Canada back in the airline business – $5.9 billion to Air Canada
Can WestJet be far behind?
Is the reason the WestJet deal is not done at this same time because they are balking over the government taking an equity position? I wonder. It can’t be that the government is so inept that it could not do two deals at the same time.
So for $500,000,000 ($23.18 a share) we get six per cent of the shares of the company. The government can buy 14 million more, but the voting rights of the government are capped at 20 per cent.
The other money is said to be loans, but.
We know all about government loans and how many are not paid back. There is always an excuse, or so-called reason later of why not. You know times have changed etc. But our Minister Freedland says now it will all be paid back.
Of course, Quebec is not left out. The planes, 33 of them Airbus 220s being built in Montreal, will be completed and purchased by Air Canada with the accompanying jobs. You could see this coming given that Michael Sabina is now deputy minister of finance and oversaw the whole deal. He had been with one of Quebec’s largest companies for 11 years.
The interest rate on the loans is not the going interest rate. It is below two per cent. And the government has capped the executive compensation of the company at one million dollars. I suppose that means no executive can make more than a million per year. Poor people. Don’t you pity them?
The question outside of paying passengers what they are owed, reopening regional airports, etc. is whether the government should get back in the airline business. Of course, that’s a silly question, I suppose, since what isn’t financed one way or other by the government these days? So, some equity is right in line with what is happening. We can’t talk about becoming a socialist state – we are already there.
Oh, and the company has already received $554 million from the Emergency Wage Program of the government.
The airline attendants’ union CUPE is not happy. There appears nothing there for these employees as they contend was promised in any deal.