UPDATE 1-Air Canada gains as Quebec drops suit, Canada to ease some restrictions

Wed Feb 17, 2016 3:18pm EST
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(Releads with Ottawa saying it could lift restrictions on airline, figures in U.S. dollars)

By Kevin Dougherty and David Ljunggren

QUEBEC CITY/OTTAWA Feb 17 (Reuters) - Air Canada won a double victory on Wednesday when Ottawa promised to ease some restrictions on the carrier and the province of Quebec dropped a lawsuit against the airline after it ordered passenger jets from Quebec-based Bombardier Inc.

Air Canada wants an end to the 1988 Air Canada Public Participation Act, which limits foreign ownership to 25 percent.

It also obliges the carrier to maintain a head office in Montreal, service planes in locations across the country and operate in English and French, Canada's two official languages.

Federal Transport Minister Marc Garneau said Ottawa would "clarify this act" in order to "help Air Canada to respond more effectively to changing market conditions".

Garneau made the announcement shortly after Air Canada said it would buy up to 75 passenger jets from Bombardier and service them in the company's home province of Quebec for 20 years.

A spokesman for Garneau said Ottawa would not change the limits on foreign ownership or the obligation to operate in two languages and keep its headquarters in Montreal.

Instead, it would alter the act to help prevent lawsuits over where Air Canada planes are serviced.   Continued...