First Air, Makivik want guarantees from Air Canada

First Air likes Air Canada’s proposal to restructure the airline industry in Canada, but they want guarantees that its commercial agreement with Air Canada will remain intact.


IQALUIT — Air Canada’s counter-proposal to a hostile takeover bid by Onex Corp. is encouraging, say First Air and its parent corporation Makivik Corp., but they want more, First Air executives say.

Specifically, executives from the two companies say they want guarantees that the commercial agreement between Air Canada and First Air will stay in place if the air industry in Canada re-structures.

“We’d like assurances that our agreement will remain intact and viable so that half the country — the top half, where air service is a lifeline, and where First Air is the sole provider of scheduled air service to many communities — isn’t forgotten,” said First Air President Bob Davis.

Davis has said his company is concerned that Onex’s bid to take over Air Canada and merge it with Canadian Airlines would shut First Air out of competition with its rival, Canadian North.

“Our concern from the outset and the reason we oppose the Onex proposal, has been the impact of re-structuring on services to northern communities, and the potential loss of northern jobs that accompanies any threat to First Air,” Davis said.

Canadian and Canadian North, while separate companies, have a business partnership in which Canadian provides aircraft for Canadian North and passenger connections to destinations outside of Canadian North’s service area.

Air Canada provides passenger connections for First Air passengers to location’s outside of First Air’s service area.

Air Canada’s counterproposal would see it take over Canadian instead of the other way round, and operate Canadian as a separate subsidiary company.

Air Canada would also buy back 35 per cent of its own shares from shareholders at $12. The proposal also talks about “rationalizing” the routes of Canadian and Air Canada’s other subsidiary airlines.

“We just want to ensure it (Air Canada) will protect the interests and investment of some of the original Canadians, the Inuit of northern Quebec,” said Makivik Corp. president Pita Atami.

Atami said the federal government has a fiduciary responsibility to protect the $50 million investment Inuit have made in First Air.

He said this duty is based on the federal government’s signature on the James Bay and Northern Quebec Agreement.

First Air will present its position to the House of Commons Parliamentary Committee on Transportation, which is holding hearings on airline restructuring, on Thurs. Nov. 4 at 3:30 p.m.

Makivik intends to make a separate presentation to the committee.

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