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Air Canada is the flag carrier and largest airline of Canada. The airline, founded in 1936, provides scheduled and charter air transport for passengers and cargo to 178 destinations worldwide. It is the world's ninth-largest passenger airline by fleet size, and the airline is a founding member of the Star Alliance. Air Canada's corporate headquarters are located in Montreal, Quebec, while its largest hub is Toronto Pearson International Airport, located in Mississauga, Ontario. Air Canada had passenger revenues of CA$12.38 billion in 2013. The airline's regional service is Air Canada Express.
Canada's national airline originated from the Canadian federal government's 1936 creation of Trans-Canada Airlines (TCA), which began operating their first transcontinental flight routes in 1938. In 1965, TCA was renamed Air Canada following government approval. After the deregulation of the Canadian airline market in the 1980s, the airline was privatized in 1988. On January 4, 2000, Air Canada acquired their largest rival, Canadian Airlines. In 2003, the airline filed for bankruptcy protection and in the following year emerged and reorganized under the holding company ACE Aviation Holdings Inc. In 2006, 34 million people flew with Air Canada as the airline celebrated their 70th anniversary. Air Canada is recognized as the Skytrax Best International Airline in North America, and was ranked as a 4 Star Airline by Skytrax in 2013.
Air Canada has a fleet of Airbus A330, Boeing 767, Boeing 777, and Boeing 787, wide-body jetliners on long-haul routes and uses the Airbus A320 family aircraft, including the A319, A320, and A321 variations, and Embraer E190 family aircraft on short-haul routes. The carrier's operating divisions include Air Canada Cargo, Air Canada Express and Air Canada Rouge. Their subsidiary, Air Canada Vacations, provides vacation packages to over 90 destinations. Together with their regional partners, the airline operates on average more than 1,530 scheduled flights daily.
Trans-Canada Airlines
Air Canada's predecessor, Trans-Canada Airlines (TCA), was created by federal legislation as a subsidiary of Canadian National Railway (CNR) on 11 April 1936. The newly created Department of Transport under Minister C. D. Howe desired an airline under government control to link cities on the Atlantic coast to those on the Pacific coast. Using $5 million in Crown seed money, two Lockheed Model 10 Electras and one Boeing Stearman biplane were purchased from Canadian Airways and experienced airline executives from United Airlines and American Airlines were brought in.
Passenger flights began on 1 September 1937, with an Electra carrying two passengers and mail from Vancouver to Seattle, a $14.20 round trip, and, on 1 July 1938, TCA hired their first flight attendants. Transcontinental routes from Montreal to Vancouver began on 1 April 1939, using 12 Lockheed Model 14 Super Electras and six Lockheed Model 18 Lodestars. By January 1940, the airline had grown to about 500 employees.
Canadian Pacific Airlines (CP Air) suggested in 1942 a merger with TCA. Prime Minister William Lyon Mackenzie King rejected the proposal and introduced legislation regulating TCA as the only airline in Canada allowed to provide transcontinental flights. With the increase in air travel after World War II, CP Air was granted one coast-to-coast flight and a few international routes.
Originally headquartered in Winnipeg, which was also the site of the national maintenance base, the federal government moved TCA's headquarters to Montreal in 1949; the maintenance base later also moved east. With the development of the ReserVec in 1953, TCA became the first airline in the world to use a computer reservation system with remote terminals.
By 1964, TCA had grown to become Canada's national airline and, in 1964, Jean Chrétien submitted a private member's bill to change the name of the airline from Trans-Canada Airlines to Air Canada, the English translation of the name TCA had been using in French. This bill failed but it was later resubmitted and passed, with the name change taking effect on 1 January 1965. Elizabeth II, the reigning Queen of Canada, flew on the first aircraft to bear the name and livery of Air Canada when she departed for the United Kingdom at the end of her 1964 tour of Prince Edward Island, Quebec, and Ontario in 1964.
1970s: early years
During the 1970s government regulations ensured Air Canada's dominance over domestic regional carriers and rival CP Air. Short-haul carriers were each restricted to one of five regions, and could not compete directly with Air Canada and CP Air. CP Air was subject to capacity limits on intercontinental flights, and restricted from domestic operations. Air Canada's fares were also subject to regulation by the government.
