1999). A merger of Canadian Pacific Air Lines, Ltd. and Pacific Western Airlines, Ltd. is announced on December 2, 1986. Calgary-based Pacific Western Airlines Corporation, parent of the latter, has paid C$300 million to effect the merger, which also includes various amounts of shareholding in the subsidiaries Nordair, Ltd., Quebecair, Ltd., Eastern Provincial Airways, Ltd., Time Air, Ltd., and Transair, Ltd. In addition, shareholding in AirBC, Ltd. is sold to Air Canada, Ltd. Rhys T. Eyton, former Pacific Western chief, is appointed chairman/ CEO, with Murray Sigler as president/chief operating officer.
The new carrier’s official name is adopted on March 26, 1987, with a start-up date of April 26. The initial fleet comprises 70 Boeing 737-200s and 9 Douglas DC-10-30s, plus 3 leased (later purchased) from United Airlines.
An order is placed for 6 (later 8) B-767-375ERs and 1 B-737-2E1 is sold. It will take two years to complete the changeover to the carrier’s new livery. Meanwhile, the workforce of the combined enterprise increases by 53.9% to 13,454.
During the year, chairman Eyton’s carrier establishes a nationwide commuter network, Canadian Partner. Members include Time Air, Ltd., Norcanair, Ltd. prior to its takeover by Time Air, Ltd., Calm Air, Ltd., and Air Saint-Pierre, Ltd. In Quebec, Nordair Metro, Ltd. and Que-becair, Ltd. are merged to create Inter-Canadian, Ltd., while a new Ontario partner is established in Ontario Express, Ltd.
Many of the routes and services of the merger partners are continued, including Canadian Pacific’s international flights to South America, the Pacific, Asia, Italy, Portugal, Holland, and the U. S. markets of San Francisco, Los Angeles, Pittsburgh, and Ft. Lauderdale (the last two gateways having belonged to Nordair, Ltd.).
In October, the new entrant trades certain routes with Air Canada, Ltd., giving the Montreal-based airline rights to Korea and Portugal in exchange for the German cities of Munich and Frankfurt. CAI is also now designated the nation’s link to Scandinavia and the U. S.S. R. In all, some 90 destinations are served in 13 countries.
During late fall, the previous Attache Class and Empress Class services are replaced by a new Canadian Business Class. First-class service aboard the carrier’s B-737-200s is dropped; however, a temporary ban on smoking aboard that aircraft type becomes permanent.
Passenger boardings for the new megacarrier increase by 2.1% over the previous year’s individual totals to 9,538,623. Freight rises 21.7% to 303.7 million FTKs. Revenues increase by 20.2% to C$1.4 billion and expenses are low enough to allow an operating profit of C$96.3 million. Merger costs, on the other hand, force the net profit down to C$13.8 million.
The employee population is increased by 2.6% in 1987 to 13,800. In February, two former Nordair, Ltd. Fairchild FH-227s are sold to Malmo Aviation, A. S. The second of two Hawker Siddeley HS 748s sold to Calm Air, Ltd. is delivered in March while the first B-767-375ER is delivered in April and is placed into service on the carrier’s trans-Canada routes in May. Later in the same month and with an interline agreement from Aerolineas Argentina, S. A., the carrier inaugurates a weekly route from Toronto to Rio de Janeiro.
In July, orders are placed for 4 B-747-475s and 10 Airbus Industrie A320-211s. In the fall, thrice-weekly DC-10-30 service is inaugurated from Vancouver to Bangkok via Hong Kong. Thirteen B-737-200s are sold to Polaris Aircraft Leasing during the year and leased back. Two B-737-200s are leased to other carriers, one to Britannia Airways, Ltd. and one to Transavia Holland, A. S. A second Rio frequency is introduced in December.
For three months beginning on January 6, 1988, passengers traveling first - or business-class from Vancouver to Bangkok receive hotel accommodation through a Bangkok Executive Stay program.
En route from Amsterdam to Vancouver with 263 aboard on January 12, a DC-10-30 makes an emergency landing in Edmonton after a note is found warning of a bomb in a washroom; no bomb is found. Also in January, thrice-weekly DC-10-30 service is started to Bangkok.
In March, a feeder agreement is signed with Chicago-based Midway Airlines (1). In April, 3 B-737-3Y0s are leased to Monarch Airlines, Ltd. while 1 B-737-2K9A is chartered to Air Atlantis. Nonstop service is introduced in May from Toronto to Buenos Aires, Santiago, and Lima.
In September, twice-weekly roundtrip, nonstop service is initiated between Toronto and Mexico City. Nonstop service is initiated on October 1 between Vancouver and Shanghai, with continuing service to Beijing. Late in the year, a new Northern Division is established and provided a fleet of B-737-200s with which to operate northern airlifts.
Customer bookings accelerate 6.4% to 9,848,533 and cargo rises by 23% to 432.7 million FTKs. Revenues swell by 16.3% to C$1.8 billion. Expenses grow more quickly, however, and cut the operating profit to C$64.6 million. Net gain moves ahead slightly to C$25.2 million.
The workforce grows in 1989 by 20.7%, to 16,877 and the fleet now includes 55 B-737-375ERs, 8 B-767-275ERs, 1 B-747-1D1, 1 B-747-133, 12 A310-304s, and 10 DC-10-30s. Orders are placed or outstanding for 3 B-747-475s, 4 B-767-375ERs, and 18 A320-211s.
A takeover offer is made to Wardair, Inc., parent of Wardair Canada, Ltd., in January. In February, the company introduces Super Skysaver fares with a “best price guarantee” against ticket price increases. Weekly roundtrip and nonstop B-767-375ER flights begin in late April from Montreal’s Mirabel Airport to Munich. Also during the month, thrice-daily nonstop B-737-3Y0 flights are inaugurated from Toronto to Chicago (MDW). The services are timed to connect with Midway Airlines and Midway Connector flights under a new joint marketing program with the U. S. carrier. On April 25, 100% interest is taken in Ward-air, Inc. for C$250,800,000, of which C$146.2 million is paid in cash.
Beginning on May 4, weekly nonstop roundtrips commence from Toronto to Tokyo and from Vancouver to Nagoya.
A strategic alliance is entered into with Deutsche Lufthansa, A. G. during the first week of May. In addition to joint marketing and promotions, ground handling, and frequent flyer program linkage, the two will codeshare on an increasing number of flights between Canada and Germany.
On June 25, weekly nonstop flights are initiated from Edmonton to Tokyo, with flights originating and ending in Calgary. Also in June, weekly roundtrips are launched from Toronto to Copenhagen via Amsterdam.
With a few issues outstanding, integration of Wardair Canada, Ltd. is completed on July 1, while, later in the month, weekly Edmonton-Tokyo flights commence. Other new nonstop frequencies begun during the year include Toronto to Tokyo, Vancouver to Nagoya, and Toronto to Chicago (MDW). Marketing agreements are signed with Aeroflot Soviet Airlines and SAS (Scandinavian Airlines System). The latter pact, made in December, calls for the joint operation of flights from Toronto to Copenhagen.
