On April 27, it has been revealed that the Government of Canada and Canadian North have agreed on new terms for the merger with First Air.
This article will cover the details surrounding what the new terms mean for the merger between Canadian North and First Air, as well as the input that the Government of Canada has had as part of this process.
Canadian North & First Air New Merger Terms
Canadian North is just one of a few Canadian carriers that provide vital services to some of Canada’s most remote communities. From providing air transport connections to delivering essential items such as food and medicine, Canadian North plays a vital part in ensuring those communities remain connected with the rest of Canada and have the vital lifelines they need.
Back in 2019, prior to the Covid pandemic wreaking havoc in the worldwide aviation industry, the Government of Canada had approved a merger between the two Canadian operators, Canadian North and First Air.
This merger was subject to multiple terms and conditions in the eyes of ensuring those remote communities remain a top priority. However, as the pandemic began to set in, the carrier struggled to retain those terms and conditions, which hampered the merger process.
Following the above, the carrier was granted funding of $138 million in order to continue vital operations during the pandemic.
As the pandemic is now significantly settled down, both parties have finally agreed on new terms, that also keep the carrier’s profitability in mind so that communities don’t end up being cut off with the carrier having financial difficulties.
These new terms consist of the following –
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- Canadian North to ensure all communities it currently serves to receive at least one flight per week.
- In case any of these routes achieve load factors of above 85% on average for six consecutive months, Canadian North is expected to adjust its schedules and capacity to cope with the increase in demand.
- The carrier is to limit their average annual fare increases for both passenger and cargo operations to 25% within a one-year period.
- Canadian North’s yearly profit margins are to be limited to no more than 10%, enabling the carrier to recoup its 3-year’s worth of losses.
- Canadian North will also need to provide information on a quarterly basis for auditing to be carried out by an independent audit group.
Executive Comments
As part of these new terms, Canada’s Minister of Transport, The Honourable Omar Alghabra, has said, “Canadian North provides an important service to the North, and is the only true full network air carrier in much of the region.”
“These new terms and conditions will ensure northern and remote communities have the access to the air services they need, while at the same time ensuring Canadian North remains a viable service provider.”
