RE:If Buffet loaned AC the $ 6 bailThis was a succinct summation of the deal. I hope you don't mind if I address some details.
I made a hopeful prediction a couple of weeks ago in a post. Here is an excerpt.
"What would make sense is for the government to replace the loss of working capital for the businesses that have had to dig into that reserve to survive this pandemic. I don't think they can expect that Air Canada is going to fall on a financial sword like when Canadian Airlines went bankrupt. The government needs to buck up soon. Maybe with the budget on 04/19? Dare to dream.
The only thing is that Air Canada needs to play this right so that the government does not look desperate or foolish or stupid. As part of negotiations it is called "saving face". Like a good corporation AC will move forward to make money which is what companies do. Government is there for the other agendas that do not fit the mold for making money."
The timing seemed to be correct and the government has now set a template for its renewed committment to air travel infrastructure in Canada. Working capital is like the cash that revolves through balance sheets for products that are prepaid like airplane seats. A low interest loan is perfect for this use. Working capital is money committed for products that can take years to deliver but requires deposits and then full payment in some form upon delivery. As GG stated this would cost 9% on the open market. Air Canada is replacing its narrow bodied fleet. Low interest loans are perfiect for financing airplane purchases. This should save AC from going to the markets again for 10 years to finance this goal.
The deal has been made and the government is stating "it is a very fair deal." Gerry Diaz is saying it is great for Labor. For passengers, they are getting their legally non-refundable fares refunded. The template is set for how the government can address the needs of all of the other businesses that make up the infrastructure of air travel in Canadian airspace. Nobody is doing the blame game except for the EU getting blamed for ignoring the AC/TRZ buyout into reduncency. So everyone here is looking good...For the next 10 years!!! No one should feel bad about how the airline industry will survive considering that we are going into the third wave of the pandemic.
Air Canada can TCOB. It's future is Aeroplan and this gives AP a 10 year runway to mature into a full blown success. In Michael Rousseau you have a seasoned senior financial manager at the helm who knows how to make deals at this level.
The MMs have had their morning breakfast on stop loss orders on this and GSY this morning. Like you say...Just Relax and Golong.