Air Canada to launch discount subsidiary; US airline stocks bounce back

Air Canada announced it plans to launch a new discount carrier as a competitive answer to low-cost domestic rivals such as WestJet, Air Transat and Sunwing Vacations. The carrier hopes to use a fleet of up to 50 A319s and B767s for its new LCC venture, which will operate to sun holiday destinations in Mexico, the Caribbean and Europe. The airline will not be used to replace mainland routes the Air Canada considers financially viable.

Air Canada B stock gained 1.8% yesterday. Westjet stock lost 1.5%. Jazz Air Income Fund stock was flat.

Shares in US airlines gained ground as oil prices retreated early this week. The strongest gains were seen at United Continental, which rose 5.8%, while Delta and Alaska Airlines stock also picked up sharply. 

Selected Americas airline share price movements (% change): 12-Apr-2011