TORONTO - Air Canada plans to partner with Continental Airlines, the fourth-largest U.S. carrier, to provide enhanced service to the American market.

Canada's largest airline announced Thursday that the agreement in principle, which is subject to regulatory approvals, will provide customers a broader network of destinations, frequent flyer benefits and lounge access.

The move will also help Air Canada to realize greater efficiencies as it struggles to respond to higher fuel costs.

Air Canada already has an agreement with United Airlines, which is a Star Alliance partner. Continental announced in June that it also plans to join the alliance.