Calm Air Sold (Almost)

[123]

http://www.eiif.ca/downloads/Calm_Air_A ... _Clean.pdf

[CD]

Interesting news....

[Four1oh]

looks like a single manitoban airline is in the works...

The addition of Calm Air’s mid-sized aircrafts seating 30 to 40 passengers will
complement Perimeter’s and Keewatin’s smaller-sized aircrafts seating 9 to 19
passengers

“The acquisition of Calm Air is a significant step forward for EIIF, representing an accretive
acquisition that is approximately three times larger than any acquisition EIIF has completed to
date,” said Adam Terwin, Chief Financial Officer. “The Calm Air acquisition will essentially double
the size of EIIF’s aviation division, and raise the Fund’s profile as a leading regional airline carrier.
Since Perimeter, Keewatin, and Calm Air serve a niche market providing essential transportation
to smaller communities in the remote regions of Northern Manitoba and Nunavut, these regional
airlines have less exposure to the general economy and are more recession resilient.”

“We believe that this will bring two strong organizations together and that EIIF is a natural fit for
Calm Air. With the demonstrated growth of both Perimeter and Keewatin under the leadership of
EIIF, we are confident that we will be able to advance our growth strategies going forward,” said
Gary Beaurivage, President of Calm Air."

[Localizer]

A Manitoba monopoly ...

[PJ1]

This is ussually not good for the employees in the long run, hope I'm wrong.

[hydraulic fluid]

Any employees have any thoughts on the pros and cons of this buy out

[Four1oh]

well, Kiddo, as an ex-Calm Air employee, I could see some trouble for the employees as the 3 companies share routes in order to avoid competing with each other. If they're smart it shouldn't be too bad as there's lots of territory to divide up. Doesn't do much for healthy competition IMO.

[Four1oh]

Any employees have any thoughts on the pros and cons of this buy out

so what's your opinion, kiddo?

[hydraulic fluid]

I am not an employee...are you the fellow now flying the caravan for northway four1oh

[Four1oh]

I'm on a twin now, sorry, no caravan driver here. BTW you seem to be in Manitoba. Are you aware you don't actually have to employed there to have an opinion? It looks like the 3 airlines are going to either consolidate or just cooperate now that they have a common owner. What do YOU think about that? How do YOU think it'll affect the employees? Relax, it's only the internet.

[FICU]

When EIIF bought Keewatin there were worries that there would be some sort of merger between KAL and Perimeter pilots but it never happened and both companies went on operating independantly. I wouldn't expect anything different with Calm Air part of the group in the short term but I could see the arctic sked service being merged into one airline with Keewatin remaining as an arctic medevac operation in the long term.

Who's it good for? Us EIIF shareholders.

[Jastapilot]

I doubt they'll be in any direct competition, merge or no merge, so what's the difference?

[CD]

Aviation powerhouse
Fund adds Calm Air to its northern carrier fleet

By: Martin Cash
Winnipeg Free Press
11/03/2009 1:00 AM

A northern Canadian aviation powerhouse was formed Tuesday with the purchase of Thompson-based Calm Air International by the company that already owns Perimeter Aviation and Keewatin Air.

Winnipeg's Exchange Industrial Income Fund (EIIF) has agreed to pay $59 million for Calm Air and will continue to operate all three airlines as distinct brands.

The three air carriers dominate scheduled air service in northern Manitoba and eastern Nunavut, carrying more than 300,000 passengers a year. When combined, EIIF's aviation business will generate about $140 million in annual revenue, ranking it among the top half-dozen aviation companies in Canada.

Mike Pyle, CEO of EIIF, said his company has long viewed Calm Air as an attractive target, but it was not for sale until now.

"This is a company with a proven market niche and demonstrated long-term sustainability," Pyle said. "Notwithstanding it's the worst equity market in my lifetime, it was a deal that needed to be done now."

EIIF will have to raise about $25 million in a public offering to close the deal, the largest acquisition EIIF has ever done.

But Pyle and Kevin Hooke of Wellington West, the lead agent in the syndicate, said they are confident they will be able to raise the funds on the public market.

"We see this as a recession-resilient deal that is complementary to its current holdings," Hooke said.

He said it will be profitable to EIIF right away without factoring in any potential cost savings.

But Pyle stressed that this was not a typical acquisition where costs are chopped out to make the deal profitable.

No job losses are being contemplated -- all three airlines are currently hiring -- and both Pyle and Gary Beaurivage, president of Calm Air, said there was little service overlap.

