MONTREAL - Air Canada (TSX:AC.B) president Calin Rovinescu says customers will gain access to scores of new destinations while the airline pockets new revenue after Continental Airlines joins the Star Alliance partnership on Tuesday.
"You look at this providing an increased service product for Air Canada customers and indirectly for us revenue," Rovinescu said Monday, before he flew to New York for a ceremony welcoming Continental into the alliance.
The new partnership with the world's fifth-largest airline will add 77 new destinations for Air Canada customers.
Air Canada and Continental customers will also be able to collect and redeem Aeroplan (TSX:AER) miles.
Rovinescu said he couldn't forecast how much new revenue the addition of the airline will mean to Air Canada, but Continental has said it expects to generate US$100 million more in revenue than its partnership with SkyTeam.
Air Canada stands to receive revenue from customers connecting to Continental flights, increased American traffic to Canada, a separate joint venture starting in 2010 on lucrative Atlantic routes and frequent flyer miles.
"We are quite excited. These are four interesting revenue buckets for us," Rovinescu said, noting that it's not often that airlines switch alliances.
The addition of Continental gives Canadians access to new routes in the northeastern United States through Newark, N.J., and more than 30 new destinations in Mexico and Central America through Houston.
Air Canada is also adding direct service from Montreal to Houston starting Nov. 30.
"Internationally, through Newark we're going to have increased access, but from our perspective the larger revenue opportunity will be on the South American and Mexican routes," Rovinescu added.
Airline analyst Cam Doerksen of Versant Partners says it could take some time before new revenues are significant for the struggling carrier.
"I don't think anybody's expecting it to be significantly material at all when it first starts up but it could become a more significant contributor to Air Canada," he said in an interview.
Doerksen said the revenues are likely part of the airline's plan to attract $100 million in additional revenues and $400 million in cost savings over the coming few years.
Air Canada is trying to establish a firmer financial footing until its fortunes recover with an economic rebound.
The carrier is expected to lose millions in the third quarter when results are reported the first week of November, but early signs suggest some signs of optimism globally, said Doerksen.
"It's still pretty early days but it does appear that travel has bottomed and it's starting to see some demand returns," he said.
"I would say that it's probably fair to say that it is improving for Air Canada."
Rovinescu declined to comment on market conditions ahead of the release of its quarterly results.
Houston-based Continental lost US$18 million and revenue plunged 20.2 per cent in the July to September quarter. That was a dramatic improvement from $230 million of losses a year ago when jet fuel soared.
Continental's decision to leave SkyTeam to join Star Alliance came after the Texas-based airline spurned United's merger overture.
The airline has 2,400 daily departures through 130 domestic and 132 international destinations. It carries about 63 million passengers annually.
On the Toronto Stock Exchange, Air Canada shares closed up one cent at $1.38 in Monday trading.