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12:31 PM ET 08/24/99

Onex Wants To Buy Canada Airlines

Onex Wants To Buy Canada Airlines MONTREAL (AP) _ Onex Corp., a Toronto-based conglomerate, is offering $3.8 billion to buy and combine Air Canada and Canadian Airlines. A single airline, which would retain the Air Canada name, would be more efficient and financially stronger than the separate operations, said Gerald Schwartz, the president and chief executive of Onex. The buyout and merger would involve the loss of 5,000 jobs, Schwartz told a news conference. The cuts would be handled mostly through retirements and normal attrition, he said. The plan has already been approved by the board of Calgary-based Canadian Airlines, he said. Canadian Airlines, with 14,000 employees, has been seeking new investors to keep flying. It has said it needs up to $500 million to allow it to restructure and move away from what has been a chronic cash crisis over the past decade. “This is a good deal for Canada and for all Canadians,” said Schwartz, a takeover specialist. Last week, Air Canada asked the Canadian government to approve a takeover of Canadian’s international business while the smaller airline focused on domestic routes. But Canadian Airlines rejected the proposal, saying its international routes were the most profitable part of its operations. Montreal-based Air Canada, with 23,000 employees, would not disclose financial terms. The government has relaxed antitrust laws for 90 days so the two airlines and any other interested investors could share sensitive financial data to keep Canadian flying. “We all know the Canadian airline industry cannot maintain the status quo,” said Schwartz. “This is the time for a bold step.” Schwartz, who is also a prominent Liberal Party fundraiser, has already submitted the plan to federal Transport Minister David Collenette. In Ottawa, federal Industry Minister John Manley said the government would ask the federal Competition Bureau “what a restructured industry might look like.”