(Corrects third paragraph to July, not June, and removes
TORONTO Dec 18 Air Canada will begin
flying to European and Caribbean vacation spots next year under
the "Rouge" banner, the airline said on Tuesday, disclosing
details about the ne w low-cost carrier it hopes will provide a
springboard for sustained profitability.
Montreal-based Air Canada, the country's biggest airline, is
launching Rouge at a time when Canadians have a growing number
of options for vacation travel. It will compete with Transat
, WestJet Vacations and Sunwing Travel Group.
Rouge will offer cheap flights to tourists visiting the
Caribbean and Europe, starting July 1, 2013 - not June, as was
Tickets have gone on sale for flights to Venice, Italy;
Edinburgh, Scotland; Athens, Greece; Cuba; the Dominican
Republic; Jamaica and Costa Rica, Air Canada said in a statement
handed out to reporters at a Toronto event to announce the
The fight for share of the vacation market has become more
important for Air Canada as main rival WestJet prepares to
launch Encore, its Canadian regional airline.
Encore promises to undercut Air Canada fares on domestic
Rouge, which will fold Air Canada's existing vacation
package business into the new low-cost operation, will initially
fly four planes from Air Canada's mainline fleet.
As Air Canada takes delivery of Boeing 787 Dreamliner
aircraft, starting in 2014, it will funnel more planes into the
Rouge operation. It said it planned to reach 50 aircraft in
three to five years.
Air Canada has reported a string of quarterly net losses in
recent years, weighed down by non-operating items such as losses
on foreign exchange and interest expenses.
But the airline was profitable in the third quarter, boosted
by a foreign exchange gain and higher operating income, as tight
cost controls started to pay off.
Rouge, operating as a wholly owned unit of Air Canada, will
have its own management team, headed by Michael Friisdahl,
former chief executive of Thomas Cook North America.
Air Canada plans to hire 150 flight attendants and 50 pilots
for Rouge and expects to generate profits by fitting its planes
with more seats and paying lower wages.
Earlier this year, Air Canada secured new union deals that
included lower wages and less-generous pension plans for new
hires after more than a year of turbulent negotiations.
Customer service agents went on strike in the summer of
2011. The federal government passed legislation to prevent the
two unions that represent pilots and mechanics and baggage
handlers from striking, and there were short wildcat strikes
involving members of both unions.
Air Canada Chief Financial Officer Michael Rousseau has said
the new carrier will not have a material impact on Air Canada's
Shares of Air Canada rose 7 Canadian cents to C$1.77 on the
Toronto Stock Exchange.
(Reporting by Susan Taylor and Allison Martell; Editing by
Jeffrey Benkoe and Dan Grebler)