With new fleet expenditures outpacing earnings, Air Canada officials indicated that the carrier would need additional sources of capital to fund its modernization. By 1985 the Canadian government was indicating a willingness to privatize both Canadian National Railways and Air Canada. In 1988 Air Canada was privatized, and 43% of shares were sold on the public market, with the initial public offering completed in October of that year. By this time, long-haul rival CP Air had become Canadian Airlines International following its acquisition by Pacific Western Airlines.