The joint-venture alliance with Deutsche Lufthansa, A. G. begins on December 20 with weekly nonstop roundtrips between Toronto and Frankfurt.
In addition, the company’s 32% investment in Intair (formerly InterCanadian) is sold for C$15.5 million.
Passenger boardings dip 1.9% to 9,450,000 and freight climbs 4.1% to 215.2 million FTKs. Revenues increase 16% to C$2.23 billion. Expenses, however, climb 20.5% and guarantee an operating loss of C$8.7 million. The net loss—the first in 19 years for PWA Corporation—is C$48.6 million.
The workforce inches up by 0.7% in 1990 to 17,000 and the fleet now includes 89 aircraft. The latter figure makes the airline the 23rd largest in the world. The Wardair, Inc. merger is finally finished on January 1.
Dropped for the winter season, Edmonton and Calgary to Tokyo service resumes on April 29 while flights on the Vancouver to Nagoya route are increased to thrice weekly on the same day.
In accordance with the terms of the previous December’s marketing agreement with SAS (Scandinavian Airlines System), CAI and SAS inaugurate joint, thrice-weekly nonstops in May between Toronto and Copenhagen. Canada’s first B-747-400, a Dash 475, is placed into service and inaugurates services to Taipei. Following up on the success of the previous year’s joint arrangements, new marketing agreements are entered into with Air France and China Airlines, Ltd. (CAL). In September, the company elects to divest itself of its 50% ownership in GPA Jetrop, Ltd. of Shannon, Ireland.
Daily B-747-475 service is launched in October from Vancouver to London and from Toronto to Paris. In November, a twice-weekly nonstop Ottawa to London schedule is introduced while a fifth flight is added from Toronto to Paris and nonstop B-747-475 frequencies are initiated from Toronto to Mexico City.
Services are aligned with Air New Zealand, Ltd.; beginning on December 2, the two airlines offer joint flights, with joint seat capacity and marketing promotional activities, including the Canadian Plus frequent flyer program. Enhanced flight schedules are also inaugurated between the two nations, employing the second Dash-475 Jum-bojet delivered in mid-month; 10 services per week are operated from Canada to Fiji and New Zealand. Minority interest (46%) is taken in Time Air, Ltd.
Customer bookings leap up by 10.8% to 9,450,056 while cargo moves ahead by 23% to 594.5 million FTKs. Revenues are up a slight 3.7% to C$2.38 billion and the operating loss deepens to C$10.1 million. The net loss “improves” to minus C$12.7 million.
Company employment is cut by 7.3% in 1991 to 15,300. The last 54% interest in Time Air, Ltd. is acquired in January, in consideration of C$11 per share. Also in January, twice-weekly DC-10-30 flights begin from Toronto to Mexico City. A supplemental marketing agreement is signed with Deutsche Lufthansa, A. G.; taking effect on April 12, the code-sharing project allows the German carrier to purchase and market seats on up to 19 weekly Canadian flights to Germany.
New Terminal 3 facilities are opened at Pearson International Airport at Toronto and the first of five A320-211s arrives at Vancouver on April 15. A code-sharing agreement is inked with Qantas Airways (Pty.), Ltd., providing for joint service on routes from Sydney to Honolulu with Australian aircraft and from Honolulu to Melbourne, Vancouver, and Toronto on board CAI jetliners.
A second B-747-475 enters service, on routes to the South Pacific, while the first A320-211 is placed on domestic flights, beginning in May. The holding company Canadian Regional Airlines, Ltd. is established to control the carrier’s Canadian Partner affiliates. In October, an alliance is sealed with VARIG Brazilian Airlines (Viacao Aerea Rio-Grandense, S. A.) instituting code-sharing flights from Canada to Brazil, Argentina, and Chile and, in November, a marketing agreement is signed with the China Airlines, Ltd. (CAL) subsidiary Mandarin Airlines, Ltd. covering joint services from Vancouver to Formosa.
Six-times-per-week B-757-475 frequencies are opened from Vancouver to Honolulu in late December. As with most of the larger airlines in Canada, CAI is visited by recession in the wake of the first quarter’s Gulf War.
Passenger boardings slide 15% to 8,034,000 and freight declines 4.4% to 565 million FTKs. Revenues increase 4.5% to C$2.44 billion, but spiraling costs guarantee a hike in operating loss to C$89.7 million. Net loss zooms to C$129.4 million.
The payroll declines a slight 0.5% in 1992 to 15,547. Three A310-304s are sold to the Canadian armed forces for $C50 million. Early in the year, PWA Corporation, the airline’s parent, enters into cooperative discussions with American Airlines. Air Canada, Ltd., which would like to purchase its competitor’s international routes, protests the talks even as its Canadian rival continues its attempts to resign from its Gemini computerized reservations system commitment.
In August, the employees of PWA Corporation form the Council of Canadian Airlines Employees (CCAE) to provide their company with a capital infusion via payroll deductions and to help keep it independent. Discussions are dropped with the Americans and taken up with Air Canada, Ltd. and, in September, it is reported that the former Trans-Canada has purchased PWA Corporation.
Under terms of the “premerger” deal announced in October, which remains subject to shareholder, government, and regulatory approval, a new holding company will be created. Shareholders of each airline will receive one share of common stock in it for each share of common owned in the two earlier firms, with Air Canada shareholders owning 60% interest and PWA 40%. A joint management board will employ an equal number of directors from each airline and it is hoped that merger-related layoffs can be kept below 6,000.
Concerned over the size of the debt load it might be taking on as it also negotiates a takeover of Continental Airlines, the board of Air Canada, Ltd. announces, on November 3, that it has rejected management’s effort to take over CAI’s parent, PWA Corporation. Although somewhat surprised, leadership of the latter wastes no time in reopening merger discussions with American Airlines, which quickly stall as the American major awaits the outcome of the U. S. government’s hearings on a merger between USAir and British Airways, Ltd. (2).
Also on November 24, the national transport minister, Jean Cor-beil, offers PWA Corporation a C$50-million loan guarantee, sufficient to cover operations for 80 days. Five days later, PWA Corporation is forced to temporarily cease payments to lenders as part of its restructuring.
In an effort aimed at keeping itself aloft, CAI announces in December that it has reached agreement with union leaders for huge salary cuts. It also cancels delivery of 3 A320-211s while returning a fourth to its lessor, and accepts a C$50-million ($39-million) loan from the Canadian government offered the previous month.
On December 18, the provincial governments of Alberta and British Columbia provide loans of C$50 million and C$20 million, respectively, on the same terms as that of the Ottawa government. A tentative deal, subject to approval by the U. S. and Canadian governments and dependent upon PWA Corporation’s successful financial restructuring, is announced on December 29. Under its terms, American Airlines’ parent, AMR Corporation, will purchase $195 million in convertible preferred stock, a 33.3% equity investment, in exchange for 25% control, two AMR members on the airline’s eight-person board, and a service contract worth $2 billion over a 20-year period.
