Air Canada expects Air China joint venture in the spring

Air Canada’s CE Friday said a joint venture with Air China, expected to be wrapped up this spring, would help it compete more “aggressively” in the Pacific market, after the Canadian carrier reported a better-than-expected Q4 profit. The two carriers already have agreements for passengers to use each other’s lounges and codesharing services but a full joint-venture would expand such collaboration, in a boost to Air Canada which is facing yield pressures on flights to China and Hong Kong. “We have meetings scheduled ... in the May time frame to see whether we can put the finishing touches on it,” CEO Calin Rovinescu said. “It should certainly be an assistance to us in competing more aggressively.” Canada’s biggest airline also faces competition from rival WestJet which is expanding international flights, as well as pressures to raise fares as fuel costs rise. “We fully expected fuel to be bouncing around this year,” Rovinescu said. “Our sensitivity to fuel is well embedded in our pricing strategy.” Air Canada cited growth and cost-control as drivers of a rise in operating margins to 3.5% in Q4 from 0.5% a year earlier. The carrier launched a new program to save C$250m by the end of 2019. It’s not yet clear whether the program will seek to reduce staff through early retirements, but some savings will already be achieved in 2018, Rovinescu said. “We will be looking at programs across all branches and across all initiatives,” he said. The Montreal-based company is also expanding its lower-cost leisure carrier Rouge, as passengers seek cheaper ways to fly and WestJet gets ready to launch its own ultra-low-cost carrier in June. Air Canada said it flew 9.9% more passengers in the quarter ended Dec. 31, and spent 1.3% less to fly each passenger. <br/>