Air Canada expansion overseas planned

Dino D'Amore
By Dino D'Amore September 27, 2010 14:40

Air Canada expansion overseas planned

Air Canada, which narrowly avoided having to file for bankruptcy protection last year has nearly C$1 billion (US$971 million) in debt coming due over the next two years. Now the airline plans to push further into high-margin international markets to drive growth. “We’d like to de-leverage our balance sheet and… the most inexpensive way of doing that is producing free cash flow to pay down debt,” says Air Canada chief financial officer Michael Rousseau.

“We have almost C$1 billion of debt coming due the next two years. Certainly we would like to pay some, if not all, of that back.”

Air Canada, which had more than C$2 billion in cash at the close of the second quarter, raised close to C$1.1 billion in a private offering in August and used C$729 million of that to repay debt, he said. “As to a proper capital structure, I agree we are heavily debt de-leveraged right now: roughly 95% to 5% equity,” he said. “Over time, we need to have a better balance, and again I think a combination of improving our operating results, producing free cash flow, de-leveraging the balance sheet and, some time in the future, if our stock performs the way we think it should, then obviously that door is always open for equity.”

“One of our key priorities for 2010 and 2011 is to expand our international operations… most of the capacity increases reflected international markets,” says Rousseau. “Our domestic capacity is projected to increase by only up to 1 percent for the full year 2010, when compared to 2009.” Air Canada shares are currently trading up at C$2.88.

Dino D'Amore
By Dino D'Amore September 27, 2010 14:40
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