At year’s end, a C$1 billion suit is filed against Air Canada, Ltd., charging that it is trying to drive CAI out of business with predatory pricing.
Customer bookings inch up by 1.3% to 8,136,649 and cargo rises 5.7% to 597 million FTKs. Revenues decline 0.2% to $C2.3 billion and expenses rise 0.8% to $C2.38 billion. Although the operating loss is cut to $C87 million, the net loss triples to $C434.6 million.
In 1993, Chairman/CEO Eyton and President Kevin J. Jenkins oversee a workforce of 15,200, down 2.2% from the previous year. Still, starting early in the year and continuing for four years, employee members of the CCAE contribute a cumulative total of C$210 million.
Beginning in early January, travelers paying full-fare for economy class seats are allowed to fly business class on a space available basis. Another promotion allows any first-, business-, or full-fare economy-class international passenger to make a domestic connecting flight to his or her overseas gateway for only C$1. On January 11, scheduled capacity is cut by 15%. Employees now vote overwhelmingly to invest C$200 million in PWA over a four year period through 5-20% wage cuts.
The pilot twins, Captains Ted and Robert Randall Jr., both retire on March 31; both had begun their company service on April 15, 1952.
Also in March, Time Air, Ltd. and Ontario Express, Ltd. officially begin to merge under the single Canadian Regional Airlines, Ltd. banner.
The struggling line is dealt a serious blown on April 22 by the government’s regulator, the Canadian Competition Tribunal (CCT). It refuses to allow CAI to walk away from its Gemini reservations partnership with Air Canada, Ltd. in order to join the SABRE system of American Airlines; the government body admits it lacks jurisdiction to permit the action. In May, the National Transportation Agency (NTA) of Transport Canada concludes that an AMR Corporation 25% buy would not be against the public interest as control of CAI would remain with PWA.
Two B-737Fs, the first pure freighters in the fleet, are placed into service in June on overnight cargo services within Canada. At the same time, the government, despite appeals by various interests, refuses to over turn the NTA decision. A Federal Court of Appeals decides in July that the Competition Tribunal does, indeed, have the necessary jurisdiction required to release CAI from its Gemini hosting agreement. At the same time, 70% of the carrier’s creditors sign a debt restructuring agreement (DRA). Preferred and common shareholders vote overwhelmingly in August to support the DRA and corporate restructuring.
A marketing agreement is signed with VARIG Brazilian Airlines (Viacao Aerea Rio Grandense, S. A.) opening up increased frequencies from Toronto to Sao Paulo and allowing the carrier’s customers to readily connect with VARIG flights in Brazil and Argentina. Other major overseas destinations visited now also include Auckland, Buenos Aires, Frankfurt, Hong Kong, Honolulu, London, Los Angeles, Manchester, Milan, Munich, Nadi, Paris, Rio de Janeiro, Rome, San Francisco, Santiago de Chile, Shanghai, Sydney, Taipei, and Tokyo. Transborder and domestic services are maintained to 125 communities.
In September, parent PWA Corporation rejects a takeover bid by rival Air Canada, Ltd.. If completed, the deal would have provided C$200 million ($150.9 million) in cash and the assumption of C$800 million ($603.6 million) in debt and lease obligations in exchange for all of CAI’s international routes and 8 jetliners. A B-767-375ER is, however, sold for C$15.5 million. The arrangement fails primarily because officials realize that the resulting domestic-confined CAI would not be financially viable in the long run.
The Canadian Supreme Court, in October, rules that Air Canada, Ltd., Gemini, and Covia may not challenge the appeal court’s July ruling. At this point, the remaining creditors sign the DRA. The major hurdle to an agreement with American Airlines is removed on November 24 when the Canadian Competition Tribunal orders the dissolution of the Gemini partnership with Air Canada, Ltd. within a year.
In December, PWA Corporation announces AMR’s extension of its deadline to complete business until the following June. At the same time, PWA, CAI, and AMR settle out of court with Gemini; however, mediated talks with Air Canada, Ltd. to resolve the Gemini issue cannot be resolved and a second merger offer from the Montreal-based major is rejected. Gemini, Covia, and Air Canada appeal the CCT’s November ruling to the Federal Appeals Court; however, the national government, as well as the provincial governments of Alberta and British Columbia, restore and extend PWA Corporation’s loan guarantees.
Passenger boardings for the year decline 6.2% to 7,629,962 while freight jumps 7% to 656.3 million FTKs. Although revenues are up 3.4% to C$2.25 billion, expenses climb 1.7% to C$2.3 billion. The company’s losses are down to C$46.45 million (operating) and C$207.32 million (net).
Interested in a possible relationship, Air Canada, Ltd., on January 16, 1994, drops its opposition to CAI’s pullout from the Gemini reservations system and discontinues its appeal of the CCT’s November ruling. It joins with AMR, Gemini, Covia, and PWA Corporation to negotiate an end of differences. A settlement between the Canadian firms is reached in February, the same month in which employees ratify amended terms of the company’s employee investment program.
The equity-for-service arrangement is finally concluded with American Airlines on April 27, and is seen by the Canadian carrier as the final stage in a restructuring which enhances the balance sheet by more than C$1 billion (C$720 million). In return for the transfer of a total of C$186 million ($177 million) north of the border, the Dallas (DFW)-based megacarrier receives 25% shareholding in CAI and a multibillion-dollar computer services contract worth $115 million in year one.
AA will also provide CAI with a host of other services including data processing, communications, accounting, operations planning, pricing and yield management, passenger services, and U. S.-originated reservations. The two will also link their frequent flyer programs and AA receives two seats on the CAI board of directors, with one of the new members being AA’s own strong-minded Chairman/CEO Robert L. Cranial.
CAI is able to reach agreement with Air Canada, Ltd. for dissolution of their partnership in the Gemini reservations system, reportedly by allowing its Montreal-based rival uncontested access to Osaka (KIX) in September. In other financial moves, the carrier is able to achieve $C530 million in debt restructuring and $C150 million in employee concessions. The national government and the provincial governments of Alberta and British Columbia provide C$120 million in loan guarantees.
Meanwhile, as financial restructuring continues, Chairman/CEO Ey-ton retires and is succeeded by President Jenkins, who assumes leadership of both the PWA holding company and its airline subsidiary.
On May 4, twice-weekly scheduled service, suspended after the Tiananmen Square massacre, is resumed to Beijing. Additional service to Asia is also offered, including an increase in the number of flights from Toronto to Hong Kong (from 7 to 10 flights per week); from Toronto to Tokyo (from 4 to 5), and from Vancouver to Hong Kong (from 6 to 8).
Operations continue apace during the remainder of the year and, for the winter tourist season, include charter flights to Orlando, Ft. Lauderdale, St. Petersburg, Phoenix, Palm Springs, and Las Vegas. On October 30, nonstop flights commence between Toronto and Mexico City.
