New co-pilot from Ottawa

Two aspects of Ottawa’s bailout of Air Canada will likely garner the most attention.

First, the airline will be paying out refunds to scores of customers left in the lurch by COVID flight restrictions — a requirement that many Canadians who bought tickets in good faith before the pandemic will welcome.

Second, the airline must restore a number of regional routes that it had dropped as it tried to stem growing losses. That will no doubt receive support, especially in parts of the Atlantic region that have seen flights vanish.

Not so visible on the radar is the mainly-about-optics requirement that the company also cap executive pay.

More interesting, in the long term, however, is the structure of the deal. Ottawa is essentially becoming both the airline’s bank and its partner: in a series of five loans, it will give the airline $5.9 billion at rates far better than the carrier could get anywhere else, allowing the company to pay off higher-interest loans and replace them at lower rates.

The federal government is also buying 21.5 million Air Canada shares at a 15 per cent discount, and being granted warrants to buy 14.6 million more — enough shares that the government could end up owning as much as 10 per cent of the airline.

That does a couple of things: first, if air travel bounces back significantly after the pandemic gets under control, Ottawa might be able to reap a profit by selling its holdings. As well, as a significant shareholder (Ottawa has agreed not to increase its holdings to more than 20 per cent of the company), there is now a political voice at the Air Canada boardroom table.

The other thing to keep in mind? Air Canada’s deal is likely to set the template for federal support for Canada’s other airlines. Which means, of course, federal input at several boardroom tables.

What that means depends on where you stand.

On the corporate side, it might look like an unreasonable constraint on airlines’ ability to compete. For politicians, it might be a valuable lever. And for individual customers? It may look like a chance to be heard.

Remember, Ottawa has listened in the past to passengers’ (and voters’) concerns about Canadian airlines and their policies governing things like abrupt cancellations, lost luggage and deliberate overbooking.