted the unenviable choice faced by airline employees around the world: make billions of dollars of concessions or face a trip to the bankruptcy courts.
For years, attempts to restructure the airline industry have foundered because of employee opposition but the gravity of many carriers' prospects has made many labour unions reconsider their stance rather than face Air Canada's fate.
Shares in AMR, American Airlines' parent company, rallied by about 40 per cent on Tuesday after unions agreed to pay cuts to pull the world's largest carrier back from the brink of bankruptcy.
But the pressure on American and others remains intense. After dealing with the fall-out from September 11 and the economic downturn, the industry is now suffering from tumbling revenues triggered by the Iraq war.
"Our industry is facing the worst crisis in its history," said Ulrich Schulte-Strathaus, secretary-general of the Association of European Airlines. In the seven days from March 17 to March 23, the week when the war began, AEA carriers' international traffic fell by 12.3 per cent year-on-year.
Even in Asia, where airlines had seemed relatively unscathed, carriers including Cathay Pacific and Qantas are now suffering due to the spread of atypical pneumonia or Sars, which is scaring off business travellers.
Employees, the industry's biggest cost, are bearing much of the brunt as the perks of the late 1990s, such as expensive hotel rooms and generous pension contributions, are being removed.
Tuesday April 1, 3:05 pm ET
By Caroline Daniel in Chicago, Ken Warn in Toronto and Kevin Done in London
Air Canada filed for bankruptcy protection on Tuesday, becoming the latest casualty in an industry whose problems have been exacerbated by further falls in traffic prompted by the war in Iraq.
The debt-laden carrier, the world's 11th largest, was unable to secure concessions from its unions to offset falling revenues. Bookings have been hit by the war, economic weakness and the outbreak of atypical pneumonia, or Sars, which is scaring off business travellers on routes to Asia.
Concerns over Sars grew on Tuesday after Californian officials quarantined an American Airlines aircraft from Tokyo carrying four passengers who reported symptoms of the virus that has killed 63 people.
Air Canada's announcement highlighted the unenviable choice faced by airline employees around the world: make billions of dollars of concessions or face a trip to the bankruptcy courts.
For years, attempts to restructure the airline industry have foundered because of employee opposition but the gravity of many carriers' prospects has made many labour unions reconsider their stance rather than face Air Canada's fate.
Shares in AMR, American Airlines' parent company, rallied by about 40 per cent on Tuesday after unions agreed to pay cuts to pull the world's largest carrier back from the brink of bankruptcy.
But the pressure on American and others remains intense. After dealing with the fall-out from September 11 and the economic downturn, the industry is now suffering from tumbling revenues triggered by the Iraq war.
"Our industry is facing the worst crisis in its history," said Ulrich Schulte-Strathaus, secretary-general of the Association of European Airlines. In the seven days from March 17 to March 23, the week when the war began, AEA carriers' international traffic fell by 12.3 per cent year-on-year.
Even in Asia, where airlines had seemed relatively unscathed, carriers including Cathay Pacific and Qantas are now suffering due to the spread of atypical pneumonia or Sars, which is scaring off business travellers.
Employees, the industry's biggest cost, are bearing much of the brunt as the perks of the late 1990s, such as expensive hotel rooms and generous pension contributions, are being removed.
