Air Canada

Trans-Canada Air Lines (1937–1965)

Air Canada's predecessor, Trans-Canada Air Lines (TCA), was created by federal legislation as a subsidiary of Canadian National Railway (CNR) on 11 April 1937. The newly created Department of Transport under Minister C. D. Howe desired an airline under government control to link cities on the Atlantic coast to those on the Pacific coast. Using $5 million in Crown seed money, two Lockheed Model 10 Electras and one Boeing Stearman biplane were purchased from Canadian Airways and experienced airline executives from United Airlines and American Airlines were brought in.

Passenger flights began on 1 September 1937, with an Electra carrying two passengers and mail from Vancouver to Seattle, a $14.20 round trip, and, on 1 July 1938, TCA hired its first flight attendants. Transcontinental routes from Montreal to Vancouver began on 1 April 1939, using 12 Lockheed Model 14 Super Electras and six Lockheed Model 18 Lodestars. By January 1940, the airline had grown to about 579 employees.

Canadian Pacific Airlines (CP Air) suggested in 1942 a merger with TCA. Prime Minister William Lyon Mackenzie King rejected the proposal and introduced legislation regulating TCA as the only airline in Canada allowed to provide transcontinental flights. With the increase in air travel after World War II, CP Air was granted one coast-to-coast flight and a few international routes.

Originally headquartered in Winnipeg, also the site of its national maintenance base, the federal government moved TCA's headquarters to Montreal in 1949; the maintenance base would later also move east. With the development of the ReserVec in 1953, TCA became the first airline in the world to use a computer reservation system with remote terminals.

Renamed Air Canada and early years (1965–1990)

By 1964, TCA had grown to become Canada's national airline and, in 1964, Jean Chrétien submitted a private member's bill to change the name of the airline from Trans-Canada Airlines to Air Canada, which TCA had long used as its French-language name. This bill failed but it was later resubmitted and passed, with the name change taking effect on 1 January 1965. Elizabeth II, the Queen of Canada, flew on the first aircraft to bear the name and livery of Air Canada when she departed for the United Kingdom at the end of her 1964 tour of Prince Edward Island, Quebec, and Ontario.

During the 1970s, government regulations ensured Air Canada's dominance over domestic regional carriers and rival CP Air. Short-haul carriers were each restricted to one of five regions, and could not compete directly with Air Canada and CP Air. CP Air was subject to capacity limits on intercontinental flights, and restricted from domestic operations. Air Canada's fares were also subject to regulation by the government.

In 1976, with reorganization at CNR, Air Canada became an independent Crown corporation. The Air Canada Act of 1978 ensured that the carrier would compete on a more equal footing with rival regional airlines and CP Air, and ended the government's direct regulatory control over Air Canada's routings, fares, and services. The act also transferred ownership from Canadian National Railway to a subsidiary of the national government. Deregulation of the Canadian airline market, under the new National Transportation Act, 1987 officially opened the airline market in Canada to equal competition. The carrier's fleet expansion saw the acquisition of Boeing 727, Boeing 747, and Lockheed Tristar jetliners. In 1978 Judy Cameron became the first female pilot hired to fly for any major Canadian carrier when she was hired to fly by Air Canada.

With new fleet expenditures outpacing earnings, Air Canada officials indicated that the carrier would need additional sources of capital to fund its modernization. By 1985 the Canadian government was indicating a willingness to privatize both Canadian National Railways and Air Canada. In 1988, Air Canada was privatized, and 43% of shares were sold on the public market, with the initial public offering completed in October of that year. By this time, long-haul rival CP Air had become Canadian Airlines International following its acquisition by Pacific Western Airlines.

On 7 December 1987, Air Canada became the first airline in the world with a fleet-wide non-smoking policy, and in 1989 became completely privatized. The successful privatization program was led by the president and CEO, Pierre J. Jeanniot. The associated extensive communication activities were aided by the non-executive chairman, Claude I. Taylor.

Strategic changes (1990s)

In the early 1990s, Air Canada encountered financial difficulties as the airline industry slumped in the aftermath of the Persian Gulf War. In response, the airline restructured management by hiring former Delta Air Lines executive Hollis L. Harris as its CEO. Harris restructured the airline's operations, reduced management positions, moved the corporate headquarters to Dorval Airport, and sold the enRoute card business to Diners Club in 1992. By 1994, Air Canada returned to profitability.