Air Canada

Trans-Canada Air Lines

The predecessor of Air Canada, Trans-Canada Air Lines , was created by federal legislation as a subsidiary of Canadian National Railway on 11 April 1937. 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 its 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 579 employees.Canadian Pacific Airlines 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.

Renamed to Air Canada and early years

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, which TCA had long used as its French-language name. This bill failed but it was later resubmitted and passed, with the name change taking effect on 1 January 1965. Elizabeth II, the 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.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 1976, 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. In 1978 Judy Cameron became the first female pilot hired to fly for any major Canadian carrier when she was hired to fly by Air Canada.With new fleet expenditures outpacing earnings, Air Canada officials indicated that the carrier would need additional sources of capital to fund its modernization. By 1985 the Canadian government was indicating a willingness to privatize both Canadian National Railways and Air Canada. In 1988 Air Canada was privatized, and 43% of shares were 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 its 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 privatized. The successful privatization program was led by the President and CEO, Pierre J Jeanniot. The associated extensive communication activities were aided by the Non-Executive Chairman, Claude I. Taylor.

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 by 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 US-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, totalling $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 takeover bids for ailing rival Canadian Airlines and Air Canada, spurring Air Canada to submit a competing offer for its largest rival.

Merger and reorganization

In January 2001, Air Canada acquired Canada's second-largest air carrier, Canadian Airlines International, 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 its 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 defense, it had burdened itself with onerous contracts with almost all of its suppliers. As a result, on 1 April 2003, Air Canada filed for protection under the Companies' Creditors Arrangement Act; it 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 it 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 , but since the unions refused to budge, the bid was withdrawn.Finally, Deutsche Bank unveiled an $850 million financing package for Air Canada, if it would cut $200 million in annual costs 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 18 months 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 2004, Air Canada unveiled a new aircraft colour scheme and uniforms. A Boeing 767-300ER was painted in the new silver-blue colour, and the dark green/almost 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 its widebody fleet by purchasing 16 Boeing 777s , and 14 Boeing 787-8s. It placed options on 18 Boeing 777s and 46 Boeing 787-8s and -9s. Deliveries of the 777s began in March 2007 and deliveries of the 787s began in May 2014.On 24 April 2007, Air Canada exercised half of its options for the Boeing 787 Dreamliner. The firm order for the Dreamliners then stood at 37 plus 23 options, for a total of 60. The airline also cancelled orders for two Boeing 777Fs. In November 2007, Air Canada leased an additional Boeing 777-300ER.

Project XM

Started in July 2006 and since completed, Project XM: Extreme Makeover, was a $300 million aircraft interior replacement project to install new cabins on all aircraft. New aircraft such as the Boeing 777 were delivered with the new cabins factory installed.

New cabin features included:

In Executive First, new horizontal fully flat Executive First Suites .

New cabins in all classes on all aircraft, with new entertainment options.

Personal AVOD in Economy class and Executive Class .

Larger AVOD equipped with noise-cancelling Sennheiser headphones available in Executive First Suites.

Interactive games at all seats in Executive and Economy; XM Radio Canada available at every seat.

USB ports to recharge electronic devices and for game controllers at all seats; 120 VAC plugs in most seats; In Economy . In First Class/Executive

Late 2000s financial difficulties

High fuel prices and the Great Recession caused Air Canada significant financial difficulties in the late 2000s. In June 2008, the airline announced it would lay off over 2,000 employees and cut its capacity by 7 percent by the first quarter of 2009. President and CEO Montie Brewer expressed confidence that the airline would weather the economic downturn.

Brewer resigned on 30 March 2009 and was replaced by Calin Rovinescu on 1 April. Rovinescu became the first Canadian President since Claude Taylor in 1992. Rovinescu, reported to be "an enforcer", was Air Canada's chief restructuring officer during its 2003 bankruptcy; he resigned that year after unions rejected his demands.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, the unions representing its employees, and retirees. The contracts with four of the unions also expired around this time. The airline stated that its $2.85 billion pension shortfall 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 July 2009, Air Canada requested and received CA$1 billion in financial aid from a consortium of entities, including the Canadian government, ACE, and associate company Aeroplan. The Centre for Aviation reported that only CA$600 million was actually loaned to Air Canada; the rest of the money was from sale-leaseback accounting and "aggregating an array of biscuit-tin savings".

