MONTREAL - Air Canada says it has reached a deal that will see Chorus Aviation Ltd.'s Jazz Aviation subsidiary become the sole operator of Air Canada Express flights.

The change means Air Canada will transfer operation of its Embraer E175 fleet to Jazz from Sky Regional.

Air Canada says it is consolidating its regional flying with Jazz due to the pandemic and the need to reduce costs.

The changes to the capacity purchase agreement with Jazz are subject to Jazz reaching an agreement with the Air Line Pilots Association, International.

Air Canada says as a result of the changes to the capacity purchase agreement and consolidation of regional flying, the airline expects to save $400 million over the 15-year term of the agreement.

In addition, the new agreement will lower future contractual capital expenditure and leasing costs, avoiding an estimated $193 million in future capital expenditures.