Air Canada seeks to boost US flights

October 10, 2005

Air Canada's regional Jazz airline plans to increase its transborder business in the United States via an agreement with US Airways Group Inc., according to a Toronto newspaper.

Jazz's parent company, ACE Aviation Holdings Inc., has signed an agreement with US Airways, which recently merged with America West Group Holdings Corp. in a $1.5 billion deal, to operate some flights on behalf of the U.S. airline over the next five years.

The Toronto Globe and Mail cites documents filed with the U.S. Securities and Exchange Commission.

The regulatory filings said Jazz will have first dibs on new cross-border routes "in the event that the merged entity plans to increase the number of 70- or 90-seat regional jet U.S.-Canada transborder flights."

Jazz will have to be "competitive on price, terms and conditions" whenever it operates flights on behalf of US Airways, according to the tentative pact signed by ACE, US Airways and America West, the newspaper reported.

The filings also say code-sharing agreements are slated to be expanded. That would allow ACE and US Airways to sell more tickets on each other's flights.

The Globe and Mail said Jazz spokeswoman Debra Williams declined comment on the documents. However, she told the newspaper Jazz has been expanding its U.S. destinations.

"We have significant operations into the U.S., as reflected on our route map," Williams said.

In May, Montreal-based ACE announced its Air Canada Technical Services division was awarded a $1.5 billion, five-year maintenance contract to service the US Airways-America West fleet.

At the time, ACE, one of the investors in the merged airline, said it was "entitled to provide all available outsourced maintenance, repair and overhaul services" for the carrier in return for its $75 million investment.

The newly combined US Airways, which calls Pittsburgh a secondary hub, is based in Tempe, Arizona.

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