Air Canada trims A220, B737 MAX orders, eyes B767 freighters

 

Air Canada (AC, Montréal Trudeau) has reached agreements with Airbus (AIB, Toulouse Blagnac) and Boeing (BOE, Chicago O'Hare) to adjust its outstanding aircraft order books with either manufacturer as it seeks to stem heavy losses incurred as a result of the COVID-19 pandemic. The airline posted its third straight quarterly loss of CAD685 million Canadian dollars (USD525.87 million) for the period July-September 2020.

In its third-quarter financial results, Calin Rovinescu, Air Canada's president and chief executive, said the airline had amended its A220-300 purchase agreement with Airbus Canada (Montréal Mirabel) to defer 18 aircraft deliveries over 2021 and 2022. In addition, it has dropped plans to take the last 12 of the type due under the original firm order for 45 aircraft. As of September 30, 2020, Air Canada had taken delivery of ten A220-300s with an additional five due before the end of the calendar year.

Then earlier this month, Air Canada amended its purchase agreement with Boeing dropping ten firm ordered B737-8s from its original order of 50. It also deferred its 16 remaining deliveries to the period running from late 2021 to 2023. So far, the carrier has taken delivery of twenty-four MAX 8s, all of which remain grounded.

Despite the firm order cancellations, Air Canada retains its existing A220 and B737 MAX order options

"We have the ability, even though we cancelled parts of those orders, we have the ability, if there is a more optimistic return, to exercise our options and return to traditional deliveries say starting the 2022 year," Rovinescu said in the subsequent earnings call.

"Despite modifications made to our orders, these two aircraft [the A220 and B737 MAX] remain the core of our narrowbody fleet and enable us to efficiently serve transcontinental domestic and transborder routes through improved economics and range, while providing an excellent customer experience. Through this fleet restructuring and other capital reduction initiatives, we have successfully lowered total projected capital expenditures by about CAD3 billion Canadian dollars [USD2.3 billion] over the 2020 to 2023 period compared to our total projected capital expenditures at the end of 2019."

Other fleet-related initiatives include the possible conversion of an unspecified number of Air Canada-owned B767-300(ER)s into dedicated freighters. Should pilots consent to the move, the airline would then leverage the added cargo capacity to tap into surging e-commerce market demand. Air Canada has already reconfigured three B777-300(ER)s and six A330-300s into makeshift freighters.

"When we are referring to freighter conversions of some of our B767s, those would be permanent conversions, meaning we would be getting into the freighter business, which is obviously an important step for Air Canada," the CEO highlighted. "We would only do that with the approval of our pilots. But, if executed, those would be permanent conversions of some of those 767 aircraft."

Seven B767s that were operated by the mainline carrier are currently stored in Marana alongside 15 that were operated by Air Canada rouge (RV, Toronto Pearson). Seven of rouge's B767s are currently undergoing maintenance in Shannon, the ch-aviation fleets advanced module shows.

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