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Air Canada's share of aid set at C$100 million

OTTAWA, Oct 2 (Reuters) - Air Canada's (Toronto:AC.TO - news) share of the Canadian government aid package to the country's airline sector is set at C$100 million ($64 million), Transport Minister David Collenette said on Tuesday.

Collenette told reporters that the government prefers a private-sector solution to Air Canada's financial woes, beyond the aid that is part of C$160 million of financial help Ottawa has agreed to provide over the next few days.

``I think the government would prefer a private-sector solution,'' Collenette said.

He added that certain private-sector investors have expressed an interest in possibly investing in Air Canada as part of any restructuring of the airline, which is the country's biggest carrier and world number 10. Collenette declined to name the potential investors or indicate whether a restructuring would entail a move by the airline to seek court protection from its creditors.

During a bitter takeover battle for Air Canada two years ago in which Toronto conglomerate Onex Corp. (Toronto:OCX.TO - news), backed by American Airlines parent AMR Corp. (NYSE:AMR - news), made a play for the Montreal-based carrier, members of the Star Alliance aviation group such as UAL Corp.'s (NYSE:UAL - news) United Airlines and Deutsche Lufthansa AG (quote from Yahoo! UK & Ireland: LHAG.F) came to Air Canada's defense.

Air Canada won that battle, mainly through a Quebec court ruling that reaffirmed government-legislated limits on any one individual or group owning more than 10 percent of Air Canada shares or any nonresident entity from holding more than 25 percent. Air Canada subsequently took over financially insolvent Canadian Airlines.
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