No. H094/05
For release May 2, 2005
GOVERNMENT OF CANADA
PRESERVES OFFICIAL LANGUAGE
PROTECTION IN THE RESTRUCTURED AIR CANADA
OTTAWA — Transport Minister Jean-C. Lapierre today announced that the Government of Canada will amend legislation to ensure official language obligations continue to apply to the restructured Air Canada.
"The Government of Canada continues to take the actions necessary to foster a healthy airline industry, while protecting the language rights of Air Canada employees and the Canadian public," said Mr. Lapierre. "With these amendments to the legislation, Air Canada’s responsibility to meet its official language requirements remains undiminished."
The Air Canada Public Participation Act, which set out the conditions for the privatization of Air Canada in 1988, will be amended to ensure that it applies to all federally regulated entities within Air Canada’s new corporate structure.
In September 2004, Air Canada emerged from bankruptcy protection under the
Companies’ Creditors Arrangement
Act. In its restructuring process, the company made significant changes to its corporate structure to promote productivity and improve efficiency. While the
Air Canada Public Participation Act continues to apply to a restructured Air Canada, operations that have been moved out from under the control of Air Canada are no longer subject to the act and official languages obligations.
This proposed legislation is designed to ensure that official languages obligations continue to be in place for Air Canada and its former internal divisions and subsidiaries, and that certain official language obligations, as well as a requirement to maintain the Air Canada head office in Montreal, are extended to ACE Aviation Holdings, the new holding company that controls Air Canada. The existing requirement for Air Canada to operate maintenance bases in Montreal, Winnipeg and Mississauga continues to apply.
Air Canada has publicly committed to continue providing service to the public in both official languages.
"The hard work by Air Canada management, its unions and investors to restructure the airline is already proving to be very successful," said Mr. Lapierre. "However, it is imperative that the important obligations set out in the
Air Canada Public Participation Act continue to be respected. I have committed to Air Canada that they would be subjected to ’no more, no less’ regulation."
A backgrounder with more information on the Air Canada Public Participation Act and its responsibilities under the
Official Languages Act is attached.
- 30 -
Contacts:
Irène Marcheterre
Director of Communications
Office of the Minister of Transport, Ottawa
(613) 991-0700
Anne-Marie Bouchard
Communications
Transport Canada, Ottawa
613) 993-0055
Transport Canada is online at www.tc.gc.ca. Subscribe to news releases and speeches at apps.tc.gc.ca/listserv/ and keep up-to-date on the latest from Transport Canada.
This news release may be made available in alternative formats for persons with visual disabilities.
BACKGROUNDER
AIR CANADA PUBLIC PARTICIPATION
ACT AND THE OFFICIAL LANGUAGES ACT
Air Canada was established by Parliament on April 10, 1937, as the national airline to provide essential air transportation, cargo and mail services across Canada. The airline has been subject to the
Official Languages Act since that act came into effect in 1969.
During 1988 and 1989, as part of the government’s deregulation of the air transportation industry, Air Canada was privatized under the authority of the
Air Canada Public Participation Act and through the sale of the Government of Canada’s shares in the air carrier.
Upon privatization, certain obligations were imposed on Air Canada through the act in recognition of the importance of preserving official languages rights for the Canadian public and Air Canada’s employees, and because of its history as a federal Crown corporation. Specifically, provisions were included to ensure that Air Canada continued to respect the language obligations set out in the
Official Languages Act, and to maintain its head office in Montreal.
In early 2000, Air Canada acquired Canadian Airlines and to protect public interests, Parliament passed legislation that included amendments to the
Air Canada Public Participation Act that imposed an obligation on Air Canada to ensure that its air service subsidiaries, such as Jazz and ZIP, would comply with Part IV of the
Official Languages Act by providing service to the public in both official languages.
In recent years, the aviation sector has been particularly vulnerable to economic and geopolitical shocks, such as the September 11 terrorist attacks, SARS and record high fuel prices. Air Canada, along with many other large carriers in the United States and around the world, was not immune to these shocks and filed for bankruptcy protection under the
Companies’ Creditors Arrangement Act on April 1, 2003. After eighteen months of significant restructuring, the company emerged from bankruptcy protection on September 30, 2004 with a revitalized business plan and balance sheet.
An important component of Air Canada’s restructuring is its new corporate structure that came into effect on October 1, 2004. The new structure is intended to promote improvements in productivity and efficiency and to facilitate future equity investment. Air Canada, the air carrier, has become a wholly-owned subsidiary of a newly created parent company, ACE Aviation Holdings Incorporated. In addition, several previously internal divisions and former subsidiaries of Air Canada have been spun-off into limited partnerships under the direct or indirect control of ACE Aviation Holdings Incorporated.
Currently, the requirements to maintain Air Canada’s head office in Montreal and its maintenance bases in Montreal, Winnipeg and Mississauga, as well as its obligations under the
Air Canada Public Participation Act, and the Official Languages Act, all continue to apply to Air Canada. Neither act however, applies to the operations that have been spun-off into limited partnerships under the direct or indirect control of ACE Aviation Holdings Incorporated and are now affiliates of Air Canada, such as Jazz Air Limited Partnership.
In addition, ACE Aviation Holdings Incorporated, the parent company that controls, directly and indirectly, all the entities within the new corporate structure of Air Canada, is not covered by official language obligations or the requirement related to head office location.
These changes in Air Canada’s corporate structure have prompted the Government of Canada to introduce amendments to update the
Air Canada Public Participation Act to ensure official language obligations continue to apply to a restructured Air Canada and its affiliates. This would mean that official language obligations would be extended to former internal divisions of Air Canada. As well, Jazz Air Limited Partnership and any future federally regulated undertakings providing air services would be made subject to Part IV of the
Official Languages Act and would be required to offer services in both official languages. The enforcement mechanisms and policies under this act, specifically Parts VIII, IX, and X, would also be extended directly to Jazz Air Limited Partnership and any future undertaking providing air services. In addition, certain official language obligations and the requirement to keep Air Canada’s head office in Montreal would apply to ACE Aviation Holdings Incorporated as the new head of the Corporation.
May 2005
