Air Canada's Star Alliance partners United Airlines and Lufthansa are preparing to bid for a stake in the carrier to fight a hostile takeover by the Onex investment group and American Airlines, which plan to merge it with their oneworld ally Canadian Airlines.

Lufthansa president Jurgen Weber says the Star Alliance "will do its utmost to avoid an unfriendly takeover of Air Canada by others". He adds: "Partners of the Star Alliance are willing to invest to keep Air Canada in the alliance".

Air Canada chief executive Robert Milton says counterbids would inevitably be limited by a 10% cap on single shareholdings in the flag carrier imposed when it was privatised in 1988. Don Carty, chairman of American's parent AMR, has countered by telling analysts that he has not ruled out sinking more money into troubled Canadian, in which AMR already holds a stake and which was previously targeted by Air Canada.

Meanwhile, Toronto-based Onex has won a victory in its takeover bid, with the Ontario Superior Court ruling that its C$1.8 billion ($1.2 billion) offer must be put to Air Canada shareholders by 8 November. Air Canada, which wanted more time to consider its options, had scheduled a shareholders' meeting for 7 January.

• Canada is to discontinue subsidies to its aerospace industry from 18 November. The move is in response to a World Trade Organisation ruling against its support of Bombardier via the Technology Partnerships Canada (TPC) programme. Ottawa and the Canadian aerospace industry hope, however, that some of the C$250 million potentially available from TPC each year might be salvaged. TPC gave defence and aerospace companies C$118 million 1998.

Source: Flight International