UAL May Join Canadian Airline Battle

A high-stakes battle may be developing between United Airlines and rival American Airlines over Canada’s largest air carrier. United’s parent, UAL Corp., and German airline Lufthansa are preparing a bid to buy 35% or more of the outstanding shares of Air Canada, the Chicago Tribune reported in Sunday’s editions. The bid, which could come as early as today, could block the merger of Air Canada and Canadian Airlines proposed by Toronto-based investment firm Onex Corp. That combination is being backed by American Airlines and its parent, AMR Corp. AMR owns 25% of Canadian Airlines and would own 15% of the new carrier. UAL declined to comment on the report. Onex has offered $1.2 billion in cash and stock and would assume $2.7 billion in debt to take over the Canadian carriers. Air Canada has rebuffed the offer. Canadian Airlines, which is going broke, has not responded to the offer and may be waiting for a sweetened bid. The Tribune reported that UAL Chairman Jim Goodwin last week briefed United’s pilots on the plan under which UAL and Lufthansa reportedly will each buy 10% of Air Canada’s shares.