After a brief shutdown of certain commuter services following the November ban on ATR operations by the U. S. FAA, the airline manages to maintain its schedule by redeploying several DHC Dash-8 aircraft from its western carriers; these join leased Dash-7, Dash-8 and Convair aircraft. The company’s two wholly owned eastern subsidiaries, Canadian Regional Airlines, Ltd. and Inter-Canadian Airlines, Ltd. work to maintain 60% to 70% of their schedule on a week-by-week contingency basis. The two carriers operate Canada’s only ATR aircraft with eight and seven ATR42s, respectively. They are forced to ground a combined 15 aircraft when the ban was enforced at an estimated total cost of $220,000 per day.
In December, Transport Canada rules that Air Canada, Ltd. will not be allowed to serve Hong Kong as a “second carrier.”
Customer bookings inch up 1.5% to 7,744,746 while cargo advances by 6.6% to 699.84 million FTKs. Revenues jump 7.2% to C$2.09 billion while expenses rise only 2.2% to C$2.04 billion. There is a C$50.33-million pretax gain, later adjusted upward to C$40.15 million. The net loss is cut to C$26.83 million upon initial reading, but later becomes an actual minus C$39.2 million.
The workforce stands at 15,200 in 1995. On January 4 the Russian and Chinese air ministries authorize a new route from North America via Siberia to China. The ATR ban is lifted during the month.
Under terms of a new bilateral “open skies” agreement signed between Ottawa and Washington in February, Air Canada, Ltd. and CAI on March 10, are allocated by Transport Canada a total of 24 new landing slots at New York (LGA) and Chicago (ORD). Indeed, a total of 32 new routes into the U. S. will be started.
To help direct this incursion south of the border, American Airlines executive Barbara Amster is appointed CAI vice president of management and sales; she will be joined by two other former AA officials.
The same day as the U. S. decision is announced, the government agency also reverses its December “second carrier” decision and establishes new criteria for such airline designations on international routes. Air Canada, Ltd. now becomes eligible to start Hong Kong flights even as CAI receives authority for such other Asian destinations as Malaya, Vietnam, and the Philippines plus Germany.
In order to develop a market at Seattle, the company, beginning on March 15, offers Vancouver-London tickets to U. S. citizens only in the Washington State city for C$535 (US$379); the same tickets are sold in Vancouver for C$768.
Twice-daily nonstops commence on April 1 between Montreal and Toronto and Mexico City; the new frequencies represent a three-fold increase in weekly services over the previous year.
A company DC-10-30 makes a proving flight on April 21 from Vancouver to Beijing, flying via Anchorage, Magadan, Khabarovsk, and Haiqag, and returns two days later. Problems with the Canadian Holidays, Ltd. reservations system are resolved during the second quarter.
Thrice-weekly B-747-475 return service begins at month’s end over the new Vancouver to Beijing route; passengers are saved 2i‘2 hr. from the previous service flown by way of Tokyo (NRT).
When the “open skies” pact with the U. S. takes effect, CAI launches new cross-border frequencies in June. The previous charter services to the Southwest are converted into six new scheduled routes. On June 3, daily nonstop roundtrip flights begin between Toronto and Ft. Lauderdale and Hollywood, Florida.
Additional cross-border frequencies started on June 19 include a daily nonstop return service from Vancouver to Chicago, two daily nonstop roundtrips between Toronto and Chicago, and five daily nonstop return flights between Toronto and New York.
A fourth B-747-475 arrives and begins return frequencies from Vancouver to Taipei and Vancouver to Nagoya; the summer schedule also features the initiation of a new Mexican market at Monterrey, served from Montreal and Toronto. Additional services are also laid on to Tokyo, Paris, Frankfurt, Honolulu, Mexico City, and Shanghai.
Additionally, Canadian Shuttle service is initiated to further business markets while business-class service itself is upgraded. New and competitive Value fares are introduced in an effort to counter the deep discounts offered by other carriers. Having obtained C$27 million in concessions from its unions with which to launch its “summer initiative,” CAI managers and representatives of five of the airline’s six unions continue to discuss issues even after a June 30 company deadline for agreement passes.
In association with American Airlines, dual-designator flights are undertaken as of July 3 on new CAI routes from Toronto to New York and from Toronto and Montreal to Chicago, Miami, and Dallas (DFW). Indeed, 12 daily roundtrip frequencies are now offered between Toronto and New York (LGA). By month’s end, CAI offers 208 weekly departures to American markets, including 64 daily flights from Toronto alone, to 16 U. S. communities.
Conversely, AA launches new Canadian frequencies of its own, which it code-shares with CAI, from Chicago to Ottawa, Calgary, and Winnipeg and from DFW to Calgary and Vancouver. Passengers arriving at Vancouver are able to connect to CAI’s Beijing flights.
To the tune of a C$44.5 million onetime restructuring cost, several unprofitable operations are removed by the end of September, including cancellation of the carrier’s weekly Montreal-Rome flights, closure of the pilot base at Dorval Airport, and transfer of Halifax-St. John’s service to Air Atlantic, Ltd. The B-737-200s removed from the six-times-per-week Nova Scotia-Newfoundland frequencies are assigned to the new services into the U. S.
A C$20-million arrangement is entered into with the National Hockey League’s Calgary Flames on July 20. Under its terms, the airline’s name will be placed on the Olympic Saddledome and it will transport the Calgary Flames team to its destinations free of charge; cost of the flights are estimated to value C$850,000 annually.
At the beginning of August, a strategic agreement is signed with Alitalia, S. p.A.; code-sharing flights will be undertaken between Toronto and Rome.
On August 24, it is announced that the carrier will, with the start of its winter schedule, double its service from Toronto to Florida to six nonstops per day, including two each to St. Petersburg, Orlando, and Ft. Lauderdale. Extra flights will continue to be offered on weekends.
In addition, heavy maintenance is consolidated in Vancouver, and 18 aircraft are sold and leased back, including two DC-10-30s and a B-767-375ER which are employed to enhance services between Halifax and Vancouver, via Toronto and Calgary. Funding for the three aircraft comes as a direct result of successful negotiations with the Canadian Air Line Pilots Association (CALPA).
Also in September and into October, services into the Far North are restructured and consideration is given to transferring such B-737-275C destinations as Cambridge Bay, Repulse Bay, Baker Lake, Yellowknife, and Norman Wells to regional affiliates. Deep discount fares are offered on a number of routes, but, where the schedules overlap, these are matched by Air Canada, Ltd.
While on its takeoff roll from Vancouver for Taipei on October 19, the engine of Flight 17, a B-747-475 with 257 passengers stalls, forcing the pilot to initiate a rejected takeoff. The aircraft cannot be stopped on the runway and its nosewheel gear collapses as the Jumbojet rolls through the soft ground, coming to rest in a nose-down attitude some 400 ft. off the end of the runway. Six passengers are slightly injured during the emergency evacuation that follows.
In November, seven-times-per-week passenger and freight Toronto to Rome code-sharing flights are inaugurated with Alitalia, S. p.A. CAI will operate the services during the winter and spring seasons and Alitalia in summer and fall. At about this same time, South African native Kevin Benson, who has just completed the economic rescue of the big real estate developer Trizec, Ltd., is named senior vice president/chief financial officer.
