Air Canada, Canada's biggest carrier, announced Tuesday it will cut 2,000 jobs and reduce capacity to overcome the difficulties caused by high fuel prices.

The Air Canada logo is shown on the tail of a plane on the tarmac at Pearson International Airport in Toronto, June 17, 2008. Air Canada announced Tuesday that they will cut 2,000 jobs and crimp its capacity by 7 percent as runaway fuel prices sap the profitability of many of its routes. (Xinhua/Reuters Photo)

Most of the job cuts are expected to take effect Nov. 1 and will be spread across the country. Overall capacity will be cut by 7 percent in the last three months of this year and the first quarter of 2009.

Air Canada said fuel is its single biggest expense, accounting for more than 30 percent of its operating expenses. With fuel prices more than having doubled last year, the company expects its total fuel charge to be 1 billion Canadian dollars (1 billion U.S. dollars) higher this year than last year.

"Air Canada, like most global airlines, needs to adapt its business and reduce flying that has become unprofitable in the current fuel environment. If fuel prices remain at current levels, we can anticipate further capacity reductions," said Montie Brewer, Air Canada's president and CEO Brewer said in a release.

Air Canada said it plans to cut capacity on its domestic routes by 2 percent, its routes into the U.S. by 13 percent and its international capacity by 7 percent.

The airline said it will suspend its Toronto-Rome non-stop service until the peak summer season and halt Vancouver-Osaka non-stop services on Oct. 26.

VietNamNet/Xinhuanet