Canadian transportation shareholders beware as Air Canada gets its state aid

Westjet will likely despair at the news that Ottawa is to help Air Canada deal with its $4.2bn deficit in its pension plan. The rules imposed on Air Canada in exchange for the relief set limits on executive pay and prevent dividends and stock buy-back activity.
Small fry when you consider this deal will allow Air Canada to invest in new aircraft and create a low cost arm. Now how is that remotely fair to WestJet which in the very same market had been able to show quality profits? Air Canada in its defence will argue that they have been lumbered with the pension pile from hell as a legacy from the old days. Still it is a fact that with interest rates on the floor, Air Canada's pension solvency deficit funding payments would not have been met without government assistance and the resulting seven-year extension in place. Air Canada must make contributions to the pension plan of at least $150m and average $200 million a year over the next seven years to stay on target.
This deal will see Air Canada shares rocket as the future is now secure.
However, with the Canadian Pacific Railway, Canadian National Railway, Bell Canada, MTS Allstream, Canada Post and NAV Canada all seeking funding relief for their pension plans you can bet that the zero-dividend with no share buy-back stipulations will cause a sell-off today. They will try to avoid government help but they are so far behind they just have no choice.
Meanwhile there is a price war on Australia-Europe routes developing: China Southern Airlines has upped the stakes on Qantas by cutting ticket costs on Sydney/London routes by over 50% to A$1442 whilst offering an additional 13kg of luggage weight as standard. The airline is using A330-300s and 200s on the route.
The prices are only set to last for a few months at most but if China Southern is serious about establishing a foothold in Sydney, Melbourne, Brisbane and Perth then it will have to keep prices lower to flow passengers through Guangzhou as it competes with Qantas/Emirates transits through Dubai. It will be worth keeping an eye on China Southern to see if it is able to make an impact on London Sydney traffic, if it does and the route proves to be a winner then something a bit more substantial than an A330 will be needed.