Canada not ruling out stake in Canadian airlines...

[McKinley]

Interesting times indeed...

https://www.google.ca/amp/s/beta.ctvnew ... 48841.html

[dhc#]

I can see the Trudeau Lieberals taking an equity stake in Air Canada and/or Westjet as a means to control the airlines to further his "Green" agenda.

[iflyforpie]

Don’t bite the hand that feeds you.

Your choice will probably be a government stake in your airlines that will probably last at most four years under the current PM.

Or..... going broke and letting venture capitalists pick up the pieces and maybe sitting right seat to a former flat payer who took a risk and got in sooner.

Personally.. for airlines in Canada—much like most utilities and social services— public makes more sense than private. Particularly if the taxpayer is always going to be on the hook for losses.

Either you have a monopoly that requires an extensive civil watchdog to protect the consumer, or you have the waste of duplicated or triplicated capital and infrastructure that has to be borne by the consumer.. plus a profit.

[co-joe]

No the government having a financial stake in both major carriers wouldn't be a conflict of interest at all? In fact we may as well bring back regulation as well so they both make their fair share...

[teacher]

As long as Junior and his band of merry clowns pay for all the stupid decisions and relentless new rules they will impose.

Can you say “climate change and gender impact assessments” among others to be completed in both official languages prior to every memo and SOP change.

Jokes aside, borrowed tax payer money would remove cash issues but my concern would be the total lack of business acumen. Anything this government touches looses money or ends up being disastrously Inefficient, delayed and/or over budget.

The added burden of having Trudeau with an opinion on your day to day operations makes my skin crawl.

[Gino Under]

I'd say government "support" for anything through taxpayer investment is a questionable idea at best.

I recall the furor over government support for Bombardier (and in much better times I might add). The ugly rejection of that idea and the many taxpayers who shouted, "Let them fail!!!"
The Auto Industry "support" cost something like $18 billion. We didn't get all of that back either and the taxpayer was left writing off more than $3 billion (that's BILLION) of that 18 billion. BTW, how are things in Oshawa these days?

Then there was the time they shut down our fisheries (the entire Canadian fisheries, east and west coast) and threw thousands of Canadians out of work ...
so i'm not going to suggest they won't let the airline industry fail, expecting instead, a recovery will see an airline industry Phoenix rise from the ashes to once again serve the Great White North.

Our airlines are privately owned, not taxpayer owned and should stay that way. IF any are meant to survive this pandemic they most certainly will. IF any are meant to fail, they likely will. That's free market capitalism and the government should navigate any decision to bail it out with caution.

During times of a pandemic numerous industries will understandably beg for government financial "support". But how does the government choose who gets and who does not? Who gets the most and who gets the least? Where would be the balance and fairness in that? What would it look like?

I doubt Mr Dressup will find much left in his Tickle Trunk to help fund airline survival in this country with so many Canadians nearing financial ruin themselves. Do you think these folks will be buying airline tickets any time soon? Seriously? My belief is that financial support at this point in time will likely delay failures, not prevent them.

The Bank of Canada is already printing more cash than it can back up, which means inflation is also knocking on our doors. The Canadian dollar will plummet. Look at your interest rates today and double them. Can you afford that 5 or 6% mortgage payment on CEWS or EI? That will be the financial impact of where all of this is headed if the BoC keeps printing dollars. Many of us remember mortgage rates hitting 20 and 23% back in the early 80s. Try that mortgage payment in your mortgage calculator if you want the BoC to keep printing money and having the government fund everything in Canada that's in need of financial "support".

I don't see the sense in handing out 'survival' money to the airline industry because Canada simply doesn't have the money and it's probably already too late anyway. BUT, if they're going to continue to print money they can't back, with the present interest rates being what they are, maybe burning those low interest cheap dollars will work for a few more months. Hard to imagine when Air Canada is losing $2 billion per quarter. I can just imagine what Westjet loses.

Have a nice day.

Gino

[gtappl]

I'd say government "support" for anything through taxpayer investment is a questionable idea at best.

