One of the giants of the Canadian transportation sector suffered a major financial set-back last year. The financial loss, coupled with the poor economy, will mean that Air Canada will undergo a major restructuring:

“Air Canada plans to further shrink its network after losing $1-billion last year, raising concerns about its ability to combat the recession, fund its pension plan and meet union demands.

Canada’s largest carrier, which cancelled and scaled back dozens of routes in 2008, expects to reduce worldwide seat capacity by between 2.5 and 3.5 per cent this year.”

link: Air Canada to shrink after $1-billion loss

The impact of this change in Air Canada’s business model with be felt throughout the country. The magnitude of the loss may be an indicator of possible problems for other air carriers. The transportation sector may join other essential industries and request government bailout assistance. At some point, a financial rescue simply may not be possible.

Catherine Forsythe