Bondholders are unlikely to approve a financial restructuring plan proposed Canadian Airlines Corp. last week, according to one airline official.

Under the terms of the arrangement, Canadian Airlines' senior secured $175 million, 10% issue due 2005, will be reduced to $162.75 million, translating into a pay-out of only 92 cents on the dollar. However, the company's unsecured creditors, including investors in its $100 million, 12.25% senior unsecured issue due 2006, can expect a payment equal to only 12% of their total claims. Both issues carry a C rating from Moody's Investors Service.

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