Should The Air Canada Bid Be Re-Opened ?

What makes Cerebrus Capital Management's bid or revised, revised bid so attractive is not just the new money, but the advantages Cerebrus brings to the table by design.

* While Brian Mulroney is not a national sweetheart in any manner, he is a very good, proven senior executive with excellent management / labor streetsmarts. He's also not a bad guy.

* Brian is also a proven excellent senior executive at a time in Air Canada's existence where having a credible senior leader is no longer an option. Mr. Milton and his gang have no credibility with any of the stake holders in Air Canada.

Milton has no credibility with the unions. From personal knowledge of how important this is to a concerted recovery effort, Brian's track record would open new opportunities for both management and union to work together. I've built an entire reputation on this. And, I ampositive that Brian can do likewise.

Milton has no credibility with shareholders nor, more importantly, with potentially new shareholders. Brian does and would. There are several approaches that can and should be used to re-create shareholder confidence.

Mr. Milton has no credibility with customers. I believe we would all feel more confident in service commitments that Brian would make than anything more that Milton would make. To Mr Milton's credit, everything he promised was based on good will and a feeling that it would all unfold as he suggested.

Where Mr Milton ran aground was in not appreciating the interplay between the air line as a business and the air line as a tool of the federal governement. Regardless, however, the damage was done and reflects squarely on Mr Milton.

Brian would have a better relationship with suppliers than Milton currently has. That's just a track record issue.

Does that in any way mean that I don't like Milton and do like Mulroney? No.

I am just looking at this from what was and what is. I am looking on it as what I would recommend if I were called in to analyze Air Canada as a business, what it would take to get it back on solid ground, and what I would do to get it there as is what I have done successfully for years.

If Air Canada is to come out of this mess in any way with a solid chance at a good future, it needs new, credible, strong leadership and a whole new focus... one that can only come from someone and an organization whose very mission is all about getting businesses out of deep trouble and onto solid ground.

Having turned enough businesses around, believe me, it takes strong, credible, and unflinching, hands-on leadership by someone who truly knows the mess they're in and exactly the steps how to turn it around.

The current management has proven simply that it hasn't that ability. And, current financial support is not sufficiently hands-on and hands-in with a track record of turn-around commitment. That's huge.

The propsed new team under Mulroney has the fire power and the track record needed to infuse new life and a new business culture in an Air Canada, which, as it stands now, will never get back on its feet.

As to the final comments I have heard, that Cerebrus upon completion of their job squeezes every last ounce of revenue they can for themselves.

This, as any kind of argument, is ludicrous.
What have Air Canada's senior management accepted as a cash bonus, not for doing a better job, but just for staying on? Indeed what does a great relief-pitcher make for rescuing a game or an entire season of something far less valuable?

If Cerebrus or you or I would take something from imminent disaster that it could continue into a bright new future for itself, its employees, its shareholders, its suppliers, its customers... can Cerebrus or you or I not expect a pretty good rate of return on something that has to be performing well enough to be attractive enough to sell? Of course we would and we should.

In one company I turned around, I got a pretty penny in the final sale price simply because in doing my job properly, what was an imminent bankruptcy, sold for mega bucks simply because the company became the top performer in its industry. I suggest that the only way Cerebrus can get paid mega bucks is if they do the same thing. And, they do... or they're stuck with the asset.

* Finally, and almost totally forgotten or ignored in this kind of business environment, Brian is an exceptional networker.

Whether by design or by default, Brian has worked hard and deligently to position himself into positions of power and respect.

Most, if not all of the most effective and successful people admit to sixty-five percent or more of their success is the result of the quality of the pro-active referral system they set up through very effective and efficient networking. In Canada. Brian is one of the very best.

In collatoral terms for Air Canada, that can only mean re-installing this airline into the most important halls of power and to the privileges it desparately needs. I don't know of anyone else better than Brian who I would rather have networking for me and thus Air Canada.

To that extent, it is in everybody's best interest to re-open the bid. Get someone with a track record of what is needed and not just money. And, get Air Canada fucntioning like a champion again.

John W David
http://business-analyst-consulting.com