Canadian GP Loses Air Canada Sponsorship

Insolvent Air Canada said today that its financial situation has forced it to end its five-year deal as the main sponsor for Formula One's Canadian Grand Prix, though the decision will not affect the race this summer.

Air Canada, under bankruptcy protection from creditors since early April, is reorganizing as it tries to slash about C$13 billion ($9.2 billion) of debt and lease obligations.

Canada's largest airline and the world's No. 11 said it was reviewing all its sponsorship deals and could not afford to renew its contract with the organizers of the Montreal race.

The arrangement between Air Canada and the Canadian Grand Prix organizers was set to expire after this year's event, scheduled for June 15.

"It's a decision we regret but the reality is that this is an extremely challenging time in our industry and we have to make decisions that are best for Air Canada," spokesman Renee Smith-Valade told Reuters.

"This brings us to the end of a five-year contract for sponsorship of the Grand Prix and we will not be renewing ... They (the organizers) have accepted our decision".

Held on the Gilles Villeneuve circuit on a scenic island in the St. Lawrence River, the race is one of Montreal's biggest annual events as it attracts tourists from across Canada, the United States, Europe and Asia.

Air Canada does not disclose the amount it spends on sponsorships but said the Grand Prix deal was a "multimillion-dollar" one. Reports have pegged the cost at C$5 million a year. The airline is also a regular sponsor of Formula One telecasts in Canada.

A spokesman for the Grand Prix did not wish to comment on the news.

"A sponsorship such as this one isn't viable going forward for us," Air Canada's Smith-Valade said.

"We haven't broken any contracts for community sponsorship as a result of our financial challenges but are certainly cognizant that when a contract comes to an end, we take the time and effort to analyze whether it makes sense to continue," she said.

The company also sponsors the annual Toronto International Film Festival and the Royal Winnipeg Ballet. It is also in a multiyear arrangement as venue title sponsor for the Air Canada Centre, home of the Toronto Maple Leafs of the National Hockey League.

The Canadian Grand Prix's previous main sponsor was Imperial Tobacco, which had to end its funding because of a federal law restricting tobacco sponsorships.