Canada Won’t Rush to Airline’s Aid

The Canadian government, deeply divided over how and even whether to aid struggling airline Air Canada, sent a clear signal Monday that it would not be rushing to help the debt-laden carrier.

Transport Minister David Collenette said there was no question of Ottawa offering Air Canada, the country’s dominant carrier, any loan guarantees just yet.

“The whole point about the loan guarantees is that it is to help carriers when they face difficulties,” he said in Toronto.

“What I’ve said on a number of occasions is the government would be the last resort, not the lender of first resort.”

“It appears there are other options available to the carrier at the moment,” noted Collenette spokesman, Anthony Polci.

Collenette told a parliamentary committee Monday night that Air Canada has $2.5 billion in unindebted assets and almost $627.4 million in cash, enough to help it do the restructuring required for any later government help.

“It has the capital to do it, and it’s important that it do it as quickly as possible,” he said of the restructuring idea.

Last month--in a bid to boost private sector interest--Ottawa said it would scrap the 15% limit on shares that any one Canadian investor can hold in the airline.

But most analysts have a “sell” recommendation on Air Canada stock. Potential investors, fully aware of the carrier’s $6.2-billion debt load and the millions of dollars it is losing every day, would undoubtedly feel happier about putting their money in the airline if Ottawa were more interested.

Late last month Ottawa agreed to give struggling airline Canada 3000 a loan guarantee of $47 million on the condition the carrier implemented a major restructuring plan.

Polci said the loan guarantee was granted when it became clear the airline was about to run into severe difficulties.