Canadian North being sold to Winnipeg-based company for $205M
One of the North's major airlines is being sold.
Winnipeg-based Exchange Income Corporation (EIC) announced on Monday that it will buy Canadian North for $205 million, subject to regulatory approval. The company promised the sale would mean better service to northern communities.
Exchange Income Corporation already owns several aviation companies that operate in northern and remote regions, including Calm Air, Perimeter Aviation, Keewatin Air and Custom Helicopters.
"Canadian North will be a natural fit with our other northern air operators. Combining our aviation resources, knowledge, and assets with the team at Canadian North, will lead to increased efficiency and enhanced service levels in the region," said Mike Pyle, CEO of EIC, in a statement.
Canadian North, which offers passenger and cargo service to 24 communities in the N.W.T. and Nunavut as well as charter service for the resource industry, is currently owned by the Makivvik Corporation and the Inuvialuit Development Corporation. It operates out of Edmonton and Ottawa.
The sale, if approved by the Competition Bureau and Transport Canada, is expected to be finalized later this year.
Speaking to Radio-Canada on Tuesday, EIC president Carmele Peter said the acquisition had been in the works for a while. She said Calm Air — an EIC subsidiary — currently serves the Kivalliq region in Nunavut, while Canadian North offers similar service to the east and west of that region.
"So when you look at the landscape, obviously we saw an opportunity to be able to look at providing that service holistically across the whole region by the addition of Canadian North," Peter said.
"We thought it was a good fit, a good opportunity, and hopefully the communities will benefit from it."
Peter also said EIC owns two pilot schools, so that could help with recruiting at Canadian North amid an ongoing pilot shortage across Canada.
She couldn't say how the sale might affect Canadian North's fares or schedules, saying: "it will be the market that determines what's possible."
For now, though, she said it will be "business as usual" at the airline.
'Good news,' analyst says
John Gradek, who teaches aviation management at McGill University, welcomed news of the sale.
"I think it's good news, because we don't have to question the financial viability of Canadian North. I think there's always the question — are Northern carriers profitable?" Gradek said.
He said the sale means "we can basically put the 'Good Housekeeping seal of approval' on Canadian North."
Still, he acknowledged it means less competition in the northern aviation sector, and that changes may be on the way for Canadian North. He noted EIC is "in there to make money."
"They're going to be asking a lot more pointed questions of Canadian North's operating profitability. Which may put into question some of the routes, and some of the aircraft that Canadian North are operating today."
The airline is due for some big upgrades to its fleet and operation plan, Gradek said.
"It's going to take a few million dollars, several million dollars, of Exchange [Income Corp.] investing in Canadian North to improve the product. And I think that's a question mark," Gradek said.
"Are they looking at this as an investment, or are they just looking to eliminate a competitor?"
Speaking in the Nunavut legislature on Tuesday abut the sale, Transportation Minister David Akeeagok said the territorial government has been "assured that there will be no impact on service for Nunavummiut."
"We look forward to engaging with Exchange Income Corporation and Canadian North throughout this transition to ensure air services remain reliable, accessible, and sustainable. We remain committed to working with all stakeholders and regulators as this process moves forward," he said.
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