First Air completes buy-out of NWT Air
Purchase seals airline’s bid to extend control of air service across the Arctic
First Air has further expanded its northern empire by acquiring troubled NWT Air from Air Canada.
With 180 employees and revenues of roughly $50 million, NWT Air operates a number of passenger and cargo routes in the western Arctic, including direct flights from Rankin Inlet to Winnipeg, and from Yellowknife to Edmonton.
Details of the purchase were not disclosed, but First Air hastened to assure customers and suppliers that no immediate changes to NWT Air’s routes are planned.
Andrew Campbell, vice president of sales and commercial operations at First Air, told Nunatsiaq News that the airline is in no hurry to drop the NWT Air logo, either.
“In the interim we will keep First Air and NWT Air separate. NWT Air will retain the brand and First Air will retain its brand,” said Campbell.
“We want to be in a situation where we operate it and see how it actually works and get our feet wet, before we make any moves any other way.
With 750 employees and revenues reported to be in the vicinity of $110 million last year, First Air, a wholly owned subsidiary of Makivik Corp., is already the dominant carrier in Canada’s North.
Since purchasing Ptarmigan Air in 1996, First Air has added connections to Yellowknife, Gjoa Haven, Cambridge Bay, Pelly Bay, Rankin Inlet, Coppermine and Resolute to its roster of regularly scheduled flights.
The company began a due diligence review of NWT Air’s financial operations several months ago. The deal announced last week will permit First Air to restructure delivery of services to several western Arctic communities.
“I don’t think it was a profitable organization the last couple of years, but it was pointed in that direction, possibly, this year, from what we’ve been able to see,” said Campbell.
“So we only hope that we can make it profitable, and go from there.”
The deal with Air Canada was greeted with some apprehension by business customers in the Baffin region, who expressed concern about the concentration of ownership in the northern airline industry.
Mike Hine, president of the Iqaluit chamber of commerce, said the 1995 withdrawal of Canadian North from north-south routes to Montreal and Ottawa resulted in several rate increases for passenger and cargo service.
“We are concerned that the same situation might occur in the east-west routes, should Canadian decide to leave the marketplace,” Hine said in a press release.
The Iqaluit chamber of commerce has called on First Air for assurances that the company will do everything possible to control its operating costs and limit freight and passenger rate increases.
The takeover effectively removes a key competitor for north-south routes in the Keewatin region, but business leaders there remain comforted by the continued presence of Canadian North.
“They’re still going to have to compete with Canadian, so I don’t see them being able to raise prices over here,” Bob Leonard, vice president of the Keewatin Chamber of Commerce, said.
A good match
Ray Mercer, a cargo agent for both NWT Air and First Air in Rankin Inlet, actually welcomed news of the takeover.
“It’s a good thing to see that you have one professional airline buying another, so at least the purchasers have a knowledge and understanding of running the business,” said Mercer.
“I think both airlines should benefit from this move.”
Bad for workers?
But a spokesman for the union representing flight attendants at NWT Air warned that the purchase of the airline could be bad for workers and customers alike, in the long run.
“We think it’ll be to the detriment of our people,” said Roy Findley, secretary treasurer of Teamsters Local 362.
Findley said the growth of First Air’s monopoly is directly related to the deregulation of the airline industry.
“Deregulation hasn’t done anything for our people. The job opportunities are less, and they’re dominated by one company,” he said.
Insiders say, privately, that the airline’s disappointing financial performance was partly due to restrictions placed on it by Air Canada, which prevented NWT Air from offering direct flights to vacation destinations in the U.S.
No fleet exchange
Air Canada and First Air already cooperate closely under joint reservations and marketing agreements.
NWT Air’s fleet consists of three Boeing 737s and Canada’s only commercially operated Super Hercules Turboprop. The 737s, leased from NWT Air’s founder, Bob Engle, are not destined for use on routes currently served by First Air’s aging fleet of Hawker Siddleys and Boeing 727s, Campbell said.
“At this time we don’t see any intermix of the aircraft type.”