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Posted by David Reed on 11/22/2020

Oh Canada!

Canadian Airlines are like the yellow brick road, except instead of leading to Oz, they all lead to Air Canada.

There have been many airlines calling the Great White North home, but four of them played a big part in creating Air Canada. Trans Canadian Air Lines (TCA), Pacific Western Airlines (PWA), Nordair and CP Air. Just before World War 2, the Canadian National Railway and the Canadian Pacific Railway were arch-rivals in the passenger train business. CNR started Trans-Canada Airlines (TCA), based in Montreal and Toronto, because they wanted to get into the air travel business, a growing market as seen in the United States. The Canadian government was not happy calling charter bush companies airlines, and wanted a national airline for Canada. CNR provided the management expertise needed, funding was acquired, and with the government paving the way clear they bought some Lockheed Model 14 airplanes and began regularly scheduled flights. These airplanes proved that the business model was promising, and in 1945 they purchased 30 ex-C-47's for national routes. In 1947 they bought a fleet of Canadian North Stars, designed specifically by Canadair Aircraft Ltd for TCA. TCA put them to work on transcontinental routes as well as flights to Europe after the war. The DC-4M North Star wasn't just a DC-4 with Rolls Royce Merlin engines. It was more like a shortened DC-6 with a DC-4 tail and mid-section. They weren't very fast, and even though they were pressurized, they were still quite noisy.

Meanwhile, Canadian Pacific Railways, not to be outdone, started their own airline, Canadian Pacific Air Lines (CPA), based in Vancouver. To do this, they purchased ten charter bush companies and combined them all into one operation in 1942. Management was a mix of people from the ten companies. With the government heavily involved in TCA, CPA had an uphill battle with TCA for access to government-controlled routes, both transcontinental and international, throughout their history.   Using Lockheed Model 14's and DC-3's (much like TCA), they focused more on developing a regional market within Canada, bringing airline service to a large number of small, isolated communities. When they went looking to go internationally to Europe with their own DC-4's and DC-4M's, they hit a roadblock. The Canadian government had already given these prize routes to TCA. Instead, CPA went to the Pacific, providing scheduled services from their base in Vancouver to Tokyo, Shanghai, Hong Kong, Honolulu, Fiji and Sydney. When long range jets became available (which replaced CPA's British Bristol Britannia's), the government relented and let CPA fly to European cites not served by TCA.

In 1964, TCA changed their name to Air Canada. In 1968 CPA changed their name to CP Air. TCA moved into Vickers Vanguards and Constellations for long distance, then later acquired the DC-8. CPA went with the Britannia, DC-6 and DC-8. For years, both airlines had always been flirting with the idea of a merger. It only made sense. CP Air had the domestic route structure and the Pacific, while Air Canada was more into flying to the larger Canadian cities, the US and Europe. Air Canada was still controlled by the government though, so any ideas of a merger fell on deaf ears. When open skies came about in the 1970's, CP Air and Air Canada scrambled for bigger planes, purchasing and leasing DC-10-30's, 747's and long-range DC-8-63's. This rapid expansion would prove fateful for both carriers. Smaller Pacific Western Airlines, with some big financial backing, took over CP Air (and smaller Nordair) in 1987. They assumed CP Air's $600 million debt, but they were always struggling finacially after that. The new airline was called Canadian Airlines. 

Air Canada meanwhile was finally freed from government control in 1989. The change went surpisingly smooth. In 2001 the idea of merging CP Air (now Canadian Airlines) and Air Canada finally came to pass, but when the deal was done, Air Canada officials discovered Canadian was in worse shape financially than they had thought. This, along with a worldwide downturn in the airline market, caused Air Canada to file for bankruptcy protection in 2003. They managed to come out of bankruptcy a year later. Since then, the airline has done well, modernizing it's fleet and cutting costs, but the road it took would confuse even a seasoned Wall Street trader. Despite the ownership fog, Air Canada has been profitable again since 2012.

Two other Canadian airlines have survived through all of this. First Air and Air North have their nitch markets and stick with them, improving their service and not looking to compete in the international marketplace. Both are owned by local native tribes, who helped them move into jets, primarily 737's. Though not as big as Air Canada, they have one thing Air Canada doesn't- sustained profitability and fierce customer and employee loyalty. Sometimes, small is good.

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