The financial troubles at Air Canada have halted its efforts to launch a new generation passenger reservations system.

In announcing a heavy second quarter loss and a steep revenue decline, chief executive Calin Rovinescu said that it was suspending work on the so-called Polaris system and would take an "impairment" charge of C$67 million ($61 million) relating to costs incurred on the project.

Rovinescu said while Air Canada will "revisit it in the future", for now "given that we had no certainty as to when that future would come, we took the conservative approach of writing it down". The extra C$40 million in migration costs needed in 2010 to take Polaris live would be saved.

Air Canada was the launch customer for ITA Software's new reservation management system in 2006 and it was crucial to the airline's radical strategy to enhance its customer booking experience and take control of its distribution channels.

Back then the target was for the new system to be deployed by late 2007, replacing its legacy IBM mainframe system, but in common with many complex IT projects it was delayed.

The carrier will continue using the patched up, but capable, IBM system for several more years, and while it does not want to spend any further money on Polaris, it will continue to work with ITA on implementing certain components of the system such as web and fare technology.

The Star Alliance carrier has however put no firm timescale on when these portions will now go live, but it is not thought to be too far away.

Rovinescu stresses that it remains on good terms with ITA and has confidence in the products it plans to take.

Meanwhile, the US technology firm stresses that it will continue to develop its reservations product with the same vigour and pace. "We're confident we've built the right solution for going forward," says ITA's vice-president Cara Kretz.

Source: Airline Business