by Jim Byers
Last updated: 6:16 PM ET, Tue April 13, 2021
For the first time since 1989, Canadian taxpayers own a piece of Air Canada.
Packed into Monday's announced $5.9 billion financial assistance package was a statement from Deputy Minister Chrystia Freeland that the Liberal government was buying $500 million of Air Canada stock, or roughly 21.6 million shares. The government also has the right to buy 14 million more shares, according to published reports.
Freeland said the government paid roughly $23 per share and that the price represented a 15% discount from the going rate at the time. Freeland said Ottawa's voting interest in Canada's largest airline is capped at below 20%.
Estimates are that the government's current share of Air Canada stock is around 6.4%.
It's not a large amount, but it could grow. And, if Air Canada takes off during a recovery, the government could make a tidy profit.
Still, this marks the first time the government has had a voting say in the company since it went fully private in 1989.
Former Air Canada President and CEO Calin Rovinescu last fall railed against the idea of government having a stake in the airline, saying state ownership of airlines has "been a colossal failure around the world."
Speaking on a conference call on Tuesday, Lucie Guillemette, Air Canada's Chief Commercial Officer and newly-named President of Air Canada Vacations, said she doesn't expect the government owning shares will make a difference.
"It's not a stake in terms of providing management influence," she said on a virtual call on Tuesday.
Robert Kokonis, managing director of Toronto-based aviation consulting firm AirTrav Inc., said he found the news somewhat surprising. But he told TravelPulse Canada he doesn't think the Trudeau government is seeking a long-term seat in the AIr Canada board room.
"I think if Air Canada pays back its loans and the stock goes to the high 30's or low 40's, the government might sell," he said.
Some observers speculate that the Trudeau government may buy shares in Air Transat as part of a Transat rescue package, which appears to be close at hand.
"I can see the government taking some position with Transat," Kokonis said. "The challenge is what about privately-owned WestJet or Sunwing."
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