Also during the 11th month, code-sharing begins with Malaysia Airlines, Ltd. (MAS) aboard MAS aircraft flying from Kuala Lumpur to Vancouver via Taipei. Plans are announced on November 24 for the consolidation of all maintenance in Vancouver, including closure of the base at Calgary and a reduction in workers.
Notice is given by the Germans on December 5 that the 6-year old code-sharing pact with Deutsche Lufthansa, A. G. will end in six months.
On December 20, a B-737-217 cleared to land touches down at Calgary and applies reverse thrust before noticing that a Piper Cheyenne that had landed ahead of it had ceased its movements toward the terminal and had come to rest with its nosegear just off the edge of the runway. The jetliner passes the Piper, with about 15 ft. of clearance, at between 100 and 115 knots. No injuries are reported.
Passenger boardings ascend 3.8% to 8,625,559 while freight climbs 12.9% to 716.62 million FTKs. Although operating revenue is up 5.9% to C$2.29 billion, costs rise 8.8% to C$2.31 billion. As a result, the previous year’s operating profit becomes a C$19.49-million loss. The net loss deepens to C$142.13 million.
The workforce is reduced by 2.9% through 1996 to 13,228.
At the beginning of the year, CAI becomes the first Canadian airline to offer a designated concierge program. A total of 43 trained concierges are made available to assist VIP and business passengers at the airports at Toronto, Montreal, Ottawa, Calgary, Vancouver, London (LHR), Tokyo (NRT), Honolulu, and Hong Kong.
Matched wherever possible by Air Canada, Ltd., CAI expands its shuttle services during the year’s first two months. From Toronto, 41 daily flights are undertaken to Montreal, with another 33 flown to Ottawa. This schedule represents an increase of 10 flights per day on each leg of the eastern triangle. At the same time, 42 daily frequencies are inaugurated between Calgary and Edmonton; a total of 31 daily flights are made from Calgary to Vancouver and 14 per day are initiated from Edmonton to Vancouver.
This schedule represents an increase of four daily frequencies on each leg of the western triangle. B-737s are employed on the CAI shuttle; in a new departure, 20 seats on each plane are converted from economy to business-class.
Flight 48, a B-767-375 coming in from Toronto on March 8, crosses the Halifax runway threshold about 20 ft. above ground level while landing and touches down 200 ft. further on. The tail of the aircraft strikes the runway, causing substantial damage to the tail skid and rear fuselage.
Code-sharing is inaugurated with Japan Air Lines Co., Ltd. (2) on April 1 on board CAI jetliners flying four times a week from Nagoya to Vancouver.
On April 18, company officials, in a complex arrangement, sell 11 B-737s to Arkia Israel Airlines, Ltd. for $60 million. The planes (3 Dash-275Cs, 2 each Dash-242Cs, Dash-217As, and Dash-296As, and 1 each Dash-2T5A and Dash-2T2C) are then leased back to CAI for US$1,079,100 per month for a six-year period, bringing Arkia a profit of US$17.7 million. As part of the arrangement, CAI is given the option of continuing the lease of individual aircraft for two-year periods, up to four years, after 2002.
The code-sharing pact with Deutsche Lufthansa, A. G. ends on June
1. Also in June, a marketing agreement begins with British Airways, Ltd. (2) covering CAI services from Calgary to London (LHR) direct and to the U. K. capital from Vancouver, Calgary, and Montreal. Links between the frequent flyer programs of the two carriers are also made.
A three-year arrangement is entered into with Pepsi-Cola Canada Beverages on June 7. In return for exclusive Pepsi beverage service aboard its aircraft, CAI will receive, gratis, 250,000 cases of canned soft drink products annually.
On June 19, CAI sells its Canadian Holidays, Ltd. unit to an undisclosed management concern for an undisclosed price. Hereafter, the airline will outsource its holiday charter business to independent contractors.
Citing personal exhaustion, President Jenkins resigns on June 28; Chief Financial Officer Benson succeeds him. At the same time, the machinists’ union, which represents 5,000 employees, ratifies a 38-month contract that will result in cost savings for the company of C$34 million.
During July and August, CAI moves to cut unprofitable routes, convert some shuttle routes to smaller, cheaper jets, and move its B-737 fleet to the most profitable routes in Asia and Europe. Routes to Frankfurt, Paris, and Shanghai are eliminated; the European suspension frees up planes for use on more profitable Asian services. Only two aircraft are employed in northern Canada to fly the profitable routes to Yellowknife, Rankin Inlet, and Inuvik.
Some Calgary-Edmonton shuttle flights are converted to smaller F.28s, thus allowing 2 B-737s to be added to the general fleet. Extra aircraft as they become available are stationed at Vancouver to accommodate the alliance with American Airlines, while the number of frequencies to Hong Kong, Beijing, Japan, and Southeast Asia are boosted.
A cargo alliance signed between the Canadian Air Cargo subsidiary and American Airlines takes effect on September 1. Under its terms, each acts as the other’s sale agent in respective territories and creates a cargo network of over 420 destinations worldwide.
Philippine Airlines (PAL) employs its newly received A340-312 on September 19 to commence four weekly nonstop dual-designator round-trips with CAI between Manila and Vancouver, with continuing service to Newark. The Philippines was, previously, the largest airline market still unserved by direct flights from Canada.
Also in September, a C$20-million advertising campaign designed by Gee Jefferey & Partners Advertising, begins; it is designed to improve the airline’s image and will be run in business publications and as TV spots during sports and news programs.
In early October, the code-share arrangement with American Airlines is expanded to cover “American Eagle” services from New York (JFK) to Baltimore (BWI), Boston, Philadelphia, Pittsburgh, and Washington, D. C. (IAD). Chicago will become part of the agreement within a month.
CAI initiates its portion of the PAL code-sharing pact on October 28 with three weekly flights from Vancouver to Manila via Hong Kong.
Through the summer and into the fall, rising energy costs, competition from new deep-discount entrants, and a fall in the value of the
Japanese yen plague the company. As part of a rescue plan designed to save CAI from bankruptcy, CEO Benson seeks 10% wage cuts (valued at C$70 million) from the carrier’s workers, who are represented by six trade unions. On “Black Friday” November 1, he announces that, unless the wage cuts, route restructuring, and an AMR Corporation concession could be gained, thereby allowing C$200 million in savings, CAI will fail by year’s end.
The next day, the company begins turning its domestic flights in Ontario and Quebec over to its regional partners, while long-haul services to Paris and Frankfurt are also cut.
On November 4-5, company executives at domestic hubs begin to outline the carrier’s survival plans to employees. In the words of CEO Benson, “there is no Plan B.” In Ottawa, Transport Minister David Anderson indicates that the Canadian government is prepared to consider proposals to assist the airline—if the unions will accept the restructuring plans.
