By Jeffrey Hodgson TORONTO, May 28 (Reuters) - Canadian airline industry veteran Michel Leblanc said on Tuesday his new discount carrier Jetsgo will take flight on June 12, becoming the latest player to take on market leader Air Canada (AC). Jetsgo will launch with just three planes, offering low-fare, no-frills daily service between Toronto, Montreal, Halifax, Winnipeg and Vancouver. Weekly flights to Stephenville, Newfoundland, and Sydney, Nova Scotia, will also be available in the summer months. Leblanc said the service will be similar to Southwest Airlines Co. (LUV), whose low-cost model has been been widely emulated. Jetsgo will not issue paper tickets and passengers will have to pay extra for food and beverages. By starting small and keeping costs low, Leblanc is hoping to escape the fate of former Air Canada rivals such as Canada 3000, which went bankrupt last year amid intense competition and the impact of the Sept. 11 attacks. "We have a cost structure to be effective, profitable, competition," Leblanc told reporters at the airline's launch in Toronto. "We're forecasting to fly over half a million passengers for the the first year, with a projection of annual revenue around C$100 million ($65.3 million)." STIFF COMPETITION The airline is backed by C$120 million in investment, Leblanc said. Investors include Leblanc and his family, who own all of the equity, an unnamed Canadian bank, and Boeing Co. (BA). Leblanc declined to say how much he has invested, or the terms on which Boeing and the bank have put money into the venture. Jetsgo will operate three 160-seat Boeing MD-83s and a fourth plane will be delivered in the fall. Leblanc said the airline will use the same make of plane throughout to keep maintenance costs low. But Jetsgo can expect stiff competition from Air Canada, where Chief Executive Robert Milton has tried to steer the airline toward the low-fare or no-frills end of the market. Air Canada's own no-frills service, "Tango", was described by regulators last year as a "fighting brand" aimed at squeezing out competition. Last month Air Canada launched Calgary-based "Zip" to compete head-to-head with profitable rival WestJet Airlines Ltd. (WJA). Leblanc said Air Canada was not operating on a true low-cost model. Jetsgo's workforce of 200 is not unionized and will subcontract services such as baggage handling. "Customers want a true discount airline -- not the imagery of a discount airline -- a true discount airline that offers day in, day out low fares competitive with the buses, with the trains, and with your cars," he said. FAILURES LITTER LANDSCAPE The Jetsgo president said he did not consider WestJet to be a competitor because Jetsgo is targeting eastern Canadian customers. But he said they could become rivals as both companies expand. He also brushed aside comparisons with Canada 3000, which bought Leblanc's Royal Aviation early last year for C$84 million. Leblanc said Canada 3000's failure was not due to its domestic operations. A plan to revive Canada 3000 in a much diminished form failed this year when backers could not find financing. The country's airline industry has seen numerous players disappear in recent years. Royal and CanJet were swallowed by Canada 3000 before it failed. Air Canada bought money losing rival Canadian Airlines. And new ventures Roots and Greyhound failed to take flight. ($1=$1.53 Canadian) ©2002 Reuters Limited.