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Mix-Ansicht- Bsp. f. aktuellen Irrsinn: Aktie d. Air Canada weigert sich auf 0.00 zu gehen - kingsolomon, 13.06.2003, 08:15
Bsp. f. aktuellen Irrsinn: Aktie d. Air Canada weigert sich auf 0.00 zu gehen
-->Air Canada: the stock that's refusing to die
Thursday June 12, 6:24 pm ET
By Charles Grandmont
MONTREAL, June 12 (Reuters) - Shares of Air Canada (Toronto:AC.TO - News) fell 36 percent on Thursday, a day after the insolvent airline said its restructuring would render the stock worthless, and analysts and fund managers remained puzzled why the shares had not crashed to zero.
"It's the question everybody is asking," said Pierre Bernard, portfolio manager for BLC Edmond de Rothschild in Montreal.
"On paper, Air Canada is worth zero given the context we see today."
Air Canada shares dropped 67 Canadian cents to finish at C$1.17 on the Toronto Stock Exchange (News - Websites) on Wednesday on volume of nearly 20 million shares.
The shares were at C$2.10 just before the airline obtained court protection from its creditors on April 1. The stock later fell to 69 Canadian cents, before slowly recovering in the ensuing weeks.
"I don't really know why there is still some value other than people perhaps speculating that in the meantime maybe they can make some money off of some short-term trading," said aviation analyst Cameron Doerksen, of Dlouhy Merchant.
Air Canada, the country's largest airline and world No. 11, said after the market closed on Wednesday that its board of directors had approved a plan that would convert a"substantial" portion of its unsecured debt into new equity, essentially making its current stock worthless.
"I think there may be some misplaced hope that there will be a small something left for shareholders," said Claude Boulos, vice-president of Canadian equities for Natcan Investment Management, which sold its last shares of Air Canada five years ago.
Air Canada plans echo an announcement made on Tuesday by United Airlines parent UAL Corp (OTC BB:UALAQ.OB - News) that its shares have little or no value and that they were"highly likely" to be canceled in the airline's restructuring process.
UAL shares have dropped 71 percent since the announcement, closing at 53 cents on Thursday. The stock is traded on pink sheets on the over-the-counter board after recent delisting on the New York Stock Exchange (News - Websites).
"If the markets react similarly to Air Canada's comment, our C$0.00 target price for the company's shares may not look so unrealistic after all," said Raymond James airlines analyst Ben Cherniavsky in a research note.
($1=$1.35 Canadian)
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