In the late 1970s, with reorganization at CNR, Air Canada became an independent Crown corporation. The Air Canada Act of 1978 ensured that the carrier would compete on a more equal footing with rival regional airlines and CP Air, and ended the government's direct regulatory control over Air Canada's routings, fares, and services. The act also transferred ownership from Canadian National Railway to a subsidiary of the national government. Deregulation of the Canadian airline market, under the new National Transportation Act, 1987 officially opened the airline market in Canada to equal competition. The carrier's fleet expansion saw the acquisition of Boeing 727, Boeing 747, and Lockheed Tristar jetliners.
With new fleet expenditures outpacing earnings, Air Canada officials indicated that the carrier would need additional sources of capital to fund their modernisation. By 1985 the Canadian government was indicating a willingness to privatise both Canadian National Railways and Air Canada. In 1988 Air Canada was privatised, and 43% of shares are 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 their acquisition by Pacific Western Airlines.
On 7 December 1987, Air Canada became the first airline in the world with a fleet-wide non-smoking policy, and in 1989 became completely privatised. The successful privatisation effort was aided by a public relations effort led by company president Claude I. Taylor and chief executive officer Pierre J. Jeanniot.
1990s: strategic changes
In the early 1990s, Air Canada encountered financial difficulties as the airline industry slumped in the aftermath of the Persian Gulf War. In response, the airline restructured management, hiring former Delta Air Lines executive Hollis L. Harris as its CEO. Harris restructured the airline's operations, reduced management positions, moved the corporate headquarters to Dorval Airport, and sold the enRoute card business to Diners Club in 1992. By 1994, Air Canada had returned to profitability. The same year also saw the carrier winning route access to fly from Canada to the new Kansai Airport in Osaka, Japan.
In 1995, taking advantage of a new U.S.-Canada open skies agreement, Air Canada added 30 new trans-border routes. In May 1997, Air Canada became a founding member of the Star Alliance, with the airline launching codeshares with several of the alliance's members. The second half of the 1990s saw the airline earn consistent profits, totaling $1 billion for the 1997 to 1999 period.
On 2 September 1998, pilots for Air Canada launched the company's first pilots' strike, demanding higher wages. At the end of 1999, the Canadian government relaxed some of the aviation regulations, aimed at creating a consolidation of the Canadian airline industry. That year, American Airlines in conjunction with Canadian financial company Onex Corp, launched a takeover bid of ailing rival Canadian Airlines and Air Canada, spurring Air Canada to submit a competing offer for their largest rival.
2000s: merger and reorganization
In January 2001, Air Canada acquired Canada's second largest air carrier, Canadian Airlines, merging the latter's operations, becoming the world's twelfth-largest airline in the first decade of the 21st century. As Air Canada gained access to their former rival's financial statements, officials learned that the carrier was in worse financial shape than was previously believed. An expedited merger strategy was pursued, but in summer 2000 integration efforts led to flight delays, luggage problems and other frustrations. However, service improved following Air Canada officials' pledge to do so by January 2001. The airline was confronted by the global aviation market downturn and increased competition, posting back-to-back losses in 2001 and 2002.
Bankruptcy and restructuring
As Air Canada had employed a scorched earth policy to prevent the Onex proposed acquisition as one of its lines of defence, they had burdened themselves with onerous contracts with virtually all of their suppliers. As a result, on 1 April 2003, Air Canada filed for protection under the Companies' Creditors Arrangement Act; they emerged from this protection on 30 September 2004, 18 months later. During the period of bankruptcy protection, the company was subject to two competing bids from Cerberus Capital Management and Victor Li. The Cerberus bid would have seen former Prime Minister Brian Mulroney installed as chairman, being recruited by Cerberus' international advisory board chair Dan Quayle, the former Vice President of the United States. Cerberus was rejected because they had a reputation of changing existing employee pension agreements, a move strongly opposed by the CAW. At first, Air Canada selected Victor Li's Trinity Time Investments, which initially asked for a board veto and the chairmanship in return for investing $650 million in the airline. Li, who holds dual citizenship from Canada and Hong Kong, later demanded changes to the pension plan (which was not in his original takeover bid), but since the unions refused to budge, the bid was withdrawn.
Finally, Deutsche Bank unveiled an $850 million financing package for Air Canada, if they would cut $200 million in annual cost cutting in addition to the $1.1 billion that the unions agreed on in 2003. It was accepted after last-minute talks between CEO Robert Milton and CAW president Buzz Hargrove got the union concessions needed to let the bid go through.
ACE Aviation Holdings became the new parent company under which the reorganized Air Canada was held. However in November 2012 ACE sold all shares and warrants it held in Air Canada.
