Skyservice Investments and Air Canada to Forge Strategic Partnership in Lowcost, Vacation Charter and Corporate Jet Divisions
TORONTO, May 3 /CNW/ - Skyservice Investments and Air Canada announced
today that they have signed a letter of intent providing for a strategic
investment by Air Canada in:
- Skyservice Airlines Inc., which currently operates both a low-cost
vacation charter business and the Roots Air scheduled operation; and
- Skyservice Aviation, Skyservice's highly successful corporate jet
division
Air Canada will acquire a 30% equity interest in Skyservice Aviation and
50% of the voting common shares of Skyservice Airlines. In addition, Air
Canada will acquire a 35% non-voting equity interest in Skyservice Airlines
which it intends to distribute to its shareholders within 18 months through a
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public distribution, market conditions permitting. Air Canada will have the
right to appoint certain directors to the boards of Skyservice Aviation and
Skyservice Airlines but it will not have the right to direct the management of
the carrier operations of these companies. The agreement is subject to
customary due diligence and regulatory and certain other approvals. The terms
of the proposed commercial agreement are confidential.
"Air Canada's powerful brand image, extensive network, strategic
purchasing capabilities in addition to the Aeroplan advantage are just some of
the reasons we approached Air Canada to partner with us," said Russell Payson,
Chairman, CEO and President of Skyservice. "Skyservice is able to deliver on
the top quality product that Air Canada brings to its customers and the
partnership will give Skyservice a significant advantage in the marketplace,"
he added.
"This exciting strategic partnership with Skyservice is a win-win for Air
Canada's customers, employees and shareholders," said Robert Milton, President
and Chief Executive Officer. " Air Canada's customers will now have access to
one stop shopping for all their travel needs. In particular, Aeroplan's six
million members will benefit from attractive mileage redemption opportunities
to popular vacation destinations.
"Air Canada's employees and shareholders will benefit through a
comprehensive commercial agreement whereby Air Canada will provide Skyservice,
among other things, with aircraft maintenance, ground handling, information
technology, revenue accounting, insurance, security and emergency response
services. Through the provision of these services to Skyservice, this
agreement further enhances job security for Air Canada employees through their
participation in some of the fastest growing sectors of the industry.
"Shareholder value will be enhanced through expansion in new areas of
profitable growth. The partnership provides a unique opportunity for Air
Canada to provide its industry-leading expertise to an established Canadian
aircraft operator resulting in exciting new areas of growth and profit centres
for Air Canada," concluded Mr. Milton.
The existing Skyservice vacation charter product and Roots Air will now
be re-positioned. The partnership allows Air Canada to participate on a
competitive basis in the increasingly important low-cost sector of the
industry while remaining fully compliant with the terms of its collective
agreements. "Air Canada's buying power on aircraft, insurance, fuel,
maintenance and other areas combined with Skyservice's cost effective
operations will result in a quality low cost product appealing to consumers
yet profitable to shareholders," said Mr. Payson. "Consumers in this rapidly
growing low-cost sector of the industry will benefit from more schedule
frequency and a greater choice of destinations," he added.
The synergies created by the partnership on the low-cost carrier are
equally applicable to the vacation charter division and demand for additional
capacity in this sector of the market has grown on a number of fronts. "The
new carrier will fill the recent capacity void in the vacation charter market
created by recent changes in the industry. In particular, Air Canada Vacations
now has a requirement for additional product to distribute in view of growing
opportunities throughout the Air Canada international network," added Mr.
Payson. Plans for the new leisure carrier call for a 2001 fall/winter launch
to destinations in the Caribbean, Mexico, Bahamas and Las Vegas.
Skyservice Airline Inc. currently operates a total of 11 aircraft and the
business plan contemplates growth opportunities.
"When we approached Air Canada they realized the value of our premier
business aviation division and that it would be a good fit to complement Air
Canada's leading business class product for premium corporate and individual
customers looking for a critical productivity enhancing tool in the use of
corporate business aircraft," concluded Mr. Payson.
If I was the ACPA, I would be pissed...
They spent so long working out language in the contract to control the size of the LCC. And now AC has bought one entirely outside of the collective agreement. (Anybody notice that very important sentence in the news release?)
From a management perspective, it is a masterstroke.
Here is the AC no frills airline....
This has been a long term plan of AC, which makes you think this was not planned!!
This was to tackle the likes of Westjet, canada 3.
Well i have news for AC, they already offer a "no frills" airline.....
It will be hard to seperate the two services!
This should open up the fare war between the east and west coast.
This is what interests me:
"Skyservice Aviation, Skyservice's highly successful corporate jet division"
First UA, then AC. I somehow think that this focus on the corporate jet market will become a major trend in North American, if not global, aviation.
 Suggestion for cool sorting options
 Unwanted bonus
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Skyservice and Air Canada Strategic Partnership