Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Air Canada's Buyout Bid Backed By Board of Canadian Airlines




TORONTO -- Canada's bitter airline war appears over after Canadian Airlines recommended that its shareholders accept a buyout offer by rival Air Canada.


The announcement Saturday by the Canadian Airlines board of directors signaled a likely monopoly in Canada's air industry, with Air Canada running the nation's two major airlines.


It was also a defeat for the Oneworld alliance led by American Airlines, which had been trying to fend off Canadian Airlines' takeover by Air Canada, a member of the Star Alliance headed by United Airlines of the United States and Lufthansa of Germany.


Canadian Airlines stock owners have until Tuesday to accept Air Canada's $63 million offer at $1.37 a share. The offer calls for Air Canada to take over Canadian and run it as a separate airline.


Saturday's announcement ended nearly four months of a corporate takeover war focused on restructuring the Canadian airline industry.


It started with a bid by Onex, a Canadian takeover specialist, to gain control of both airlines and merge them into a single national carrier. The Onex bid was withdrawn after a judge ruled it illegal, but it forced Air Canada to respond with its own offer to buy out Canadian Airlines and also start a discount regional carrier based in Ontario.


Canadian Airlines president Kevin Benson sought help from American Airlines and its Oneworld partners to fight off the Air Canada bid, but was unable to secure the necessary financial commitment last week during meetings in New York.


Even if a majority of Canadian Airlines shareholders accept the Air Canada offer by Tuesday's deadline, Air Canada still must get American Airlines to surrender its 25 percent stake in Canadian Airlines and win federal regulatory approval for the deal. It has said it expects to cut about 2,500 jobs in a merged company.