MONTREAL - As Air Canada heads for arbitration hoping to further cut costs, the company formed following the airline's court-supervised restructuring is preparing to shell out millions more to investors before finally winding down.
ACE Aviation Holdings, once Air Canada's largest shareholder, plans to distribute up to $300 million to shareholders following an April vote to approve the company's liquidation.
The Montreal-based company formed in 2004 said Tuesday that it plans an initial distribution of $250 million to $300 million in the weeks following the April 25 shareholder vote, according to a proxy circular sent to investors.
A final distribution is expected after mid-2013.
Between 2004 and 2011, ACE (TSX:ACE.B) returned $4.5 billion to shareholders from the sale of its equity interests in Air Canada's former operations.
ACE has sold most of its assets -- including the companies now known as Chorus Aviation (TSX:CHR.B), which operates the Jazz air service;, loyalty program Aeroplan or Aimia (TSX:AER) and Aveos, which overhauls aircraft -- and distributed the bulk of the money to shareholders.
"The liquidation of ACE is the logical and consistent concluding step in the execution of this strategy through the distribution of the remaining net assets of ACE to its shareholders," ACE Aviation chief executive Robert Milton said in a letter accompanying the proxy circular.
Labour leaders who are fighting for new collective agreements and stem the launch of a new low-cost carrier said Air Canada's financial woes have resulted from the stripping of the carrier's value by ACE Aviation.
"This was just an opportunistic asset play by vulture capital," said Capt. Paul Strachan, president of the Air Canada Pilots Association.
The pilots' union and machinists are the last two groups with which Air Canada needs to reach an agreement.
Strachan said ACE's efforts paid the airline a pittance of its market value while forcing it into agreements that bleed revenue to the former subsidiaries and made workers agree to massive concessions.
"It has been a very, very frustrating and demoralizing experience for Air Canada employees at large and pilots in particular," he said in an interview.
Particularly galling is that Air Canada CEO Calin Rovinescu stands to receive a $5-million retention bonus next month after just three years at the helm, Strachan added.
Milton also collected some $80 million over his tenure at both companies even though Air Canada has not been consistently profitable.
Milton has said the formation of ACE would allow the intrinsic value of Air Canada (TSX:AC.B) to surface beyond what was recognized by investors.
The union representing mechanics, baggage handlers and other ground crew at Air Canada said the federal government's decision to impose arbitration on its talks with the airline is eroding labour rights. …