2010s

In December 2010, ACE sold 44 million Air Canada shares, followed by the remaining 31 million shares in November 2012 to Cormark Securities Inc.In November 2014, Air Canada pilots voted by a majority of 84% in favour of a 10-year contract that allows the country's biggest passenger carrier to use arbitration or mediation to resolve disputes. A year later, the flight attendants also approved a 10-year agreement, apparently by a narrow margin, with wage increases, increased job security and improvements to working conditions, according to Michel Cournoyer, the head of CUPE's Air Canada unit.

New branding and fleet

On 9 February 2017, a new retro red and black aircraft livery was launched, to coincide with Air Canada's 80th anniversary and Canada's 150th anniversary of Confederation. The update includes design aspects from the logo used between 1964 and 1992, with an overall white colour scheme, with a black underside, tail fin with red maple leaf rondelle, black "Air Canada" lettering with a red maple leaf rondelle underneath, and a black "mask" surrounding the cockpit windows.

In December 2013, Air Canada ordered 61 Boeing 737 MAX single-aisle narrow body aircraft to replace its existing fleet of Airbus A320 series aircraft with the first MAX 8 variant delivered on 2 November 2017. Some Airbus Airbus A319s will be transferred to Air Canada's Rouge subsidiary, with the remaining fleet retired. As part of the deal, Boeing purchased 25 Embraer E190s from Air Canada that were retired in 2016. The same year, Air Canada signed an agreement with Bombardier Aerospace to replace the E190s with Airbus A220/CSeries aircraft from 2019.In July 2017, Air Canada reintroduced Premium Economy on its North American wide-body flights.In April 2018, Air Canada rebranded its international business class cabin as Air Canada Signature Class. Passengers could expect an enhanced menu, including the new Air Canada Signature Cocktail, in addition new amenity kits, a chauffeur service at its hubs during domestic to international connections, and access to the Air Canada Signature Suite at Toronto Pearson International Airport. On select North American routes, Air Canada Signature Service is offered on widebody aircraft.

In May 2018, Air Canada listed Taiwan as part of China to comply with a requirement of China's civil aviation administration. On 6 June 2018, Air Canada and Air China signed a joint venture, the first joint venture between a North American and Chinese airline.

Proposed acquisition of Transat A.T.

On 16 May 2019, Air Canada announced it is in exclusive talks to buy Transat A.T., the parent company that owns Air Transat, for 520 million Canadian dollars. On 27 June 2019, Transat A.T. agreed to be purchased by Air Canada for CA$13 per share. The deal is still subject to shareholder and regulatory approval. On 11 August 2019, Air Canada raised the purchase price of Transat A.T. to CA$18 per share. The overall value of the deal was now 720 million dollars. On 23 August 2019, 95% of Transat A.T. shareholders approved the acquisition by Air Canada on that basis. The plan was "expected to face intense scrutiny from the Competition Bureau and other regulatory authorities, including in Europe", according to CBC News. The agreement was revised downwards in October 2020 to CA$5 per share, reflecting the challenges posed to the airline industry by the COVID-19 pandemic. The deal was dropped in April 2021 following a failure to secure European Commission approval.

2020s

COVID-19 pandemic

Travel restrictions caused by the COVID-19 pandemic forced Air Canada to heavily restrict service. On 18 March 2020, the airline announced it would suspend most of its flights by 31 March. Service began to return to normal on 22 May, with flights to more cities being added over the summer. In its first quarterly financial report, Air Canada announced it had lost CA$1.05 billion, compared to a profit of CA$345 million in Q1 2019. The airline similarly suffered in the third quarter, reporting a loss of CA$685 million. It stated capacity in the fourth quarter of the 2020 fiscal year would be 75 percent lower than the previous year. In June 2022, after the provincial governments across the country began lifting pandemic-era restrictions, Air Canada announced it was cancelling over 150 daily flights in the summer due to unprecedented and unexpected pressure in the aviation industry.In April 2021, the Government of Canada acquired 6.4% of Air Canada as a part of a $5.9 billion COVID-19 related assistance package, and has not ruled out further investment.