Air Canada has revealed it will proceed with its plans to establish a new low-cost subsidiary to help it better compete in the international market. The long-awaited confirmation of the airline’s plans was made during an investors’ earnings call on August 8, 2012 discussing its Second Quarter results. The as yet unnamed venture will operate a mixed fleet of Airbus A319s and Boeing 767-300ERs and will likely serve mainly leisure destinations around the Caribbean, Mexico and possibly Europe.
According to company executives, the start-up will begin services in 2013 and will take delivery of up to 50 aircraft all directly transferred from the current Air Canada fleet during the next 36 months. These jets will include up to 20 767s that were all due to be returned to the lessor at the end of their existing agreements as Air Canada’s new 787 Dreamliners arrive, while the up to 30 A319s are also coming to the end of their leases.
It is not clear if the new airline will take over any of Air Canada’s existing routes or simply enter markets that the flag carrier has been unable to sustain profitable air services, although it is likely to include a mix of both. In the earnings call, Air Canada’s Executive Vice President and Chief Financial Officer, Michael Rousseau claimed there would be a net rise in services when the start-up commenced operations. “The launch of a LCC represents growth of Air Canada flying," he said. “Although we are not yet in a position to confirm specifics of the business the venture will enable us to return to some markets we have had to abandon previously and enter new markets where we can’t currently compete effectively.”
The launch of the new carrier has been made possible following new collective agreements being finalised with the International Association of Machinists and Aerospace Workers (IAMAW) and the Air Canada Pilots Association (ACPA) through binding arbitration.
“The conclusion of these last two collective agreements brings finality to what has been a challenging collective bargaining process with our large Canadian-based unions,” said Calin Rovinescu, President and Chief Executive Officer, Air Canada. “We will now be able to more closely focus on our four priorities which are key to our transformation, namely leveraging our international network, cost transformation, engaging our customers, and culture change.”
(by Declan Maguire, Editorial Assistant)
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