David Knibb/SEATTLE
Air Canada has made big strides towards completing its takeover of Canadian Airlines, including court approval for Canadian's C$3.5 billion ($2.3 billion) restructuring plan.
All Canadian's secured creditors and most unsecured creditors approved the plan in May, but a group of dissident noteholders mounted a legal challenge. After a two-week trial, a Calgary court has ruled that the plan is fair and reasonable. That effectively ends the challenge and lets Air Canada merge Canadian into a wholly owned subsidiary.
Labour disputes remain, but Air Canada has made progress. On the question of merging seniority lists for pilots of Air Canada and Canadian, unions for the groups have agreed to treat Air Canada as a common employer and to submit the dispute to binding arbitration.
But negotiations on a new contract for Air Canada pilots have been complicated by plans to create a low-cost unit, known in the trade as Air Canada Lite. A pilots' spokesman calls it "a frontal assault on our career expectations".
Robert Milton, Air Canada's chief executive, has tried to reassure pilots that plans for the new carrier pose no threat to their jobs, but they remain sceptical. The pilots have approved a strike, but are attending talks on a new labour contract. Ottawa is debating whether and how to intervene if they decide to walk out.
Air Canada has chosen to consolidate all its regional carriers into a new consolidated regional airline based in Halifax, Nova Scotia. After months of haggling with the government, Air Canada has put Canadian Regional Airlines up for sale. This was a requirement for approval of its takeover of Canadian.
Source: Airline Business
