First Air defends codeshare agreement as part of airline's restructuring

A First Air executivesays the airline has been grappling with a difficult financial position, requiring it to make major changes including a controversial codesharing agreement with Canadian North.

"We have been operating at heavy losses," said First Air's vice-president of commercial Bert van derStege.

"We have been in a very, very difficult situation and we are still in the middle of a three-year restructuring plan at First Air."

Van der Stege said the company is now one year into its planned "turnaround".He said some of the changes the airline has had to make included major internal restructuring, selling off its Boeing 767 and Hercules aircraft, and new partnerships with other airlines such as codeshare agreements with Canadian North and Calm Air.

A year ago, First Air and Canadian North, the two major airlines that fly to Nunavut communities, called off merger negotiations. The announcement of thecodeshareagreement came this spring and went into effect over the summer.

Van der Stege said the codeshare has not rolled out as smoothly as he would have hoped. There have been complaints from territorial and municipal governments as well as Inuit organizations, all of which prompted a review from the Canadian Competition Bureau.

"We are carefully listening to the feedback that we are getting," said van der Stege.

"We have already implemented a couple of changes. We have added more capacity. We have added an extra frequency to Pond Inlet and we are adding extra freighter capacity to some of the communities like Igloolik. "

Despite its rocky start, van der Stege said the codeshare has been a success, helping to bring the airline back into the black. It's expected to generatea positive cash flow by 2016.

Van der Stege said the airline hasjust announced a $100millioninvestment program in new aircraft.

"I think that is a major step forward," he said.

In 2008,First Air's board of directorspaid themselves more than a million dollars in bonuses.

"As far as I know nobody received a bonus [this year]," van der Stege said.