AIR CANADA BOARD REJECTS ONEX BID; FILES SUIT

AIR CANADA BOARD REJECTS ONEX BID; FILES SUIT

   Air Canada’s management board has unanimously recommended that
shareholders reject a bid to buy the airline made by Canadian investment
firm Onex Corp.
   "It is clear from our review of the offer that it was structured to
rescue Canadian Airlines at Air Canada’s expense, and to transfer more than
$1 billion of value from our shareholders to Onex, AMR (Corp.), and
Canadian’s creditors and shareholders," said Robert Milton, Air Canada’s
president and chief executive officer.
   The Onex bid, at C$8.25 per share, does not reflect the true value of Air
Canada and is a below-market value offer, the airline said.
   Air Canada said it is in discussions with third parties to structure an
alternative deal. "The board may recommend that Air Canada remain an
independent company with a commitment to maintain further growth and
superior operating performance within the Star Alliance," the airline said.
Subsequently, Air Canada has filed a complaint to the Quebec Superior
Court, claiming that the Onex bid violates Canadian airline ownership laws.
Air Canada wants the court to throw out the Onex bid.
   Onex, backed by American Airlines’ parent company AMR Corp., proposed in
August a plan to acquire and merge Air Canada and Canadian Airlines into one airline.
   Onex and Air Canada face off Wednesday in an Ontario court to decide
when Air Canada’s shareholders will meet to consider the Onex bid. Onex
wants the court to order a meeting on Nov. 8. Air Canada has scheduled a
meeting for Jan. 7.