"I feel very good about this deal," Beaurivage said. "The opportunities in the future are good for the entire aviation group that Exchange Industrial controls."

Calm Air was founded 45 years ago by Arnold Morberg, who died three years ago. The company continued to be owned and run by Morberg's widow, Gail Morberg. About 10 per cent of the purchase price will be paid in EIIF units and the rest in cash.

In 2007, Calm Air generated about $70 million in revenue and about $13 million in earnings before interest, taxes, depreciation and amortization (EBITDA). Beaurivage said 2008 numbers will come in close to those levels, despite the fact there has been a marked drop-off in business from mining exploration companies in Nunavut.

When one company dominates a market, there are usually concerns about price-gouging, a particularly sensitive issue when there are 23 remote First Nations in northern Manitoba that rely on air travel from these airlines.

Rob Evans, grand chief of the Assembly of Manitoba Chiefs, said, "It costs me much more to travel in the North than it does to travel east-west."

But he said there is a history of adequate air service from those airlines.

One of EIIF's largest shareholders is Tribal Councils Investment Group, an investment fund owned by the seven tribal councils of Manitoba.

Allan McLeod, CEO of TCIG, said its stake in Exchange Industrial contributes to the fund's ability to make substantial cash returns to the communities that those airlines fly into.

"Instead of just being customers, it is good for First Nations people to be owners as well," McLeod said.

Barry Prentice, a transportation expert at the Asper School of Business at the University of Manitoba, said there is always a trade-off in a thin market between rates and the volume of business and competition.

"But it is expensive to operate in such a market and you have to be good to survive," he said.

martin.cash @ freepress.mb.ca

Calm Air and Exchange Industrial Income Fund

15 -- number of planes in the Calm Air fleet including six Saab 340Bs, four ATR 42-300s, two Cessna Grand Caravans and three Hawker Siddeley 748s

33 -- number of planes in Perimeter's fleet, including 19 Fairchild Metro II's

9 -- number of planes in Keewatin Air's fleet (operates as Kivalliq Air), including three Beechcraft 1900s and six King Air 200s

450 -- number of Calm Air employees primarily based in Thompson, Winnipeg, Churchill and Rankin

500 -- number of employees at Perimeter Aviation and Keewatin Air in Winnipeg and throughout northern Manitoba

1,500 -- total number of employees at EIIF companies that also include Jasper Tank of Spruce Grove, Alta., Water Blast Manufacturing and distribution of Calgary and Stainless Fabrication Inc. of Springfield Mo.

$240 million -- annualized revenue of EIIF after the close of the Calm Air deal

Full article here...

[Carrier]

Has this proposed situation been referred to or approved by the federal government's Competition Bureau?

[stuckmike]

Is Calm air's routes in and out of Rankin Inlet Nunavut their own or Canadian North's?....... If not their own I Imagine Dash-8s will be showing up there in the near future. Maybe the current owners saw the end in sight?

[Donald]

Maybe it will be like the Discovery Air deal, only on a larger scale.

Acquire a whole lot of assets, probably pay more than they are worth.

At some point in the not too distant future, plead for money from the gov't to protect all these northern/MB/SK/NU jobs.

What do you think?

[Jastapilot]

"No job losses are being contemplated -- all three airlines are currently hiring -- and both Pyle and Gary Beaurivage, president of Calm Air, said there was little service overlap."

That's good news. Anyone know what the overlap's are?

[BigQ]

A few routes... Perimeter mostly serves the northern communities, and as such their flights between YTH and YWG make 1 or two stops enroute in places such as Oxford house. Calm air flies direct.

All I can think of out of YTH are the Shamattawa routes that are direct comp... maybe 30 minutes difference in departure times between PAG and CVA. And the freight to and from communities such as Oxford House, Lac Brochet, etc etc.

I'm just curious how this is going to unfold freight-wise, since Perimeter was somewhat competing with Calm Air on the resupplying of the northern stores...

[rd1331]

Basically every route Keewatin fly's is in direct competition with CalmAir. As for Perimeter, very very few.

[sluggo]

So it'll be a set-up just like Transwest.

[123]

http://www.newswire.ca/en/releases/arch ... c6143.html

[Rubberbiscuit]

Could this mean ALPA membership for Perimeter/Keewatin?

[roger.roger]

or Keewatin doing just the medivac thing, and keeping the 1900 for charters?