Air Canada Unveils Major Fleet Renewal Plans

Air Canada's mainline narrowbody fleet renewal plan includes commitments, options and rights to purchase up to 109 Boeing 737 MAX aircraft.

The new aircraft will replace Air Canada's existing mainline fleet of Airbus narrowbody aircraft.

The agreement with Boeing, which is subject to completion of final documentation and other conditions, includes firm orders for 33 737 MAX 8 and 28 737 MAX 9 aircraft with substitution rights between them as well as for the 737 MAX 7 aircraft. It also provides for options for 18 aircraft and rights to purchase an additional 30.

Deliveries are scheduled to begin in 2017 with 2 aircraft, 16 aircraft in 2018, 18 aircraft in 2019, 16 aircraft in 2020 and 9 aircraft in 2021, subject to deferral and acceleration rights.

Calin Rovinescu, President and CEO of Air Canada, said, "Renewal of our North American narrowbody fleet with more fuel efficient aircraft is a key element of our ongoing cost transformation program and the enhanced passenger cabin comfort provided by the Boeing MAX will help us to retain Air Canada's competitive position as the Best Airline in North America. Our narrowbody fleet renewal program is expected to yield significant cost savings. We have estimated that the projected fuel burn and maintenance cost savings on a per seat basis of greater than 20% will generate an estimated CASM reduction of approximately 10 per cent as compared to our existing narrowbody fleet."

Air Canada is also evaluating the potential replacement of its Embraer E190 fleet. Consistent with this strategy, the agreement with Boeing provides for Boeing to purchase up to 20 of the 45 Embraer E190 aircraft currently in Air Canada's fleet.

The E190 aircraft exiting the fleet will be initially replaced with larger narrowbody leased aircraft until the airline takes delivery of the Boeing 737 MAX aircraft.

Air Canada is still reviewing various options for the remaining 25 Embraer E190 aircraft including continuing to operate them or replacing them with a yet to be determined number of aircraft in the 100 to 150 seat range.

Air Canada's plan is for its total fleet including Air Canada rouge, excluding aircraft flown by its contracted regional carriers, to grow from 192 aircraft as at 30 September 2013 to approximately 214 by the end of 2019, on a pro forma basis.

Additionally, for further growth flexibility, Air Canada has 13 options and rights to purchase 10 Boeing 787 aircraft, rights to purchase 13 Boeing 777 aircraft as well as the 18 options and 30 purchase rights for Boeing MAX aircraft.