Air Norterra sits tight as one national airline emerges

Canadian North brass confirm they’ve looked at other partnerships just in case Canadian Airlines goes bankrupt before Air Canada completes its takeover.



IQALUIT— While the owners of Canadian North— Air Norterra — have applauded Air Canada’s moves to restructure the airline industry in the south, the company has also looked into alternatives to its partnership with Canadian Airlines.

“That would only be sound business practice,” said Michael King, Air Norterra’s vice president of communications, when asked if his company had looked into other business partnerships in the event Canadian Airlines International (currently the sole provider of pilots flight staff and maintenace to Air Norterra) goes bankrupt.

Last week Air Canada announced it had bought American Airlines 25 per cent stake in Canadian, giving it effective control of the financially troubled airline.

“We believe this restructuring will bring much needed stability to the southern Canadian Airline market,” said Canadian North President Carmen Loberg.

Loberg said he was particularly pleased with news from Air Canada that it would continue to run Canadian Airline’s frequent flyer program and that the service agreement between Canadian Airlines and Air Norterra would continue.

The fact that we are a large customer of airline services, coupled with our ability to feed traffic into a southern network is a positive contribution to any carrier,” said Loberg.

Loberg said that there was no reason to think that a single dominant national airline would not have a business relationship with both Air Norterra and First Air, and he said that if need be, his company could operate independently from a southern airline.

“We’ve been falsely accused by First Air of not owning our own airplanes. Hardly anybody owns their own airplanes anymore,” Loberg said. Loberg said that Air Norterra leases their 737 combi-jets from an off-shore leasing company.

“Although connection traffic is a very important part of our business, it’s a smaller part than people think. And I’m sure it’s a smaller part of First Air’s business than people think. Prior to purchasing NWT Air, First Air didn’t have a relationship with any southern carier,” said Loberg.

But the deal between Air Canada and Canadian is far from done. There is no word yet on approval for the merger from Canada’s competition bureau, and special legislation from the federal government may force Air Canada to divest itself of its regional airlines.

Some airline industry analysts are questioning whether the cash-strapped Canadian Airlines can stay afloat long enough for Air Canada to finish inking the take-over.

The National Post reported on the weekend that Canadian Airlines was asking the government for a bailout because its partner American Airlines is threatening to start charging $15 million a month in service fees for the use of its Sabre computerized ticket system.

However Loberg said he thought the financial straights of Canadian had been overstated in the southern media.

“We don’t see any imminent demise,” he said.

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