Jazz is the new name for Air Canada's four regional carriers, which are merging into one unit as a possible step towards sale.
Air BC, Air Nova, Air Ontario, and Canadian Regional were legally integrated on 1 January 2000, but have been unable to operate together before now because of 25 different labour agreements. In recent months the carrier and unions have negotiated the last of five new contracts that now cover all of their individual operations.
With 4,420 employees and a fleet of 120 turboprops and small jets, Jazz president Joe Randell claims the merged carrier has become one of the five largest regionals in the world, and the largest based on area served. Jazz generates C$1.1 billion ($693 million) annual revenue, or 10% of Air Canada's sales.
Under its new name Jazz, now based in Halifax, has started adding flights to the USA as it sees demand for transborder flights return. For instance It has resumed two daily services between Halifax and Boston. Later this year the regional grouping plans to give notice that it will withdraw from some smaller domestic communities. Under the terms of the Canadian Airlines acquisition, Air Canada must keep all domestic services until the end of 2002.
Consolidation of all regional services is widely seen as a prelude to Jazz's sale. Robert Milton, Air Canada's president, told investors in February that Air Canada eventually might spin off all or part of its regional unit "should market conditions permit".
Some analysts see such a sale as the best way for Air Canada to raise badly needed capital. Raymond James analyst Ben Cherniavsky figures that Air Canada now has more than C$5 billion of debt, another C$7 billion in capitalised operating leases, and a negative book value.
Selling Jazz not only would help Air Canada's balance sheet, but also shave its domestic market share, thus deflecting some of the pressure it now faces from regulators in Ottawa.
Source: Airline Business
