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Air Canada to launch low-cost carrier in 2013

Air Canada plans to launch a low-cost carrier next year, chief financial officer Michael Rousseau said during a presentation on Wednesday.

The carrier will be wholly owned by Air Canada and will fly to “leisure” markets, like holiday and sun destinations.

The new airline, which has not yet been named, will operate up to 50 planes. The new planes will have more seats in the same amount of space than the full price Air Canada route.

Click here to read the full presentation (pdf). 

Rousseau said the new collective agreement with its unions – a hard-fought decision that involved the federal labour minister – and a new pilot contract will keep costs down.

Air Canada has been beset by labour problems for most of the last year with all of its major unions.

A federal arbitrator sided with Air Canada in its dispute with pilots earlier this year, putting in place a five-year collective agreement effective until April 2016.

Last month, a federal arbitrator sided with Air Canada in a long-standing labour dispute between the airline and its unionized machinists, imposing the company’s final contract offer, a five-year deal that includes pension changes for any new hires.

That same year, Air Canada ticket agents and customer service staff staged a brief strike before reaching a deal after the federal labour minister threatened to legislate them back to work. Lisa Raitt also pulled levers behind the scenes when flight attendants rejected a tentative agreement and held a strike vote.

Air Canada’s shares gained six per cent to close at $1.23 on the Toronto Stock Exchange Wednesday.