Air Canada is the flag carrier and the largest airline of Canada by fleet size and passengers carried. Headquartered in the borough of Saint-Laurent in Montreal, the airline was founded in 1937 and operates a fleet of 335 aircraft serving 208 destinations worldwide through its major hubs at Montréal–Trudeau, Toronto–Pearson and Vancouver. It is a founding member of Star Alliance. In 2025, the airline transported 45.3 million passengers.
Canada's national airline traces its origins to the Canadian federal government's 1936 creation of Trans-Canada Air Lines (TCA), which launched its first transcontinental flight routes in 1938. TCA was renamed Air Canada in 1965 and was privatized in 1988 following the deregulation of the Canadian aviation market. In 2000, Air Canada acquired its largest rival, Canadian Airlines. The carrier filed for bankruptcy protection in 2003 and emerged from restructuring the following year.
Air Canada operates a mixed fleet of Airbus and Boeing wide-body aircraft on long-haul routes alongside narrow-body aircraft on short- and medium-haul services. Its divisions include Air Canada Cargo, Air Canada Express, Air Canada Jetz, and Air Canada Rouge, while subsidiary Air Canada Vacations offers vacation packages to more than 90 destinations. Together with its regional partners, the airline operates an average of more than 1,600 scheduled flights daily.
History
Trans-Canada Air Lines (1937–1965)
Air Canada's predecessor, Trans-Canada Air Lines (TCA), was created by federal legislation as a subsidiary of Canadian National Railway (CNR) 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.Mills, Albert J, Mills, Jean Helms. Masculinity and the Making of Trans-Canada Air Lines, 1937–1940: A Feminist Poststructuralist Account. Canadian Journal of Administrative Sciences, March 2006. Date accessed: 18 October 2007 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 (CP Air) 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, also the site of its national maintenance base, the federal government moved TCA's headquarters to Montreal in 1949; the maintenance base would later also move 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 Air Canada and early years (1965–1990)
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 (1990s)
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 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 aviation regulations, aiming to consolidate the Canadian airline industry. That year, American Airlines in conjunction with Canadian financial company to Onex Corporation, 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 (2000s)
In January 2000, 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. Service improved following Air Canada officials' pledge to do so by January 2001. The airline was confronted by the global aviation market downturn after the September 11 attacks 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 defence, 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 (which was not in his original takeover bid), 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. The offer was accepted after last-minute talks between CEO Robert Milton and CAW president Buzz Hargrove resulted in union concessions.
ACE Aviation Holdings became the new parent company under which the reorganized Air Canada was held.
Fleet modernization
In October 2004, Canadian singer Celine Dion became the face of Air Canada's relaunch to promote service in the international market after 18 months of bankruptcy protection. She recorded her single, "You and I", which subsequently appeared in several Air Canada commercials. 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', which was also colloquially known as the "toothpaste" livery.Air Canada unveils New Look and Leading Edge In-Flight Enhancements, Canadian Superstar Celine Dion joins Employees to Launch New era for Nation's Flag Carrier, prnewswire.com, 19 October 2004 Date accessed: 23 May 2014
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 747-400s were replaced by the Airbus A340s for the time being.Aviation giant retires – onAir, December 2004, aircanada.com Date accessed: 6 November 2008