Brian Dunn/MONTREAL
A Toronto-based business group, Regional Airlines Holdings, aims to establish a new national airline by buying and merging the regional carriers of Air Canada and Canadian Airlines. The move would appear viable if the two majors themselves merge.
Regional Airlines Holdings wants Ottawa to force Air Canada to sell the regional operations as a condition of its planned purchase of Canadian, and to prevent it from re-entering the regional sector for 10 years. "Our proposal would not only preserve, but also improve on the service to Canada's small market communities," president Robert Deluce told a parliamentary committee.
The regional operations of Air Canada and Canadian together have 5,000 employees, 125 aircraft and revenues totalling C$1.1 billion ($750 million). Deluce claims to have been working on a plan to combine Canada's regionals for two years, with the new airline serving small communities and feeding traffic to larger carriers.
If successful, the move would be sweet revenge for Deluce, whose family was forced to give up its 25% in Air Ontario to Air Canada in 1993. He is also a former president of charter carrier Canada 3000. Neither Air Canada nor Canadian are likely to be keen to sell their regionals, however, so that Ottawa's intervention is crucial.
"It will probably require a bit of political pressure," says airline analyst Mark Mettrick of Standard & Poors, Toronto. "If there's undue ownership concentration, the Competition Bureau may force Air Canada to divest some of its assets. But Air Canada may come back and say: 'Look, the regionals hold more value for us than Canadian and we don't want to sell them'. The question then becomes, can Ottawa force Air Canada to sell?"
Air Canada last week tabled a new C$2 per share bid for Canadian after the rejection by a Quebec court of a rival move to merge the pair headed by investment group Onex and oneworld alliance leader American Airlines.
Source: Flight International
