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Thomas Cook cancels contract with Jazz

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TOUR operator Thomas Cook Canada Inc. is making an early exit from its five-year agreement with Jazz Aviation this month due to market conditions, leaving Jazz with fewer choices to diversify from its dominant customer.

Halifax-based Jazz has been operating a fleet of six Boeing 757 jets for the British vacation company since 2010 to sunny destinations during the winter season to the Caribbean, Mexico and Central America. The deal had another three years left.

"We are very disappointed that the current market conditions require Thomas Cook to restructure its operations," Jazz chief executive Joseph Randell said in a news release.

"We enjoyed working with the Thomas Cook team and our employees can be proud of the solid operational performance and customer service they delivered," Randell said.

Jazz said it will cease flying planes for Thomas Cook at the end of April.

That will leave the small airline with fewer customers, tying its fortunes even closer to those of Air Canada (TSX:AC.A), which has seen its reputation tarnished by disruptive labour disputes in recent months.

Air Canada is by far the largest customer for Jazz, which provides seating capacity to Canada's largest airline under contract.

National Bank Financial analyst Cameron Doerksen said Thomas Cook's move is a "major step" back for Chorus Aviation (the parent company of Jazz) in its efforts to diversify away from Air Canada.

"We are not aware of any other major tour operator charter contracts up for bid in the next two years so it will be very challenging to diversify away from Air Canada in the near term."

 

-- The Canadian Press

Republished from the Winnipeg Free Press print edition April 14, 2012 B9

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