Air Canada elaborates on LCC plans

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Air Canada plans to announce details of its new low-cost carrier within "weeks", says an airline executive.

Michael Rousseau, executive vice-president and chief financial officer of Air Canada, says today that it will announce the name, launch date and initial destinations for the new wholly-owned LCC. He was speaking at the CIBC 11th Annual Eastern Institutional Investor Conference in Montreal.

The LCC is possible following Air Canada's new contract with its pilots, which was selected by a Canadian government appointed arbitrator in July. Flights will begin in 2013.

The carrier will operate a fleet of 50 aircraft, including 20 Boeing 767-300ERs and 20 Airbus A319s from Air Canada's mainline fleet. The aircraft will transition over a "couple of years", says Rousseau.

The 767s will be used to launch new routes over the Atlantic while the A319s will be used more "defensively" on leisure routes to the Caribbean, Mexico and the USA, says Rousseau. Some of the narrowbody routes are flown by Air Canada mainline while some will be new service.

Rousseau says that the new carrier will be structured similarly to Qantas Airways' low-cost subsidiary Jetstar Airways, with its own management and branding. It will allow Air Canada to expand while also improving margins.

"A number of conditions have to exist to be low cost," he says. "The planes have to carry more seats than ourselves, [for example] the 767s will carry 20% more. The other half includes [employee] work rules and wage rates."

Air Canada operated LCC subsidiaries Tango and Zip from 2001 until 2003 and 2004, respectively, to compete with low-cost competition.