The carrier’s entire 10-member board of directors, including CEO Benson, former Alberta premier Peter Lougheed, and CTV CEO John Cassady, resigns on November 15. The move is taken on the advice of legal counsel in order to avoid personal responsibility for the airline’s payroll in the event of bankruptcy. Until a new board is appointed (within about two weeks), the airline is operated under the direction of two of its major shareholders, Canadian Airlines Corporation and Aurora Airline Investments, Inc., a wholly owned subsidiary of American Airlines.
Benson remains in control as CEO and is closeted in one meeting after another seeking both labor concessions and to reassure corporate clients and travel agents that CAI will remain viable.
By November 28, CEO Benson has secured approval from four of the unions, with the Canadian Union of Public Employees (CUPE) and Canadian Automobile Workers (CAW) refusing to agree. That day the CEO, rather than calling upon these company employees to vote directly on the cut, refuses to extend talks with the two remaining groups. The next day, the CUPE president, convinced that the cut is in the best interest of the 2,700 flight attendants she represents, agrees to endorse the salary-slashing plan. Passenger service staff are requested to voice their yea or nay.
At the close of business on the last day of November, stock that CAI employees had purchased upon the airline’s creation for C$13 a share closes at C$2.20 per share.
On December 2, CAI announces that it is planning to defer more than half of its debt and lease payments during the next six months and will begin discussions with lenders and aircraft suppliers to suspend payments of about C$170 million over the next six months. Canadian Labor Minister Alfonso Gagliano requests that the 3,700 reservations and ticket agents vote, even though their union remains opposed to the CAI bailout plan. He warns that, unless workers agree to wage cuts and other concessions, the company will run out of money in January.
Having received daily reports on the airline crisis during a tour of Asia during the last week of November, Prime Minister Jean Chretien becomes convinced that something must be done to avoid CAI’s failure. Upon his return to Ottawa on December 3, Chretien summons Transport Minister Anderson and Labor Minister Gagliano. The latter suggests that seldom-invoked Section 107 of the Canadian Labour Code can be employed to force a vote among CAW workers, despite continuing opposition from that union leader’s, Basil (“Buzz”) Hargrove.
Section 107, which allows the federal government to “maintain or secure industrial peace,” is invoked on December 4. The national labor relations board is ordered to organize and conduct an election of the CAW membership. After CAW President Hargrove voices the outrage expected of him, an intense flurry of last-minute negotiation begins between union executives, government ministers and bureaucrats, and airline officials.
With the company’s future placed squarely upon their shoulders, leaders of the Canadian Auto Workers union come to terms on December 8 for a rescue plan that includes pay cuts averaging 3.7%. The company’s immediate labor crisis appears over. In addition, the federal, Alberta, and British Columbia governments agree to continue C$35 million in tax reductions while AMR Corporation promises to accept a 35% reduction ($35.5 million) in its annual fees.
At this point, CEO Benson and his airline must convince customers that the airline is open for Christmas business and will be so for many more to come.
Enplanements inch up 2.6% to 8,852,578 and 714.1 million FTKs are operated, a 0.4% decrease. Operating income slips 1.3% to C$2.25 billion and expenses move up a slight 0.9% to C$2.32 billion. Although the operating loss deepens to C$70.44 million, the net loss “improves,” with only C$136.58 million loss reported. That negative figure is readjusted later to read an even better C$104.3 million.
The workforce is increased by 7.6% in 1997 to 14,233. Early in the year, the company drops charter flights to Florida. Domestic service is cut back sharply and frequencies to Paris and Frankfurt are withdrawn. A new four-year restructuring plan is put in place designed to save C$146 million.
In April, the code-sharing arrangement with British Airways, Ltd. (2) is expanded. CAI will place its codes on BA flights from London to Montreal and from London to Aberdeen, Amsterdam, Edinburgh, Glasgow, Manchester, and Prague. BA will share codes on CAI flights from Toronto on to Halifax and Quebec City.
Also during the month, the frequent flyer relationship with American Airlines is modified. Heretofore, it has only been possible for members of one carrier’s program to upgrade on the other airline if the flight was dual designator; now, members may upgrade from economy to the next class up on any of each other’s flights.
Daily roundtrip A320-211 nonstop service is inaugurated on May 5 between Vancouver and Boston. These are the first nonstop flights by any airline in this market.
On May 29, the company announces that it has obtained formal agreement for all of its lenders and lessors and is able to implement the payment deferral plan announced the previous December.
In June, CAI becomes the first Canadian airline to offer scheduled service to Central America. Via its code-sharing agreement with American Airlines, it inaugurates dual-designator services from Toronto to Miami, where American takes over and flies through passengers to El Salvador and Guatemala.
Also during the month, Pacific Coastal Airlines is contracted to operate daily roundtrip replacement service on behalf of CAI from Vancouver to Nanaimo.
The decision having been taken to discontinue operations, Greyhound Canada, parent of the failing discount carrier Greyhound Air, Ltd., works out an arrangement on September 1 with CAI. The major agrees to honor all reservations made before September 2 for travel after the new entrant’s shutdown, subject to availability. Affected Greyhound passengers or their travel agents will be rebooked by September 15.
During takeoff from Beijing on September 6, a company B-767-375ER suffers an uncontained failure of its No. 1 GE CF6-80C2 engine; the takeoff is rejected and no injuries are reported. A few fragments are recovered from the runway.
On September 8, American Airlines begins to code-share on CAI wide-body flights from Vancouver to Taipei. The dual-designator flights commence in Boston, Chicago, Dallas (DFW), Las Vegas, Los Angles, New York, Portland, Seattle, or San Francisco and transit via the British Columbia capital on to Taiwan. At the same time, AMR management fees are reduced. A new service to New Zealand is announced on September 18.
The last Greyhound Air, Ltd. service is operated on September 21.
Helijet Airways, Ltd. joins the Canadian Plus frequent flyer program on October 6. Passengers of the helicopter line are able to earn loyalty points on Helijet scheduled flights between Vancouver, Victoria, and Seattle.
On October 26, the company and Mandarin Airlines, Ltd. begin to sell tickets on each other’s flights between Vancouver and Taipei and from Taipei to Vancouver. The same day, the company expands its direct service from Toronto to Buenos Aires via Sao Paulo to six times a week.
When the winter shuttle schedule begins on October 26, service on the Western Shuttle between Vancouver and Calgary increases to 34 flights a day, while that from Calgary to Edmonton reaches 47. Connections between Vancouver and Calgary increase to 34 flights a day and the Vancouver-Edmonton corridor is served by 16 flights every day. Flights from Vancouver-Kamloops and from Vancouver-Prince George jump to 12 flights every day. Service from Vancouver-Campbell River reaches 3 daily roundtrips while that between Vancouver and Comox grows to 5.
The Eastern Shuttle is significantly expanded. Its flights from Toronto to Ottawa jump to 38 roundtrips each day, while that between Toronto and Montreal is just 2 fewer.
Twice-weekly B-767-375ER return flights commence from Vancouver to Auckland, New Zealand, via Honolulu on October 29. The one-stops replace a service previously provided by Air New Zealand, Ltd.
