Onex says First Air over-reacting

An Onex spokesperson says that First Air has nothing to fear from a proposed merger between Air Canada and Canadian Airlines.

By NUNATSIAQ NEWS

SEAN McKIBBON
Nunatsiaq New s

IQALUIT — A proposed merger between Canadian Airlines International and Air Canada would not shut Canada’s third largest airline out, says a spokesman for Onex, the company proposing the merger.

“That is an over-reaction on First Air’s part,” said Paul Costello, an Onex spokesperson. Costello said the merger proposal includes plans to operate regional air lines and not to favor one over the other.

However Costello wasn’t aware that First Air is not owned by Air Canada.

He did say that there were no plans to scrap any commercial agreements that Air Canada has with regional airlines.

While Canadian North is a also a separate company from Canadian International, First Air president Bob Davis says he thinks Canadian North would gain a big advantage if the merger goes through.

Canadian North uses the same Sabre computerized booking system and air miles rewards as Canadian Airlines International. But the real advantage Canadian North has is that it connects its passengers to destinations outside of its service area using Canadian Airlines which in turn uses an air travel network called Oneworld.

Some market analysts have cast the merger bid as a battle between the world’s two largest air travel networks: Oneworld and Star Alliance.

Oneworld groups together Canadian Airlines International, American Airlines and British Airways, while the Star Alliance partners Lufthansa, United Airlines and Air Canada. First Air connects its passengers to points outside its service area through Air Canada.

Davis said Onex Corporation wants to get the newly merged airline to use the Oneworld airline agreement instead of Star Alliance, which would leave First Air out in the cold.

But Costello says no final decision has been made on Oneworld. He says that although Onex has been negotiating with American Airline’s parent company AMR for use of Oneworld and the Sabre travel booking technology, no deals have been entered into yet.

“That would be the decision of the newly merged company’s board of directors,” he said.

American Airlines’ parent company AMR owns 25 per cent of Canadian International, leading some people, including Air Canada’s board of directors, to charge that the Onex offer is really an attempt by AMR to take over the Canadian aviation industry. AMR refers all inquiries about the merger proposal to Onex’s communications centre in Toronto.

Costello said that American is not trying to take over the Canadian air industry. He said the new board would be composed of 13 members, two of which would be appointed by AMR and the other 11 by Onex.

AMR would hold 14.9 per cent of the new airline, while Onex would hold 31 per cent, he said. The rest of the company would be held by Canadian investors and institutions, Costello said.

Costello said the newly merged airline would have to form new agreements with partner airlines and that no preference would be shown to either Canadian North or First Air.

“There is nothing contemplated like what was talked about in their press conference last week,” he said.

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