CP/AC merger will be in Oneworld
 

If AC approves the Onex deal, the combined airline will be called "Air Canada" and be in Oneworld. I guess that's were the 15% AMR stake comes into play.

See http://www.cdnair.ca/eng/cpi/01discover/onexcacdn.html

Extract:

"We strongly believe Canadian Plus members will benefit in a number of ways

- The new airline will guarantee your Canadian Plus points.
- The new airline will become a member of the oneworld global alliance of world-leading airlines including American Airlines, British Airways, Cathay Pacific, Qantas Airways, Iberia and Finnair.
- The new airline will continue to rely on serving the business customer as a key component of its strategy to build revenues and ensure the stability and growth of the industry.
- Canada’s communities will benefit through the preservation over the long-term of thousands of jobs, which are at risk if Canada’s airline industry continues to decline
- A strong Canadian carrier will mean improved service, a better choice of flights on many routes and more non-stop flights to more destinations, including more international destinations."

I was originally surprised by the assumption that the "new" Air Canada would be in oneworld, but I guess that was the whole point of AMR's $200M+ "bribe." I wonder if any Star Alliance carriers will try to up the bidding.

I'm still concerned about one carrier competition issues. I have my doubts that I also suspect that FF program benefits in Canada, which seem to be a lot more and a lot better than most other places, will be "harmonized" downward, to the lower levels of US programmes.

Regards,

Ken Hamer

It is also far from a done deal. The AC shareholders I've seen have described the offer as "an insult" and "low even for a lowball." (I certainly would take a severe loss from a merger into 1w--none of its carriers serves my home airport, unless US Airways joins.)

Regardless of AA's added investment in this overall deal, they already own 25% of Canadian, which gives them more say in the deal than any of the Star Alliances carriers from what I've seen.

Remember, Air Canada also has to approve the deal--and according to the WSJ, it must be a 2/3 majority. From what I can tell, that is not going to happen, certainly not at 8.25 loonies when the voting shares are past 9 and the non-voters are close (both count for this purpose).

Just saw an item on Bloomberg Reports that LH was making an offer for CP. Just a headline at the bottom of the screen, no details. I'm sure no matter who takes over the ff program will change. They were very generous and this seems to be out of style nowadays.

The headline was not quite right. LH, and the rest of *A, are considering buying AC, not CP. (Currently, foreigners are limited to 25% voting in Canada's airlines, although AA owns a third of CP financially; treaties limit the figure to 49%.)

The deal is far from done, and there is a possibility that AC will reject it. But AC is not quite in the power position they like to imagine. If they doreject the offer, they will look like the bad guys, and probably give the feds an opening to assist CP. There's yet a huge amount of manouvering to come.

Regards,

Ken Hamer