I think to save CAIL they should sell off Canadian Regional and what share they have in Calm Air. Along with Regional, they should sell about 10 or so 737's to Regional and offload some more of their CP coded domestic flights to Regional, allowing the main airline to concentrate on US and overseas flights, and major transcontinental runs. What they really need is to reduce their debt. In my opinion their purchase of Wardair put them over the limit as to how much debt they could take on and remain viable. They got greedy, and wanted to increase market share rather than compete to win over customers. The problem is right now that I'm not sure how much AA wants to pump more money into Canadi>n, and for that matter whether any capital markets have any interest in more stock. Maybe BA would be interested?
As far as competition, I think there is more than people acknowledge, and perhaps room for more of a niche market operators. Basically Westjet, Canada 3000, Royal, Air Transat, and Skyservice all have some potential to expand to fill a gap left by Canadi>n. But then again, I don't think it will come to that.
Another problem with Canadi>n. Basically it evolved between the late 70's and late 80's being formed out of Nordair, Wardair, CPAir, Pacific Western, Transair, Eastern Provincial, Quebecair, and a few others such as Time Air and Ontario Express (I believe this is accurate, but maybe not complete). Several of these operators ran 737's, but all of different configuration. Thus, it seems to me that I read somewhere that CAI's 737's are in about 25 different configurations-out of a fleet of 44 aircraft!
Oh, and one last thing. I sometimes have heard stirrings that CAI, as a last ditch, could merge with AC. That is worse than CAI dropping out altogether, considering the debt, fleet, and competition scenarios. If CAI died, everybody would scramble to expand. If CAI was forced by the government to merge, to me that would seem even more anticompetitive.
Anyways, that's my thoughts on CAI, and some of the speculation I've heard from elsewhere. Feel free to correct any mistakes I've made.
Matt in YWG