Air Canada will fly a semiprivate route
Selling off a sacred cow can sometimes be a tough job. The Canadian government is going to sell 45 percent of its interest in Air Canada to the public through a share issue. Politicians, unions, and pressure groups across the country are saying ``don't sell,'' and are using some high-powered rhetoric.
``You propose to sell out not only our members, but all Canadians in disposing of our national assets,'' a group of three unions said in a letter to Prime Minister Brian Mulroney last month.
The unions are worried that a semi-privatized Air Canada would mean fewer jobs and centralizing flight operations in Toronto, the country's busiest airport. The unions termed the privatization ``a triumph of blind ideology over common sense.'' The three unions involved represent ground workers, mechanics, ticket staff, and other clerical workers. But the union representing the pilots at Air Canada is in favor of privatization.
The management of Air Canada says it welcomes privatization. ``Public participation in the ownership of Air Canada is highly desirable in a free and open market,'' said Claude Taylor, chairman of the board of the airline. Mr. Taylor has been credited with turning the airline around and increasing productivity and morale in the past decade.
Air Canada is the country's ``national'' airline, carrying about half of the passengers in the country. It is the 14th-largest airline in the world. It flies to 66 cities and towns in Canada, 13 cities in the United States, and 27 cities in Europe, the Caribbean, and the Far East.
It is the scope of Air Canada's domestic operations which has politicians worried. Many of them are concerned that a more profit-conscious airline might drop services to smaller areas. Members of the Liberal Party have criticized the move by the Conservative government. But when the Liberals were in power, they too were planning to privatize Air Canada.
Mr. Mulroney once stated in a moment of rhetorical weakness, ``Air Canada is not for sale.'' The remark has been quoted by his critics, although it was taken slightly out of context.
The airline recently asked the government for $300 million (Canadian; US$243 million) to help pay for a new fleet of jets. It wants to replace its 33 Boeing 727 jets, possibly with the European Airbus planes. The cost of buying those new planes will be C$2.5 billion or more. The privatization is expected to raise between C$300 and C$500 million.
Even after privatization, the federal government would still own 55 percent of the shares of Air Canada. With an election expected this fall, that caution may reflect a political strategy. ``There is a general feeling in the population, an emotional factor, that we shouldn't sell it all. We don't want to plunge right in,'' said government spokesman Tom Van Dusen.
Air Canada is not a top-heavy government airline. ``The airline is already run like a private-sector corporation, and it will stay that way,'' says airline spokesman Brock Stewart.