Anyone notice this Aug 1 article in the National Post ?
Propping up Air Canada
Ottawa has stumbled deeper into the practice of picking winners and losers from amid corporate Canada with its decision to pump $250-million into struggling Air Canada.
Some of the money will come from the Canada Account, the same pool used to bail out General Motors and Chrysler. The fund was established to promote export-oriented businesses but will be used to prop up Air Canada even though it produces nothing for export. In effect, it's become a slush fund for failing companies favoured by politicians.
Ottawa justified the infusion by noting Air Canada is dealing with "extraordinary circumstances" -- seeking to survive in a competitive industry during difficult times. But no money is going to rival airlines WestJet or Porter, though both face the same challenges and continue to thrive.
A spokesman said Stockwell Day, the International Trade Minister, was confident "the airline has developed a long-term plan to remain a viable business." One analyst told the National Post that Air Canada still suffers an "inflated cost structure, eroding market share, high debt levels, big pension deficit and depressed industry demand," but what does he know next to a federal Cabinet member?
In effect, Air Canada's competitors are suffering the same fate as Ford Motor Corp., which got its finances in shape before the recession hit and was penalized by having its rivals saved from extinction. Now it's up to
Cabinet ministers to decide which business plans are viable and which aren't, which airlines deserve to survive and which don't, which companies are worthy of federal lifelines, and which -- like Nortel -- can be left to the mercy of market forces. And this from a Conservative government.