Newsgroups: can.politics
From: robinson@mdivax1.uucp (Jim Robinson)
Subject: Re: Bou Bou made a boo boo (staying away from talks)
Reply-To: robinson@mdd.comm.mot.com (Jim Robinson)
Organization: Motorola - Mobile Data Division; Richmond, BC
X-Newsreader: Tin 1.1 PL4
Date: 12 Aug 92 16:29:54 GMT

ph3@unixg.ubc.ca (Michael Hamilton (phys 306)) writes:
>In <1992Aug11.172548.21381@oneb.almanac.bc.ca> kmcvay@oneb.almanac.bc.ca (Ken Mcvay) writes:
>
>>In article <ph3.713482260@unixg.ubc.ca> ph3@unixg.ubc.ca (Michael Hamilton (phys 306)) writes:
>
>>Rafe Nair ...
>>suggested there was a connection between the government's support
>>for the Canadian airline merger and the constitutional talks - he pointed
>>out that the new airline would be Montreal-based, and that 10,000 jobs would
>>be lost in Western Canada. He closed by challenging B.C.'s conservative MP's
>>to deny that the government approval was not done to placate Bourassa...
>
>>His editorial is bound to strike a positive chord here in B.C., where the
>>feeling is that jobs are routinely lost to Quebec simply because the West
>>lacks political clout...
>
>>Any comments?
>
>Sure, the merger between Air Canada and Canadi>n will likely end up with Air
>Canada on top. (probalbly made more money because of all that crappy food.)
>Air Canada will likely be on top because of a better balance sheet. Air
>Canada, however, is _required_ to have it's headquarters in Montreal, Que.
>(That's the way things go when a company gets privatized: rules, rules, rules.)
>It seems likely to me, that it would be impossible to move the headquarters to
>Calgary without government intervention. That is, if the deal is allowed to
>progress naturally, the headquarters would wind up in Montreal. Well, this 
>government is Conservative, so they're unlikely to intervene. I think Nair is
>stretching things a bit.

As I understand it, Canadian is in better financial shape than Air Canada.
In addition to having a better balance sheet, Canadian has a lower
passenger-mile cost than AC - sorry, I don't remember the numbers.  And,
the reason that both are now in trouble is because Air Canada started a
price war that neither side could hope to win. The conspiratorially minded
would say that air Canada did this with the intent of mortally wounding
Canadian and thus allowing it to be gobbled up - Air Canada would survive
because too many people think a national carrier, especially Air Canada as
that national carrier, is essential.

As for the requirement that AC's headquarters be in Montreal: well, the
Federal government created this requirement, and the Federal government
could just as easily lift it - not much in the way of government
intervention required to do this.

Apparently, the unions of Canadian are looking to buy a major share of the
company in order to stop the takeover (let's call it what it is - there
will be little left of Canadian when this is over). They claim that the
major stumbling block to this is Canadian's high debt to equity ratio and
that they will thus need government loan guarantees to proceed. Should be
interesting to see how it unfolds.

-- 
Jim Robinson
robinson@mdd.comm.mot.com
{ubc-cs!van-bc,uunet}!mdivax1!robinson