In October 2004, Canadian singer Celine Dion became the face of Air Canada, hoping to relaunch the airline and draw in a more international market after an 18-month period of bankruptcy protection. She recorded her single, You and I, which subsequently appeared in several Air Canada commercials.
Fleet modernization
On 31 October 2004, the last Air Canada Boeing 747 flight landed in Toronto from Frankfurt as AC873, ending 33 years of 747 service with the airline. The Boeing 747-400 fleet was replaced by the Airbus A340 fleet. On 19 October 2005 Air Canada unveiled a new aircraft colour scheme and uniforms. A Boeing 767-300ER was painted in the new silver-blue colour, and the black tail was replaced with a new version of the maple leaf known as the 'Frosted Leaf'.
On 9 November 2005, Air Canada agreed to renew their widebody fleet by purchasing 16 Boeing 777s (10 -300ERs, 6 -200LRs), and 14 Boeing 787-8s. They placed options on 18 Boeing 777s and 46 Boeing 787-8s and -9s. All of the 777s will be powered by the GE90-115B engine, and the 787-8s, by the GEnx engine. Deliveries of the 777s began in March 2007 and deliveries of the 787s began in May 2014. As the 777s and the 787s are delivered, they will gradually retire all Boeing 767s and Airbus A330s.
On 24 April 2007, Air Canada exercised half of their options for the Boeing 787 Dreamliner. The firm order for the Dreamliners is now at 37 plus 23 options, for a total of 60. This makes Air Canada the largest customer of the Dreamliner in North America and the third largest in the world (behind Qantas and All Nippon Airways). They also cancelled orders for two Boeing 777Fs. In November 2007, Air Canada leased an additional Boeing 777-300ER from ILFC. Air Canada has now taken delivery of the 18 Boeing 777s on order (12 -300ERs, 6 -200LRs) and still holds options for 16 more, totaling 34.
Air Canada has also taken delivery of 15 Embraer 175s and 45 Embraer 190s. These aircraft are being used to expand intra-Canada and Canada/USA routes. Air Canada will transfer all 15 Embraer 175s to Sky Regional Airlines to fly them under the Air Canada Express brand. They will also transfer all Airbus A319-100 and Boeing 767-300ER aircraft to Air Canada Rouge.
Project XM
Started in July 2006 and now completed, Project XM: Extreme Makeover, is a $300 million aircraft interior replacement project to install new cabins on all aircraft. New aircraft such as the Boeing 777 are being delivered with the new cabins factory installed.
New cabin features include:
Since the late 2000s, Air Canada has been facing a number of financial difficulties, including the global recession, leading to speculation that they could file for bankruptcy, less than a decade after they exited bankruptcy on 30 September 2004.
President and CEO Montie Brewer was replaced by Calin Rovinescu effective 1 April 2009. Rovinescu became the first Canadian President since Claude Taylor in 1992. Rovinescu was Air Canada's chief restructuring officer during their 2003 bankruptcy, and he resigned that year after unions rejected his demands, and is reported to be "an enforcer".
Federal finance minister Jim Flaherty appointed retired judge James Farley, who had presided over Air Canada's 2003 bankruptcy, to mediate pension issues between the company and their unions and retirees. The contracts with four of their unions also expired around this time. The airline stated that their $2.85-billion pension shortfall (which grew from $1.2-billion in 2007) was a "liquidity risk" in its first-quarter report, and it required new financing and pension "relief" to conserve cash for 2010 operations. The company was obligated to pay $650-million into the pension fund but it suffered a 2009 Q1 loss of $400-million, so it requested a moratorium on its pension payments in 2009. The unions had insisted on financial guarantees before agreeing on a deal. In December 2010, ACE sold 44 million of Air Canada shares, followed by the remaining 31 million shares in November 2012 to Cormark Securities Inc.
In 2013, Air Canada's practice of systematic overbooking was exposed. This much-criticized strategy, in which "the same seat is sold to more than one person," thereby causing ticket-holding passengers to be bumped and left stranded, persuaded the federal government to consider adopting an airline passenger bill of rights.
In November 2014 Air Canada pilots voted by a majority of 84% in favor of a 10-year contract that allows the country’s biggest passenger carrier to use arbitration or mediation to resolve disputes.
Air Canada Cargo
Air Canada Cargo is the company's freight carrying division, offering more than 150 shipping destinations through the Air Canada airline network and airline partners. Their route network has focused on European destinations through their Eastern Canada departure points, along with direct services from Vancouver and Calgary to Frankfurt, Paris, and Zurich.
