First off Air Canada was not forgiven any debt when it was privatized. That is an urban myth.
The first part of this post is from company material put out in 1993.
Air Canada
A financing and profit history
· Air Canada has not received subsidies from any government since 1962
· Air Canada received government subsidies between the years 1937 and 1962. These subsidies totaled $25.6 million and were provided to cover shortfalls in the company's operating surplus account.
· During these years, the airline generated operating surpluses of $11.2 million, which was returned to the government.
· From 1963 to 1977 Air Canada returned $2.75 million to the government as dividends. At the same time, $38.7 million was accumulated as retained earnings.
· In 1974, the government committed to building a hangar in Winnipeg as part of an election promise. The government paid the $14 million capital cost and the operating costs of the hangar until Air Canada put it into full operation at which time the airline assumed the full operating costs of the building.
· In 1978, the government converted $24 million of outstanding loans to Air Canada, into equity, which eventually was repaid to the government, (the taxpayers) during privatization.
· The remaining $311 million of debt owed to the Federal government has been largely repaid, ($16.6 million was outstanding as of 1993), including interest charges on outstanding balances at market rates.
· In 1988, the Federal government, under Brian Mulroney, completed the first phase of the privatization of Air Canada. Air Canada received the proceeds of the first offering, which was $246 million.
· In 1989, the final 57% of Air Canada was privatized. A total of $493 million was raised and went to the government. That money not only paid off the government's 1978 equity investment in Air Canada, but also provided the government with an additional $164 million.
· Over Air Canada's 55 year, history, it has received a total of $679 million in loans and equity from the government but has returned $986 million to the government, (the Canadian taxpayer) in dividends, interest and capital repayments.
· The only outstanding loan to Air Canada from the Federal government was paid back in full as of April 1993.
· When Air Canada privatized it re-structured. Employee numbers went from just under 24,000 to just over 17,000. It bought new Airbus aircraft, making it the youngest, quietest fleet of any major carrier. Air Canada dealt with money-losing routes and pursued lucrative markets on a timely basis, especially the US. It has since grown to almost 23,000 employees again.
The following numbers are taken from Air Canada's annual reports.
In the years 1993 to 1999 Air Canada’s operating income, (operating revenue – operating expenses), was 1,422 million.
The long term debt plus the perpetual debt at the end of 1993 was 3,571 million. By the end of 1999 the total debt was 275 million LESS or a total of 3,296 million.
The total profit in those years was 711 million.
These are the facts.