CANADIAN FIRM TO MERGE NATION’S AIRLINES
Onex Corp., a Canadian holding company with interests in aviation and
electronics, plans to launch separate bids to buy Air Canada and Canadian Airlines
International in a $3.8 billion deal to merge Canada’s two largest carriers.
Canadian Airlines has been struggling financially and the Onex
announcement stems from private negotiations encouraged by the Canadian government to save
the airline.
Onex said it will form a new subsidiary based in Montreal called AirCo to
merge the airlines. AirCo will offer C$8.25 a share or one share of AirCo for each Air
Canada share. Onex will buy Canadian Airlines for C$2 a share or 0.2424 shares of AirCo a
share.
Half of AirCo will be owned by public shareholders. The two largest
private shareholders will be Onex and American Airlines parent AMR Corp., which eventually
will sell its share in the company, Onex said.
Onex plans to cut staff at the combined airline by 10 percent, or by
5,000 employees, in two years. The new airline will retain the Air Canada name.
It was unclear what effect the deal will have on the alliance partners
of Air Canada and Canadian Airlines. Air Canada is a member of the Star Alliance,
including United Airlines and Lufthansa German Airlines. Canadian Airlines is part of the
oneworld alliance, including American Airlines and British Airways.