Prime Minister Justin Trudeau is working hard to convince Canadians that he is doing us a favour after signing off on the bailout of Air Canada. The plan has given airline shareholders and executives a lot to celebrate and Canadians pause. Call it a loan, a bailout, or corporate welfare, but a grift is a grift is a grift.
In what has been among the worst years for air travel in history, it’s not that Air Canada doesn’t need the help, or that the company isn’t worth saving. The airline provides a vital service to Canadians, connecting far-flung communities, and a national airline is a prerequisite of national pride. What distinguishes a good deal from a grift, however, is that the buyer gets what they paid for instead of being fleeced with a smile.
The PM and Air Canada could lead a masterclass on the art of the con. In this sweetheart of a deal that the airline could never find anywhere else, and private investors would ridicule, Trudeau and his team have negotiated just a paltry 6 per cent of shares of a company worth $9 billion.
With an investment that amounts to two-thirds of the company’s value, the Canadian people are floating the company and ensuring its survival. Shouldn’t we then own the majority of the company? The math just doesn’t add up.
The airline will now be forced to refund the fares paid by Canadians for flights that were cancelled due to COVID-19. That sounds like a win. It makes sense to get hard-working Canadians their money back as soon as possible. But hold on. The fares were never Air Canada’s to negotiate with in the first place.
The company held our money hostage for over a year in an effort to get a much bigger slice of the pie, and Trudeau and company are rewarding the practice. It is a dangerous precedent to set in an economy filled with corporate sharks, showing any future bailout seekers that all they need to do is abuse Canadian customers long enough and the federal vault will spring open, spilling forth its riches.
A key point of the deal is the cap on executive compensation, which the government is touting as a symbol of their responsibility with our money. And while it is true that Air Canada senior executives will see smaller pay cheques while they hold the government loan, don’t start a GoFundMe for them just yet. The plan limits pay to $1 million a year, which would amount to a pay cut of over 90 per cent for recently retired CEO Calin Rovinescu, who made nearly $13 million in 2019 (His replacement, Michael Rousseau, made over $4 million as deputy CEO last year). But this is still nearly 20 times what the average Canadian earns annually. Hardly a poverty wage.
Proponents of the deal say a loan is just that, a loan, and will be paid back, creating profit for Canadians. As we’ve seen with the 2009 bailout of General Motors and other cases of corporate welfare in Canada’s recent past, the record of repayment is spotty at best and the promises of great profit often fail to materialize. The people may end up holding the bag while Air Canada shovels our money to shareholders.
With a classic sleight of hand, Trudeau keeps repeating what he thinks we want to hear, employing the line that the bailout is a “good and fair deal in the interest of jobs, workers, communities and customers.” He forgot to include the Queen, Canadian geese, and even God in his exhaustive list of imaginary beneficiaries.
Trudeau’s minions are busily parroting his line, with Finance Minister Chrystia Freeland repeating it verbatim and Liberal surrogates taking to the airwaves to regurgitate the meaningless phrase ad nauseum. Trudeau and his underlings can apply all the lipstick they want but this pig is still a pig, and repeating his word salad won’t take the sting out of the grift.