Originally Posted by
AC7E7
I was not a fan of government ownership of GM Canada, and I am very concerned about government ownership of AC.
How much influence will the government have going forward? I am not talking about a board seat. If AC wants to cancel or cut back flights to a city, will the government force them to keep money-losing routes in place? This is unacceptable.
I do believe the government needed to get involved as this was their doing. They are the ones that restricted travel, and should be compensating companies for these decisions. However, I am disappointed Air Canada agreed to a government equity stake. I am considering moving my business to Westjet if their agreement does not include an equity stake.
As a shareholder, I am happy the shares have not tanked as I suspected they would in my earlier post. However, I am considering selling my shares. I don't believe the government can keep their nose out of their operations.
You can think of things as 1% loan or a 10% loan, but at some point its real dollars per day. Flying to an unprofitable place is also real dollars per day.
Its a perfectly reasonable framework for the Government to say "We will provide low rate loans if you implement some public service". It would also be perfectly reasonable for a Government to say "we will directly subsidize some service for cash", which is only a hair away from "we will compensate you for a service you can't provide because we limited your existence for 18 months". Devil is in the details, yes, but I see these on a spectrum, not as jarring distinctions.
I'm sure the loan agreement list specific routes, frequencies, available seats, etc. I can't imagine in 5 years (or 3 months for that matter) the GoC, as a 20% owner and loan holder, ordering AC to, say, have a YTS-YVR direct because some backbench MP was promoted to Minister of Transport..