Air Canada merging vacations group with low-cost carrier that launches in June

MONTREAL – Air Canada is combining its tour operator business Air Canada Vacations with a new low-cost carrier to create an integrated leisure group that will take flight in June.

Michael Friisdahl, former CEO of Thomas Cook North America, has been appointed to lead the new unnamed subsidiary. He will report to Air Canada’s chief commercial officer Ben Smith.

Details about the carrier’s name, schedule and product offering will be disclosed later this fall when Air Canada releases its 2013 schedule.

The new low-cost airline will begin operations with two Boeing 767-300ER and two Airbus A319 aircraft that will be released from Air Canada’s mainline fleet.

Additional planes will be added as Air Canada (TSX:AC.B) starts to take delivery of new Boeing 787 Dreamliner aircraft in 2014, ramping up to 50 planes.

The new travel company will serve holiday destinations in Europe and the Caribbean that didn’t generate adequate profits under Air Canada’s existing cost structure.

Air Canada plans to hire more than 900 employees over the next 12 months for the main airline and another 200 flight attendants and pilots for the new low-cost carrier.

Air Canada CEO Calin Rovinescu said the creation of the new travel company is “a major milestone” for the airline.

“Our new leisure group will benefit from combining the low-cost carrier with the strong brand reputation of Air Canada Vacations and leveraging the established marketing and distribution channels of both Air Canada Vacations and Air Canada,” he stated.

“As a result, Air Canada will be able to compete more effectively in this highly dynamic and expanding market.”

Air Canada is Canada’s largest domestic and international airline and 15th largest in the world, serving more than 175 destinations and 33 million customers a year.

On the Toronto Stock Exchange, its shares gained two cents at $1.33 in afternoon trading.