Sunday, Nov. 29, 1992 -—

B.C. should buy airline equity |

“You know, the French have an expression, ‘eouverner c'est chuisir,’ —

to govern is to choose. We had to choose between doing nothing and
looking stupid, or doing something and suceceding. So it was a simple

choice.”"

— Robert Bonner, QC

BONNER USED those words when he explained the na-
tionalization of the B.C. Electric Co. to W.A.C. Beanett’s

bicgrapher, David Mitchell.

Two weeks ago, in a radio edi-
torial, | argued thai the British
Columbia government should be
bold and imaginative. It should
buy equity control of PWA Corp.
and Canadian Airlines Interna-
tional. And bring them both home
to Vaiwcouver.

One week ago, in private, I
mentioned this to B.C. Federation
of Labor president Ken Geergetti,
who appeared more than in-
trigued

Enrly this past week, when the
same idea was outlined by Dr.
Michzel Goldberg, Dean of
Cosamerce at the University of
British Columbia, i was
thunderstruck when he responded
with com ,icte agreement.

Goklterg is the most respected
business mind at any university
west of Torcnto. He sits on both
public and private beards of
directors.

He set up the International Fi-
nance Centre for Vancouver and
drafted many of the province's
Asia Pacific initiatives.

“*I think this would be aa en-
tirely appropriate place for an ag-
gressive intervention by a gov-
ernment in the marketpiace,”’

We would then hold an
awesome tool in global economic

‘The power of provincial gov-
ermmment behind the much discuss-
ed Arocrican Airlines and Cana-
dian partnership, he said, would
assure Vancouver’s emergence as a
“gateway” airport.

Goldberg said that Amevican’s
west coast hub is the domestic
Toutes centre in San Jose,
California, Vancouver would
become to North America what
Schiphol Airport (Amsterdam) is
to continental Eurepe.

“*¥ nommally support free mar-
ket forces, but there is a time
when government should play
more than an observer rolc,”’
Gotdberg said.

Before examining what might
happen today, let’s look back to
the B.C. Electric takeover in 1961.

It was the bold move that laid
. the commerstone of modern British
Cobambia history. W.A.C. Ben-
nett had grown frustrated with
both the private monopoly and

Gary
Bannerman

OPER LINES
necessarily socialism,’ Bennett
told his detractors.

He then took his “two rivers
policy” to fruition, developing
both the Peace and the Columbia,
assuring that federal Ottawa
would never again dictate resource
decisions.

eee

Last week in this space we trac-
ed the history of both Pacific
Western Airways and Caradian
Pacific Airlines, and the sad ioss
of both of these historic B.C. en-
tities to ure neighboring province
of Alberta,

The federal announcement this
week is strange.

The rescue plan requested foun
guarentees from Ottawa, Alberia
and B.C. totafling $190 million. it
proposed a $125 million public
share issue.

Employces would raise $150
million over three years by payroll
deduction.

It included a $246 million injec-
tion from American Airlines and
various other censiderations.

The airline is $2.2 billion in
debt with few fixed assets.

Most of the credit is fully
secured. The creditors own
everything, including paper clips.

There are 48 miilion issued
shares, currently trading at about
$2. List price of the whole com-
pany: $96 million.

The deal simply doesn’t make
sense. The equity investors have
been trashed.

This is equally true fur those
who bought Air Canada stock

erament came to the table with a
multi-faceted proposal, it could
offer as much as $4 or $5 a share,
conditional upon the acquisition
of 51% of the common stuck and
the voting shares,

Ht could further extract condi-
tions from employces to invest
$150 million, and to secure an in-
terim agreement with American
Airlines.

The federal government would
have to ensure regulatory cooper-
ation.

My guess is that al! the key
players except the Canadian
unions and empioyees would im-
mediately dig in their heels.

Ottawa would face the certain
realization that one of its most
precocious partners would now
hold what, in business terms,
would be a nuclear weapon.

Any time the province became
disp!cased with federal discrimina-
tion over choice air routes, British
Columbia could be defiant right
to the sieps of the Supreme Court
of Canada. The Crown Provincial
has its own charming rights of
sovereignty.

‘The unions would sense a rich
new owner and that happy days
are here again.

Hopefully, this would be a
delusion. Government would im-
pose a precondition of salary and
benefit concessions.

PWA Corp. management would
face certain unemployment and
many would sense an imminent
move to Vancouver.

Business ideologues would again
charge that the socialists were at
the gate.

There would be many potential
saboteurs in this recipe.

Every good game needs a
master stroke en route to
checkmate.

Afte: laying out a complicated
proposal —- the conditions —
W.A.C. Bennett might nave add-
ed:

“If the parties to this agreement
fail to respond positively within 30
days, British Columbia will launch
its own international airline, and
we will buy whatever assets of
Canadian Airlines International
are offered for sale by its
receivers.”

This was the story, not of B.C.
Electric, but of B.C. Ferries.

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