Air Canada says it has entered into an aircraft maintenance agreement with the Manitoba government that is expected to create at least 150 jobs in the province.
Under the deal, Canada's largest airline says it will help establish a "Western Canada Centre of Excellence" for aircraft maintenance by bringing to Manitoba three of its aviation suppliers and partners.
In return, the deal will help Air Canada (TSX:AC) avoid legal action related to the closure of Aveos Fleet Performance in 2012 after the airline pulled its maintenance work from the company. The closure led to the layoff of 2,600 employees, including more than 1,700 in Montreal along with many others in Ontario and Manitoba.
Quebec led the original lawsuit against the company, saying the airline has failed in its obligations under the 1988 Air Canada Public Participation Act to maintain heavy maintenance operations in Quebec.
However, the province recently dropped its suit after Air Canada agreed to buy up to 75 Bombardier CSeries planes and agreed to have heavy maintenance work performed on them in the province for a minimum of 20 years.
The airline says the Manitoba government has also agreed to drop its participation in the suit under the new agreement, although the Quebec Federation of Labour filed a motion in Quebec Superior Court last week seeking permission to take up the legal battle there.
Under the deal announced Monday, Air Canada said it will help three long-standing suppliers and partners set up shop in the province.
They include Hope Aero Propeller & Components Inc., which specializes in propellers, wheels, brakes, and batteries; and Airbase Services Inc., which specializes in aircraft interior equipment maintenance.
It has also agreement to lease one of its Winnipeg hangars to Cargojet Airways Ltd. on favourable terms to enable it to establish its own maintenance activities.
Startup for all three is expected in 2017.
Air Canada has also agreed to encourage bidding by Manitoba suppliers for other services, including components work on future aircraft to enter the airline's fleet, subject to certification, price and quality considerations, it said.
"Air Canada is very pleased to have reached an agreement with the Manitoba government to work co-operatively to further support the province's aviation sector and to help develop a Western Canada Centre of Excellence," president and CEO Calin Rovinescu said in the announcement.
"By bringing some of our suppliers and partners to Manitoba and facilitating their establishment there, Air Canada is strengthening the foundation for future growth of the industry in the province."
Air Canada said it is already one of Manitoba's largest employers, with more than 725 workers in the province.
"This agreement should further develop and diversify Manitoba's aviation expertise and help create quality jobs in a highly competitive and dynamic industry," Rovinescu said.