Loading ...According to most media reports, a handful of American interests may be interested in buying Air Canada. Robert Milton, the company’s outgoing CEO, has apparently agreed to place Canada’s flag carrier on the market and the airline appears to be attracting some corporate interest from south of the border.
Canada’s national airline is already owned in large part by foreign investors, but Canadian law has thus far required that foreign owners not be given more than 25 percent in voting rights, as a way to ensure that the airline remains “national” in character. ACE Aviation Holding currently controls 75 percent of the carrier, but it has been revealed that several private equity and pension funds may consider buying these shares. Milton suggested that one of the potential investors may be interested in partnering Air Canada with a major US-based airline. If this were the case, it would represent a major realignment of North America’s air travel industry, as four of the largest US carriers—namely, Continental, United, Delta and Northwest—are already in potential merger negotiations.
In most circumstances, this news may worry WestJet, Air Canada’s primary domestic competitor. Yet Sean Durfy, the discount airline’s CEO, told the Toronto Star that he is not nervous at all. Durfy observed that WestJet currently enjoys a cost advantage of nearly 35 percent, when compared to Air Canada, and that the discount airline will be able to successfully compete with AC in the future, with or without foreign investors and US partnerships. Many analysts believe that WestJet’s main advantage is that it operates using a low-cost business structure.
