ACE Aviation Holdings Inc. plans to wind down by distributing up to $300-million in cash and its 11-per-cent stake in the airline to ACE shareholders.
ACE, whose chief executive officer is former Air Canada boss Robert Milton, said Friday that it will seek approval from its shareholders to shutter the Montreal-based holding company.
Created in 2004, ACE formerly served as the parent of Air Canada, but gradually spun off stakes in the airline and sold entire interests in regional carrier Jazz Air, loyalty program Aeroplan and an aircraft maintenance division now called Aveos.
An ACE meeting will be held April 25 for shareholders of record on March 6 to approve the holding company’s dissolution. “ACE intends to make an initial distribution to its shareholders of an aggregate amount between $250-million and $300-million, within the weeks following the shareholders meeting,” the company said. “The final distribution to shareholders will not occur earlier than mid-year 2013 in order to allow that any remaining contingent liabilities be settled or otherwise provided for.”
ACE noted that is net assets amounted to $384-million or $11.83 a share, including 31 million of Air Canada common stock and 2.5 million warrants at exercise prices from $1.44 to $1.51 for each of the airline’s shares.
The Air Canada Pilots Association has been a vocal critic of ACE’s strategy to split up Air Canada, Jazz, Aeroplan and the aircraft repair unit. ACE was created in 2004 after Air Canada emerged from bankruptcy protection.
ACE’s pending dissolution comes as pilots conduct a strike vote, but another union has reached a tentative agreement. The International Association of Machinists and Aerospace Workers said Friday that it has signed a four-year pact on behalf of mechanics, baggage handlers, cargo agents, cleaners and electricians.
“This agreement represents a huge amount of hard work by our bargaining team under extremely trying circumstances,” machinists union leader Chuck Atkinson said in a statement, noting that it’s now up to members to decide whether to ratify.
ACPA’s negotiation committee said Thursday night that pilots have made financial sacrifices ever since Air Canada’s restructuring in 2003-04.
The union described management’s stance at the bargaining table as “an all-out assault on our careers, our pension and our profession.”
The Montreal-based carrier, which lost $249-million last year, will be in a position to lock out its 3,000 pilots or impose new terms and conditions on them on Valentine’s Day.
But Air Canada chief executive officer Calin Rovinescu said management is willing to stay at the bargaining table to discuss a potential deal, even after a cooling-off period expires Tuesday.
Federal Labour Minister Lisa Raitt and officials from her department met with representatives from ACPA and Air Canada on Monday.
The previous ACPA contract expired on March 31, 2011. Last May, about 67 per cent of the pilots who voted rejected a proposed contract for the union, casting uncertainty over the airline's proposals for starting a low-cost carrier and introducing pension reforms.
The union's negotiating committee finished presentations to pilots Thursday, clearing the way for a five-day strike vote.
ACPA is upset that Air Canada wants emulate Australia’s Qantas, which runs the low-cost, offshore subsidiary Jetstar Airways.
“By far the most egregious of the corporation’s proposals is that of scope. In short their proposal would deliver the end of job security for all of us. It provides the corporation with an ability to whipsaw our work at will between other domestic and foreign carriers either through capacity purchase agreements (CPA), joint ventures, or by creating other domestic and/or foreign Jetstar-like airlines,” the committee said. “The company’s proposal threatens unprecedented damage to the flying profession as we know it.”
ACPA said it’s seeking a strike mandate that “allows us to engage in industrial action that can take a variety of forms from picketing to rotating strikes to a complete and full walkout.”
Air Canada argues that it needs to cut costs to be competitive at home and abroad, but the union counters that management’s attempts to streamline “allows a devastating outsourcing of our jobs and is an unprecedented attack on all of us. There are concessions of enormous magnitude that threaten our livelihood, our pension and our profession.”