Canadian North: merger with First Air might take another two years

The Canadian Arctic’s two major airlines, whose aircraft are seen here on the tarmac in Rankin Inlet, have agreed to form a single entity, Makivik Corp. and Norterra Inc. announced April 11. Those talks could take another two years. (FILE PHOTO)

Peter McCart, Canadian North’s vice-president of marketing and communications, and Hunter Tootoo, Canadian North’s senior director of business and community relations, make a presentation to the Kitikmeot Inuit Association’s board of directors Sept. 23 in Cambridge Bay. (SUBMITTED PHOTO)

CAMBRIDGE BAY — Executives at Canadian North and First Air, who announced their intention to merge this past April, are still talking — but the merger’s taking longer than Canadian North first anticipated.

The merger between the Canadian Arctic’s two major airlines is “complex,” Peter McCart, Canadian North’s vice-president of marketing and communications, and Hunter Tootoo, Canadian North’s senior director of business and community relations, said Sept. 23 during a presentation to the Kitikmeot Inuit Association’s board of directors in Cambridge Bay.

“We want to make sure we’re doing the right thing,” McCart told KIA directors.

Nunavik’s Makivik Corp. and the Inuvialuit-owned Norterra Inc. — owners, respectively, of First Air and Canadian North — said last April that they have begun talks aimed at merging the two airlines.

But progress is much slower than McCart forecast then, when he said the process could likely be wrapped up by the end of 2014.

Now, that merger date has been pushed back, he said, by as much as two years.

According to a timeline McCart set out, the various steps involved in the merger could require another two years to complete.

By the end of 2014, the due diligence — that is, an investigation of the two airlines’ business operations, which must be undertaken before they sign commercial agreement to merge — should be finished, he said.

“That’s been a tremendous amount of work,” McCart told the KIA directors at the meeting.

After the due diligence exercise is complete, the next steps in the include signing a commercial agreement and the preparation of a submission to the Competition Bureau of Canada.

The Competition Bureau is an independent federal law-enforcement agency that it is supposed to ensure consumers benefit from competitive choices in the marketplace.

The Competition Bureau also has the authority to review mergers.

McCart said that submission could take six to nine months to complete.

And then, when that paperwork is complete, it could take another 18 months to merge the two airlines’ operations into “one airline with double the assets.”

The new airline will operate under a new name — which McCart promised would be a “great name.”

McCart likened the merger process to “a marathon run or sprint.”

McCart said some of the other items up for discussion include:

• increasing Inuit representation to include more senior Inuit staff, pilots, flight engineers and flight attendants;

• the future merged airline’s operating certificate — which could be Canadian North’s Alberta certificate;

• job stability as the two airlines merge — here, McCart does predict “not a large loss” of jobs; and,

• pricing and schedules — about which he said “not a lot is going to change.”

And merger might still break down, McCart said.

During their session with KIA directors, McCart and Tootoo allayed concerns about higher ticket prices and fewer flights.

“We have to remain competitive or [else] we’re inviting someone else to move in,” Tootoo said.

When its fleet of 737s expands after the merger, Canadian North wants the new airline to increase jet service to Cambridge Bay, where the Canadian High Arctic Research Station is set to open in 2017.

But in the meantime, the airline is looking at ways to consolidate its scheduled flights and remain profitable.

To that end, in October Canadian North will cease its Wednesday flights between Yellowknife and Iqaluit.