TORONTO (Reuters) - Air Canada ACb.TO, the country's largest airline, said on Monday it would transfer its fleet of 15 73-seat Embraer 175 aircraft to privately-held Sky Regional Airlines Inc next year, part of its cost-cutting push.
Sky Regional, which currently operates five Q400 turboprop planes for Air Canada flying between Billy Bishop Toronto City Airport and Montreal Trudeau Airport, is expected to get the planes between February and June 2013.
The Embraer planes will continue to fly short-haul regional routes, mainly from Toronto and Montreal to the northeast United States, Air Canada said. The company did not disclose any financial terms.
Under a July labor deal with its pilots union, Air Canada is allowed to contract out regional flights to partners other than Chorus Aviation CHRb.TO.
"We believe that Sky Regional has a lower cost structure than Chorus and will be well positioned to bid on any future opportunities with Air Canada," National Bank Financial analyst Cameron Doerksen said in a research note.
Montreal-based Air Canada also said on Monday that it would add two new Boeing 777-300 ER aircraft to its wide-body fleet in 2013 to expand its international capacity. Currently, it operates 56 wide-body and 149 narrow-body planes.
"The arrival of these new Boeing 777s, along with the 787 Dreamliners in 2014, will allow us to introduce new routes at the mainline carrier and release aircraft from out existing fleet to our new low-cost leisure carrier," Chief Executive Calin Rovinescu said in a statement.
The airline said last month it would start a discount airline in 2013 to fly to holiday destinations in North America, the Caribbean and Europe, slowly expanding to a 50-aircraft operation. Air Canada is expected to soon announce branding for the new airline.
Air Canada shares were up 4 Canadian cents at C$1.31 on the Toronto Stock Exchange on Monday and Chorus shares were unchanged at C$3.80.
Reporting By Susan Taylor