Business

Milton: ‘A game of chicken’

October 4 1999
Business

Milton: ‘A game of chicken’

October 4 1999

Milton: ‘A game of chicken’

Maclean’s Senior Business Correspondent Ross Laver and Senior Writer Robert Sheppard spoke to Air Canada CEO Robert Milton on Friday. Excerpts:

Macleans: In your view, is one option for you to sit back and let Canadian Airlines go under? Milton: Yeah. I believe American Airlines is playing a brutal game of chicken with Canada, saying: ‘It’s our way, or it all goes down in a pile of rubble—but we’ll put $650 million [into a merger] if we get to suck the life out of Air Canada like we did at Canadian.’

Macleans: How important is it that Ottawa preserve the law limiting individual investors to 10 per cent of Air Canada? Milton: It’s critically important. The vast majority of key national carriers around the world have some form of protection on ownership levels.

There are two international examples in the last few years, Malaysia and the Philippines. Both those airlines have been taken over by individuals and have gotten into serious trouble. It is a frightening proposition to think of the airline industry of Canada reduced to a picture comparable to those two developing nations. Macleans: Would you strike a deal with Onex and AMR ifthe money 'was right?

Milton: They can participate, but it has to be within the law. If Parliament changes the 10per-cent law, that’s fine. I believe the first thing the government should do is state that the 10-per-cent rule is not compromisable.

Macleans: Under the right circumstances, would you join AMR’s Oneworld alliance? Milton: I’ve got a responsibility to look at anything. If it was reconfigured and repriced and dealt with our employees properly, I don’t have a problem. Macleans: How much would it cost to pull out of your existing partnership, the Star Alliance? Milton: Our relationships have not been based on that type of penalty. The lockups, the vetoes and the massive penalties— they’re all on the side of Ameri-

can. They make it much more difficult for Canadian to do a deal with anybody.

Macleans: Is anyone waiting in the wings to make a different offer, another Gerry Schwartz? Milton: We’ve had expressions of interest from a variety of players, airlines and non-airlines. My issue is not, ‘Can we fund whatever we want to do?’, it’s simply, ‘What is the best thing?’ We do not have to come forward with something, but we are looking at alternatives. This is not Air Canada’s problem. This is about one airline, Canadian, which can’t find its way.