Air Canada: From One Crisis to Another
|
|
ICMR HOME | Case Studies Collection
Case Details:
Case Code : BSTR069
Case Length : 17 Pages
Period : 2003
Organization : Air Canada
Pub Date : 2003
Teaching Note :Not Available
Countries : Canada
Industry : Aviation
To download Air Canada: From One Crisis to Another case study (Case Code: BSTR069) click on the button below, and select the case from the list of available cases:
OR
Buy With PayPal
|
Price:
For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Shipping & Handling Charges extra
»
Business Strategy Case Studies
» Business Strategy Short Case Studies
» View Detailed Pricing Info
» How To Order This Case
» Business Case Studies
» Case Studies by Area
» Industry Wise Case Studies
» Case Studies by Company 
Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Chat with us
Please leave your feedback
|
|
<< Previous
"The chain of events that brought Air Canada to this crossroads amounts to an almost Biblical litany of woe, a perfect storm of negative news."
- An article on www.globeandmail.com, in April 2003.
Troubles, Troubles Everywhere!
In early 2003, people in many Asian countries were struck by a mysterious respiratory disease termed as the Severe Acute Respiratory Syndrome (SARS). This highly contagious and potentially fatal disease severely affected the region's economy with the most drastic impact being on the airline industry. As business and commercial passengers cancelled their trips to the Asian countries, airline companies saw their revenues declining at an alarming rate.
|
Canada's leading air-carrier, Air Canada, was adversely affected by the SARS epidemic. As the news of SARS
epidemic reaching Toronto (the company's main hub) spread, Air Canada saw many
of its passengers canceling their trips. By March 2003, the world's eleventh
largest air-carrier was losing C$5 million1 per day. These developments could not
have come at a worse time for the company which was already reeling under the
pressure of a severe financial crisis. Two factors were responsible for this
crisis - Air Canada's merger with the Canadian Airlines and the September 11,
2001, terrorist attacks. After the merger with Canadian Airlines, the company
faced many problems such as increased debts, increased employee base and
operational inefficiencies.
|
|
It also suffered a major setback after the September 11, 2001 terrorist attacks in the US, due to the huge drop in air travel worldwide. As a result of these crises, the company posted a loss of US$428 million for 2002. The severity of the crisis in Air Canada was reflected on its stock price as well. The stock prices had rapidly plummeted through the early 2000s, reaching a 52-week low of US$2.65 by mid-March 2003.
|
|
Under these circumstances, industry analysts predicted that the airline would in all probability file for bankruptcy protection by the end of the month. True enough, Air Canada filed for bankruptcy protection under the Companies' Creditors Arrangement Act (CCAA)2 on April 1, 2003. Robert Milton (Milton), the company's President and CEO, justified this saying, "Clearly, while not our preferred course of action, a CCAA
filing is necessary to allow Air Canada to make the required changes to
compete effectively and profitably in a changed environment."3 He further
voiced his plans of restructuring the company. Air Canada was required
to obtain consent from its creditors, leaseholders and bondholders
before restructuring its debt portfolio. |
Air Canada: From One Crisis to Another
- Next Page>>
|
|
