'We are now targeting $500 million in annual revenue and cost reduction initiatives, double our previously announced target. The vast majority, $400 million of the $500 million, relate to cost reductions. We expect $50 million to be achieved in 2009, $250 million by 2010 and the full $500 million by 2011 on a run rate basis,' he said.

The Air Canada boss added: 'We have also launched a series of customer-focussed initiatives including a last-minute paid upgrade programme and the expansion of interline baggage agreements, in addition to more opportunities for Aeroplan members to redeem reward travel and the elimination of call centre fees.'

Facing stiff competition from the private WestJet, the airline has also increased incentives for passengers and travel agents.

With about 24,000 staff worldwide and operations to nearly 80 international destinations, Air Canada is the world's ninth largest airline.