Canadian carriers set for £2.4bn merger?

Canadian carriers set for £2.4bn merger?

if the deal goes ahead.

The board of Canadian has recommended shareholders accept the proposal, with backing from 33% stakeholder American Airlines, which is planning to put £115m into the new venture.

Air Canada considers the bid hostile and said there would be no benefit in shareholders accepting the plan.

Shareholders at both airlines have up to 90 days to accept the bid.

Onex wants to merge both carriers under the parent name of AirCo, but call the new airline Air Canada. It would be based at the current Air Canada's Montreal headquarters.

However, the new carrier would join the Canadian Airlines-founded Oneworld to keep intact agreements with transatlantic codeshare partner British Airways and use the American Airlines-owned Sabre global distribution system.

United Airlines and Lufthansa, which founded Oneworld rival Star Alliance with Air Canada, have expressed concern at losing their Canadian partner and are expected to counter the Onex bid.

Air Canada started the merger talks earlier this month when it launched a failed bid to buy Canadian's international routes.

Canadian's managing director Europe, Middle East and Africa Gary Cross said: "Both these Canadian flag carriers should perform better and this is seen as an opportunity to put them together.

"This can not be anything but positive."

Cross, who reassured staff their jobs were safe after the bid was announced last Tuesday, said he had no indication of any impact on UK positions if the Onex plan is accepted.

He confirmed Onex will cut 5,000 jobs worldwide from a combined workforce of 50,000.

No comment has been made on rationalising routes, but it is inevitable that loss-making services or ones on which Canadian and Air Canada duplicate too closely will be axed.

If the Onex bid goes through, the shareholding in the new Air Canada will be 55% existing shareholders of both current airlines, 30% Onex and 15% American Airlines.

CANADIANAirlines and Air Canada will merge if shareholders accept an ambitious £2.4bn plan from a major corporation to buy the two carriers.

Toronto-based conglomerate Onex Corporation said around 5,000 worldwide jobs will be axed if the deal goes ahead.

The board of Canadian has recommended shareholders accept the proposal, with backing from 33% stakeholder American Airlines, which is planning to put £115m into the new venture.

Air Canada considers the bid hostile and said there would be no benefit in shareholders accepting the plan.

Shareholders at both airlines have up to 90 days to accept the bid.

Onex wants to merge both carriers under the parent name of AirCo, but call the new airline Air Canada. It would be based at the current Air Canada's Montreal headquarters.

However, the new carrier would join the Canadian Airlines-founded Oneworld to keep intact agreements with transatlantic codeshare partner British Airways and use the American Airlines-owned Sabre global distribution system.

United Airlines and Lufthansa, which founded Oneworld rival Star Alliance with Air Canada, have expressed concern at losing their Canadian partner and are expected to counter the Onex bid.

Air Canada started the merger talks earlier this month when it launched a failed bid to buy Canadian's international routes.

Canadian's managing director Europe, Middle East and Africa Gary Cross said: "Both these Canadian flag carriers should perform better and this is seen as an opportunity to put them together.

"This can not be anything but positive."

Cross, who reassured staff their jobs were safe after the bid was announced last Tuesday, said he had no indication of any impact on UK positions if the Onex plan is accepted.

He confirmed Onex will cut 5,000 jobs worldwide from a combined workforce of 50,000.

No comment has been made on rationalising routes, but it is inevitable that loss-making services or ones on which Canadian and Air Canada duplicate too closely will be axed.

If the Onex bid goes through, the shareholding in the new Air Canada will be 55% existing shareholders of both current airlines, 30% Onex and 15% American Airlines.

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