In Toronto, a new cargo terminal was completed in early 2002 which features modernised inventory and conveyor systems.
Air Canada Vacations
Air Canada Vacations is a Canadian tour operator offering leisure travel packages including cruises, tours, car rentals and excursions. All packages include accommodation, Aeroplan Miles and roundtrip airfare aboard Air Canada and its Star Alliance partners. Repeat recipient of the Consumer’s Choice Award for Best Travel Wholesaler and named Favourite Tour Operator by Baxter Travel Media in 2010, Air Canada Vacations services hundreds of destinations in the Caribbean, Mexico, North, Central and South America, Asia, South Pacific and Europe. Air Canada Vacations is headquartered in Montreal, has an office in Toronto, and destination representatives are available throughout the Caribbean, Mexico, Europe, Asia, South Pacific, and South America.
Air Canada Vacations offers Executive Class service on select flights, nonstop flights from major Canadian cities and daily flights to many destinations.
Air Canada Rouge
The airline was launched in December 2012 and began services on July 1st, 2013. It is part of the Air Canada Leisure Group. At the time of the launch it had a fleet of four aircraft, 2 Airbus A319s and 2 Boeing 767s, transferred from the parent company. Its fleet expanded to 28 aircraft within 18 months and is expected to reach 16 Boeing 767s, 20 Airbus A319s and 5 Airbus A321s by mid-2017.
On March 24, 2014, Air Canada announced plans for Air Canada rouge to expand into Western Canada beginning in spring 2014, to serve predominantly leisure markets from Vancouver and Calgary to Los Angeles, San Francisco, Las Vegas, Phoenix, Palm Springs, Honolulu, Maui and Anchorage.
Air Canada Express
Air Canada Express is the brand name of Air Canada's regional feeder service operated by several independent carriers including Jazz Aviation, Sky Regional Airlines, Exploits Valley Air Services (EVAS), and Air Georgian.
Air Canada Jetz
Launched in 2002, Air Canada Jetz is a charter service targeting sports teams, professional entertainers, and corporations. Air Canada Jetz fleet consists of two Airbus A319 in an all business class configuration.
In February 2014, Air Canada decided to leave the sports charter business. However, on March 17, 2014, Air Canada announced an agreement with several NHL teams to provide charter services under the Air Canada Jetz brand for 6 years starting from the 2015-2016 NHL season.
Air Canada Jazz
In 2001, Air Canada consolidated their wholly owned regional carriers Air BC, Air Nova, Air Ontario, and Canadian Regional Airlines into Air Canada Regional Incorporated. Several of these air carriers had previously operated a as "Air Canada Connector". In 2002, the consolidation was completed with the creation of a new brand, Air Canada Jazz. Air Canada Jazz was spun off in November 2006. ACE Aviation Holdings is no longer a shareholder of Jazz Aviation LP, making them an independent company. Air Canada Jazz was the brand name of Air Canada's main regional product from 2002-2011. As of June 2011, the Air Canada Jazz brand is no longer being marketed as all regional operators adopted the Air Canada Express name. However, some Air Canada Jazz planes retain the "Jazz" decal and the iconic green/red/orange maple leaf paint scheme. Jazz Aviation is the largest of these affiliates operating 125 aircraft on behalf of Air Canada.
Zip
In 2002, Air Canada launched a discount airline to compete directly with WestJet on routes in Western Canada. Zip operated ex-Canadian Airlines International 737-200s as a separate airline with their own staff and brightly painted aircraft. It was disbanded in 2004.
Air Canada Tango
On 1 November 2001, Air Canada launched Air Canada Tango, designed to offer no-frills service and lower fares using a dedicated fleet of 13 Airbus A320s in an all economy configuration of 159 seats. In Canada, they operated from Toronto to Vancouver, Calgary, Edmonton, Winnipeg, Regina, Saskatoon, Thunder Bay, Ottawa, Montreal, Halifax, Gander and St. John's. In addition, they operated non-stop service between Toronto and Fort Lauderdale, Orlando and Tampa; as well as non-stop service between Montreal and Fort Lauderdale and Orlando. Tango was intended to compete with Canada 3000. The Tango service was dissolved in 2004. Air Canada now calls their lowest fare class "Tango" (Tango and Flex).
Aeroplan
Aeroplan is Air Canada's loyalty marketing program operated by Groupe Aeroplan Inc., which was spun off from Air Canada in 2005.
Trans-Canada Airlines
Air Canada
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