I recall the furor over government support for Bombardier (and in much better times I might add). The ugly rejection of that idea and the many taxpayers who shouted, "Let them fail!!!"
The Auto Industry "support" cost something like $18 billion. We didn't get all of that back either and the taxpayer was left writing off more than $3 billion (that's BILLION) of that 18 billion. BTW, how are things in Oshawa these days?

Then there was the time they shut down our fisheries (the entire Canadian fisheries, east and west coast) and threw thousands of Canadians out of work ...
so i'm not going to suggest they won't let the airline industry fail, expecting instead, a recovery will see an airline industry Phoenix rise from the ashes to once again serve the Great White North.

Our airlines are privately owned, not taxpayer owned and should stay that way. IF any are meant to survive this pandemic they most certainly will. IF any are meant to fail, they likely will. That's free market capitalism and the government should navigate any decision to bail it out with caution.

During times of a pandemic numerous industries will understandably beg for government financial "support". But how does the government choose who gets and who does not? Who gets the most and who gets the least? Where would be the balance and fairness in that? What would it look like?

I doubt Mr Dressup will find much left in his Tickle Trunk to help fund airline survival in this country with so many Canadians nearing financial ruin themselves. Do you think these folks will be buying airline tickets any time soon? Seriously? My belief is that financial support at this point in time will likely delay failures, not prevent them.

The Bank of Canada is already printing more cash than it can back up, which means inflation is also knocking on our doors. The Canadian dollar will plummet. Look at your interest rates today and double them. Can you afford that 5 or 6% mortgage payment on CEWS or EI? That will be the financial impact of where all of this is headed if the BoC keeps printing dollars. Many of us remember mortgage rates hitting 20 and 23% back in the early 80s. Try that mortgage payment in your mortgage calculator if you want the BoC to keep printing money and having the government fund everything in Canada that's in need of financial "support".

I don't see the sense in handing out 'survival' money to the airline industry because Canada simply doesn't have the money and it's probably already too late anyway. BUT, if they're going to continue to print money they can't back, with the present interest rates being what they are, maybe burning those low interest cheap dollars will work for a few more months. Hard to imagine when Air Canada is losing $2 billion per quarter. I can just imagine what Westjet loses.

Have a nice day.

Gino

Most of our industries only compete for domestic dollars. The airlines compete with every other major carrier in the world.

If most other G7/G20 nations are subsidizing an industry I think it's fair for us to consider doing the same.

[trey kule]

The government could invest in airports, infrastructure, and Nav Canada....
And eliminate the taxes, and fees, which would help the whole industry.

Of course baggage fees, and seat selection fees would remain. And no refunds, of course.
People are totally fine with the add ons and the manipulated pricings.

[BTD]

It isn’t free market capitalism right now, that is the problem. There are new rules and regulations (temporary in nature) that have a foot on the throat of the industry, among others.

It would be one thing if this were simply an economic downturn and demand had dropped as a result, but that isn’t the case.

The government has effectively said close up 80% of your business for an unknown amount of time. If you can’t survive you shouldn’t be in business and should have put more away for a rainy day. That isn’t the market dictating anything.

[Mach1]

Hard to imagine when Air Canada is losing $2 billion per quarter. I can just imagine what Westjet loses.

Have a nice day.

Gino

Would you imagine that, at 1/3rd the size of Air Canada, that WestJet would lose more, or less than the Air Canada number you quoted?

The government could invest in airports, infrastructure, and Nav Canada....
And eliminate the taxes, and fees, which would help the whole industry.

What a lovely dream that would be.

I remember seeing JT in an interview before the first time was elected to be PM, he was stating that (and I have to paraphrase because I don't remember his exact words) he knew how to spend your money better than you did so he should have all of it and redistribute that money as he saw fit. Oddly enough, that media clip has disappeared from the universe. Man, would it leave his face black to give up tax and fee revenue after a statement like that.

[Mach1]

On the upside, maybe the current Liberals will nationalize the entire airline industry. Government employees seem to get good pensions, wage raises and benefits. Maybe everyone will finally get a raise and work one day less a month. Dare to dream.

We can buy planes from... I don't know, maybe the Chinese... that will run on rainbows and unicorn farts.

