"Air Canada's year-end liquidation sale", quips a Canadian columnist. It certainly looks that way as the airline puts more assets on the block.

Its impetus is clear. Air Canada has revealed another annual loss, this one preliminarily at C$428 million ($282 million). It faces a C$400 million debt repayment due this year, and a potential pension shortfall that could reach C$1 billion on top of debt and lease obligations already near C$13 billion. Clearly, Air Canada needs capital, and with share prices below investment grade, it has resorted to asset sales.

This strategy started last October with the sale-leaseback of 11 engines, followed by refinancing 16 aircraft leases in January. Sale of non-core assets started late in January when the airline sold 35% of its Aeroplan frequent-flyer programme. These three transactions netted C$490 million.

Jazz, Air Canada's regional subsidiary, is now up for sale. Finding a buyer at the right price will be a challenge because it has been a loss maker. Next up could be ground handling, technical services, and cargo units, plus Destina, Air Canada's online travel site.

Air Canada also continues its cost cutting campaign, asking unions for C$650 million in annual concessions.

Source: Airline Business