Canadian Airlines was Canada's #2 airline — then it sold itself for $92M

Canadian Airlines was formed in 1987 when Pacific Western Airlines purchased CP Air, which had recently acquired Eastern Provincial Airways and Nordair. The combined carrier became Canada's second-largest airline, operating a network of over 160 destinations across 17 countries. At its peak in 1996, it carried more than 11.9 million passengers with revenue of approximately $3 billion.

The airline's strategic bet was on its Vancouver hub as a gateway between North America and Asia. That bet collapsed when the 1997 Asian financial crisis devastated trans-Pacific demand, causing heavy losses on the routes that were meant to be the airline's core advantage. A restructuring plan launched in November 1996 was already in trouble when the crisis hit; it never recovered.

In August 1999, Onex Corporation launched a takeover bid for Canadian Airlines, backed by AMR Corporation, offering $1.8 billion in cash and assuming $3.9 billion in debt. Air Canada responded with a $930 million counter-bid. In November 1999, a Quebec judge ruled the Onex bid illegal; Onex withdrew. The next month, Canadian Airlines' board recommended Air Canada's $92 million offer to shareholders. On January 1, 2001, Canadian Airlines ceased to exist as a separate entity.

The merger created a near-monopoly: Air Canada controlled over 90% of the domestic market. The combined entity announced 3,500 job cuts in December 2000 and a further 5,000 after the September 11 attacks. Canadian Airlines had gone from Canada's second carrier to a footnote in fewer than five years.