[airway]

Our airlines are privately owned, not taxpayer owned and should stay that way. IF any are meant to survive this pandemic they most certainly will. IF any are meant to fail, they likely will. That's free market capitalism and the government should navigate any decision to bail it out with caution.

Just to clarify this, Air Canada is a public company. Any person, business, and I assume the Government, can buy shares in the company through the stock market. Jazz is owned by the public company Chorus Aviation which also trades on the stock exchange.

WestJet/Encore is privately owned by Onex. Sky Regional is also owned by a private company. You can't buy stock in these airlines unless you do a individual deal with the small group of owners/owner.

So if the government wants to take an ownership position in WestJet, I wonder if they would want WJ to go public again?
Or just keep it private and buy some shares from Onex.



.

[airway]

You could own a small part of WestJet if you bought Onex stock, but I think WJ is only a small part of the Onex business.

[Gino Under]

FWIW, not all Canadian airlines compete with international carriers. Only Air Canada faces the largest portion of that competition.
To support the argument that taxpayers should provide a financial bridge focused on international competition would be a weak argument at best. Many, in fact most large, dominant, well known international carriers, even some who’ve already received government assistance are finding it isn’t having the desired effect. Some (according to themselves and ICAO data) are still likely to fail, even with that government support.
I suggest the reason might be because the government assistance given was probably minimal and nowhere near the actual funding that would have been required.
Our airlines would be in the same boat as their international competition and are likely to be offered something short of what would be needed for survival anyway.
I pointed this out in a previous post, Lufthansa received financial assistance in May and recently told Flight Global it didn’t have the desired effect they were anticipating and are still struggling.
So, I’d suggest government assistance may not be the “be all and end all” many believe it will be. It may extend survival in the short term but may not prevent the inevitable.
As I’ve also pointed out, burning through $2 billion per quarter says all you need to say about any forthcoming government assistance. $10 billion gets us about a years survival for AC. After that what? Back to the trough? What about the other carriers who need financial assistance, not to mention the fact domestic traffic is forecast to recover before international traffic.
It just gets uglier from here on.
All of this bites the big one.

Gino Under

[Inverted2]

The government could invest in airports, infrastructure, and Nav Canada....
And eliminate the taxes, and fees, which would help the whole industry.

Of course baggage fees, and seat selection fees would remain. And no refunds, of course.
People are totally fine with the add ons and the manipulated pricings.

Government could invest in all that but this government would invest in diversity programs and studies on how to greet woke, soy latte drinking gender non-binary peoplekind.

[altiplano]

If AC did a government stake the airline would dilute the existing shares and sell for example a 20% ownership in exchange for a pile of cash for example. The government wouldn't buy existing outstanding shares.

Similarly with Westjet. Onex would sell a portion for a bunch of cash...

I don't think it would be enough cash though for what the government would be looking for from them. Particularly Onex.

I think the government would look for a disproportionate presence on the board in either case and concessions to push it's other agendas in the operations moving forward. Green, diversity, gender, Quebec... whatever...

I think the C-suites in both AC and WJ have more cards to play before they get to that. They obviously prefer loan guarantees to ceding control to a virtue signalling PM.

[rudder]

Here is one for you - what if ONEX offered to sell WJ to AC in a non-cash deal?

[Gino Under]

The Canadian government running any airline would be a disaster.
As for international competition, government assistance doesn’t seem to be having that positive of an effect for Cathay Pacific.

https://www.msn.com/en-ca/money/markets ... T?ocid=mmx

Gino Under

[altiplano]

Here is one for you - what if ONEX offered to sell WJ to AC in a non-cash deal?

There is no way that the competition regulator would approve that.

Besides, it would just be history repeats itself. Flair would become the new Westjet and fill the void.

[rudder]

Here is one for you - what if ONEX offered to sell WJ to AC in a non-cash deal?

There is no way that the competition regulator would approve that.

Besides, it would just be history repeats itself. Flair would become the new Westjet and fill the void.

Never say never. The regulator did not even blink an eye at the AC/CDN transaction that gave the combined airline a ridiculous concentration of domestic capacity and 80+% of the international route designations out of Canada. And the competition bureau didn’t even force the divestiture of CRA (nobody wanted it) or Air Canada Regional.

Desperate times. Desperate measures.