Transcontinental service from Toronto to Vancouver is boosted to 7 daily roundtrips, while that to Calgary is increased to 8. Flights from Toronto to London, Ontario, jump to 12 returns per day.
Service to Dallas (DFW) becomes daily and that to Orlando, twice-daily. Seating to London from Calgary is increased by using a DC-10-30 instead of a B-767-375ER while the Calgary departure time to Los Angeles is advanced 2i‘2 hours to provide better connections in California.
Three bridges (covered walkways) are modified and taxiway construction is completed at Calgary International Airport at month’s end.
On November 7, negotiators in Chile place the finishing touches on a new strategic alliance with LanChile Airlines (Linea Aerea Nacional Chile, S. A.). It will be formally signed after Christmas. The pact is a follow-up to the Canada-Chile Free Trade Agreement signed on July 5.
It is announced on November 17 that CAI and Japan Air Lines Company, Ltd. (2) will link their frequent flyer programs in two phases, beginning in January.
Dual-designator flights with American Airlines commence on November 19 from Toronto to Nicaragua and Costa Rica. Again, CAI flies the Toronto to Miami leg, where the U. S. major takes over and continues the services into Central America.
As the year ends, the company completes several of the goals set in its restructuring plan. President/CEO Benson will note that the redeployment of the narrow-body fleet is completed, with an emphasis on transborder operations, while capacity is shifted away from Europe and toward Asia. Increased revenues, fleet building, and recruitment of new investments remain as targets.
The carrier’s leisure travelers are, as of December 15, able to fly between Vancouver and Honolulu 28 times a week. Twice-daily roundtrips commence on December 17 between Vancouver and San Diego.
As a result of a shift in capacity toward the transborder operation and restructuring, passenger boardings are down 2.9% to 8,594,000; freight, however, rises 2% to 728.68 million FTKs.
Operating revenues of C$2.2 billion are earned, allowing a C$3.8-million net profit, the first net gain the company has been able to celebrate since 1988.
The fleet at the beginning of 1998 includes 76 planes, only 44.7% of which are Stage III certified; the numbers show 42 Stage II B-737s and a remaining Stage III contingent of 4 B-747s, 9 B-767s, 12 A320s, and 9 DC-10s.
CAI and Canadian Regional Airlines, Ltd. cancel all regularly scheduled flights into and out of Ottawa and Montreal on January 8-10, during a huge ice storm. Beginning on Sunday, January 11, CAI transports the Team Canada ’98 trade mission, headed by Prime Minister Chretien, on a two-week mission to Mexico, Brazil, Argentina, and Chile.
Between January 13-20, CAI waives the normal advance ticket purchase requirements to help victims and their families hurt in whatever way by the recent ice storms and who wish to travel to and from Montreal and Ottawa. At the same time, company aircraft transport badly needed generators to supply power to those who have been without heat and electricity.
During an official ceremony in Santiago on January 23, a commercial alliance agreement is signed with LanChile Airlines (Linea Aerea Na-cional Chile, S. A.). When the pact takes effect on March 11, the two will coordinate their schedules and link their frequent flyer programs. Initially, passengers will be able to travel on LanChile from Santiago to Los Angeles four-times-a-week and connect with Canadian service to Vancouver. The signing by the airline representatives is witnessed by Eduardo Frei, president of the Republic of Chile, and Canadian Prime Minster Chretien.
Also in January, the first phase of the linkage of frequent flyer programs with Japan Air Lines Company, Ltd. (2) begins; the second phase will kick in during November.
Dual-designator flights with LanChile Airlines (Linea Aerea Na-
Cional Chile, S. A.) commence on April 8. In addition to the daily Los Angeles connection announced earlier, the two companies also share daily return flights between Toronto and Santiago. Customers fly Canadian to Miami, where they seamlessly board LanChile for the remainder of their trip; the process is reversed on the return.
While en route from Beijing to Vancouver on April 13, Flight 30, which had filed an approved flight plan, is denied permission to enter Russian airspace per usual practice; the service returns to Beijing, where passengers are deplaned. A protest is filed by Canada with the Russian government and its federal aviation authority.
In “celebration” of the third anniversary of the U. S.-Canadian “open skies” pact, the company launches eight daily A320-211 roundtrips on May 4, between Toronto and Boston. May 5 is “Canadian Airlines Day” in Newton, Massachusetts.
This introduction helps to bring about a larger change than is anticipated. Having watched the American Airlines share of cross-border traffic drop from 95% to 50% since 1995 and concerned that CAI’s success may impact U. S. pilot jobs, the U. S. major’s Allied Pilots Association now triggers a related contract clause. American, as a result, is forced to drop code-sharing with CAI during the second week of May over 14 of 35 cross-border routes.
An application by Air Canada, Ltd. and Air China International Corporation to code-share over routes from Canada to China is rejected by Transport Canada during the last week of May. The National Transportation Agency of Transport Canada, some years earlier, had designated China as a single-market country and assigned Canadian service to it to CAI.
The company and Philippine Airlines (PAL) expand code-sharing on services between the two countries on June 1. PAL places its code on CAI flights between Vancouver and Toronto, allowing passengers the ease of seamless travel from Manila to Toronto, with a short stopover at Vancouver.
The latest expansion of the code-share partnership with British Airways, Ltd. (2) begins on June 2 with three weekly nonstop roundtrips between London (LHR) and Ottawa. BA will place its code on a CAI B-767-375ERs on Tuesdays and Saturdays and a DC-10-30ER on Sundays. CAI labels the services Dayliner and Starliner.
The dispute between APA members and code-sharing partner American Airlines concerning CAI services deepens as the union recommends that its members not accept additional flying time. American is forced to cancel hundreds of flights during July for lack of flight crews. Finally, on August 15, an arrangement is reached between the major and its flyers. Under its terms, AA is allowed to maintain its code on six CAI flights added after January 7, 1997 and to add its code to one more flight later in the year.
On August 27, it is announced that the carrier will terminate its commercial agreement with Air Atlantic, Ltd. on October 24 and that that regional will cease all scheduled flight operations. Only half of the small carrier’s 118 pilots will be taken on by Inter-Canadian Airlines, Ltd., which will assume the Air Atlantic routes the next day. After that date, IMP Group, which owns the St. John’s-based regional, maintains the company’s operating certificate and studies the viability of undertaking nonscheduled flights over the winter season.
As is the case with the Northwest Airlines strike in the U. S., a number of other carriers provide accommodation for displaced Air Canada,
Ltd. passengers when a job action begins against that airline on September 2. Chief among these is CAI, Canadian Regional Airlines, Ltd., and CAI’s domestic partners. All accept AC tickets, space permitting, and without penalty or service charge. In addition, CAI responds to the increase in passenger and cargo demand by adding flights wherever possible, including the eastern and western triangle cities and flights from Toronto to both Halifax and Vancouver.
