Air Canada stock sinks as restructuring weighed

Tue Mar 31, 2009 6:21pm EDT
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - Air Canada shares sank 22 percent on Tuesday as analysts speculated that the resignation of its CEO, and the naming of a replacement known for his restructuring expertise, may signal the airline's second filing for creditor protection in six years.

Montie Brewer, who has led the airline through the industry downturn and has had to scramble to raise cash while competing with rival WestJet Airlines Ltd, will be replaced as chief executive on Wednesday by Calin Rovinescu, a key figure in Air Canada's last corporate revamp under bankruptcy protection.

Air Canada's class B shares fell 26 Canadian cents to 89 Canadian cents on the Toronto Stock Exchange, representing a drop of more than 90 percent in the past year. Its class A shares fell 24 Canadian cents to 84 Canadian cents.

Rovinescu is a lawyer who was Air Canada's vice-president of corporate development and strategy from 2000 to 2004, a period that included the airline's last restructuring and emergence from creditor protection. He subsequently co-founded Genuity Capital Markets, a Canadian investment bank.

"While the challenges in front of us are large, we will continue to build upon the successes of the airline to date and deliver a quality product for our customers, employees and shareholders," Rovinescu said in a statement.

There were more changes in the executive suite on Tuesday, as Chief Operating Officer Bill Bredt announced he too is stepping down, to be replaced by Duncan Dee.

Air Canada shares have tumbled as the industry downturn that first took hold in the United States spilled into Canada.

The airline has cut capacity by 7 percent, which meant 2,000 layoffs, and has been feverishly working to raise capital to shore up its balance sheet.   Continued...

<p>Air Canada President and CEO Montie Brewer poses before the company's annual shareholders meeting in Montreal, May 21, 2008. REUTERS/Shaun Best</p>