As the demand for transcontinental booking increases on September 3, CAI tasks a B-747-475 and two DC-10-30s to the Toronto-Vancouver route. A dedicated CAI group works hand in glove with a similar unit from Air Canada, Ltd. to minimize Canadian air passenger travel disruption.
With Air Canada, Ltd. remaining shut down, CAI is flooded with travelers over the three-day Labor Day holiday, September 5-7. Nearly 100 flights are added to the CAI schedule to help accommodate the influx and a systemwide load factor of 95% is experienced on September
7. A total of 19 extra flights are ordered for September 8,21 for Wednesday, and 10 on September 10 and crews and personnel across the country continue to meet overtime requirements.
The Air Canada, Ltd. strike is settled on September 11, allowing CAI to gradually return its overtime services over the next few days to normal levels of operation.
It is announced at a London news conference on September 21 that Cathay Pacific Airways (Pty.), Ltd. has joined its first airline alliance, the new “OneWorld” grouping established to compete with the “Star Alliance” headed by United Airlines and Deutsche Lufthansa, A. G. Leadership for the new enterprise is provided by American Airlines and British Airways, Ltd. (2), which continue their battle to gain regulatory approval for a separate arrangement that would provide U. S. antitrust immunity on prices set for the transatlantic market. CAI and Qantas Airways (Pty.), Ltd., both of which already have marketing partnerships with AA and BA, are also charter members.
Leaders of the five companies indicate that they will coordinate ticketing and flight schedules, while cooperating on frequent flyer programs. Other carriers will be invited to join and Iberia Spanish Airlines (2) (Lineas Aereas de Espana, S. A.) announces its membership before the day is over.
One airline that will not be invited to join, Virgin Atlantic Airways, Ltd., hires a truck with a sign painted on its side proclaiming “no way” and has it parked, illegally, outside the building where the “OneWorld” news conference is held. A spokesman for Virgin indicates that his airline will gladly pay the parking ticket to get its point across.
A new code-sharing partnership is announced on September 29 with Helijet Airways, Ltd. Effective October 14, CAI passengers with premium-fare tickets will have the option to travel on one of 10 daily Helijet-operated shuttles between Vancouver’s South Airport and Victoria’s downtown inner harbor.
The next day, electronic “Virtual Ticketing” becomes available on all CAI flights from Canada to the U. S.
Also during the month, the airline’s northern division is sold to the 100% aboriginal-owned holding company NorTerra Inc., which is jointly owned by Inuvialuit Development Corporation and Nunasi Corporation. Under the name Canadian North, the division, based at Yellowknife with a regional office in Iqaluit, immediately enters into a comprehensive agreement with CAI. Under its terms, CAI will provide operational and maintenance support, including wet-leased B-737-200s, as well as joint marketing, scheduling, and fare structures. All flights operate with the CP code and Canadian North is included in CAI’s frequent flyer program, is a partner in Canadian Cargo, and is included in the major’s travel agency Sales Incentive Program.
Canadian North continues to offer services to and from Iqaluit, Rankin Inlet, Cambridge Bay, Resolute, Yellowknife, Norman Wells, Inuvik, Hay River, and Fort Smith.
It is announced on October 6 that the Toronto-based designer Brian Bailey has been chosen to create new uniforms for the carrier’s 12,000 employees. The new clothes will be unveiled and tested early in 1999 with an eye toward their introduction during the year 2000.
The pact with Air Pacific, Ltd. (2) is expanded on October 16. Under its terms, the two carriers, beginning on December 7, combine their marketing and fleet strengths to provide three weekly flights between Auckland and Honolulu. Canadian offers daily nonstop flights from Toronto to Honolulu and 13-times-a-week service from Vancouver to Honolulu. At the Hawaiian city, passengers seamlessly transfer to the Air Pacific B-767-3X2ER for any of the three onward nonstop weekly flights on which they are booked.
A strategic marketing agreement is signed with Reno Air on October 23. On November 2, a lease is taken with GE Capital Aviation Services for the charter of 4 B-767-375ERs, including 2 not yet built, and an A320-211. The 5 aircraft will be added to the fleet in 1999 and will allow retirement of the carrier’s older DC-10-30s.
The new winter schedule is announced three days later. In addition to more frequencies before Christmas, the airline will, in association with American Airlines, offer daily nonstop roundtrips between Ottawa and Raleigh/Durham beginning on January 4.
On November 6, the number of weekly flights from Toronto and Vancouver to Tokyo (NRT) and Nagoya, respectively, are increased from three to five, while the number of weekly flights to Manila rise by one. The use of B-767-375ERs instead of B-747-475s in the Japan marketplace will insure that the increase in frequencies will not result in unneeded capacity.
The number of weekly services from Vancouver to Taipei are increased by two on November 10, while the number of roundtrips to Beijing are boosted by one. Simultaneously, the number of dual-designator flights operated with British Airways, Ltd. (2) between Toronto and London grows from 14 each week to 17.
Two Canadians, David Spencer and Christine Lamont, who had kidnapped Brazilian businessman Abilio Diniz to fund leftist guerrillas in 1989 and had been caught and sentenced, are turned over to Canadian officials at Sao Paulo on November 20 under terms of a bilateral prisoner exchange treaty. They are whisked aboard a company B-767-375ER in handcuffs just before its regular departure for Canada.
Beginning on November 22, Reno Air places its QQ designator on CAI flights from Vancouver to San Jose and San Diego. The arrangement will continue even though Reno is purchased by American Airlines shortly thereafter.
On December 3, company officials announce a major Vancouver hub expansion in the spring that will triple daily connections in North America, Asia, and the South Pacific from over 500 to more than 1,450.
While on final approach to New York (LGA) on December 8 following a service from Toronto, Flight 528, a B-737-275A with 6 crew and 46 passengers, is nearly involved in a midair collision with a Cessna 172, which quickly dives at the last possible moment. At 4,000 ft., the planes have 0-ft. vertical and 500-ft. horizontal separation.
Due to heavy snowfall in Vancouver on December 24, the carrier is forced to cancel a number of flights in and out of the British Columbia city, while delaying others.
Traffic figures during the 12 months are mixed. Passenger boardings advance by 4.7% to 28,804,318, while freight drops 5.1% to 714.37 million FTKs. As the result of plummeting fares, intense competition, and a weak domestic economy, the carrier’s revenues for the year increase only 3%, to C$3.2 billion. Costs bring about a C$137.6-million loss.
By the start of 1999, airline employment has been increased by 12.4% to 16,000. A severe winter storm hits the U. S. Midwest and eastern Canada between January 2-4; CAI and Canadian Regional Airlines, Ltd. are forced to cancel all of their traffic to and from Toronto, Montreal, and Ottawa on January 3.
In association with American Airlines, Canadian begins to offer daily nonstop roundtrips between Ottawa and Raleigh/Durham on January 4. A comprehensive marketing agreement, effective April 1, is announced by CP on January 12 with Alaska Airlines and its sister carrier, Horizon Air.
The next day, the company is renamed Canadian Airlines, Ltd.
World History
