Air Canada plans to use debt to finance its Boeing 787-8s ahead of deliveries that are slated to begin in 2014, says an executive.
"We prefer to debt finance these planes than to lease them," says Michael Rousseau, executive vice-president and chief financial officer of Air Canada, at the CIBC 11th Annual Eastern Institutional Investor Conference in Montreal today.
He says that sale-leasebacks and other types of leases are more expensive than debt financing for the airline.
Air Canada has 37 firm orders for the 787-8 and 13 options, according to Flightglobal's Ascend Online database. Deliveries are scheduled for 2014 through 2020.
The airline also plans debt financing for three Boeing 777-300ER deliveries that are scheduled for 2013. It anticipates C$750 million ($768.5 million) in capital expenditure on the aircraft during the year.
The 787s will replace the airline's Boeing 767-300ERs, of which the majority will transition to a new wholly-owned low-cost carrier, says Rousseau.
Air Canada has 30 767-300ERs in its fleet, according to Ascend.
The issues with the General Electric GEnx engines on certain 787s and 747-8s will not delay the delivery of 787s to Air Canada, says Rousseau. "I spoke with GE yesterday and, in fact, they've made all of the changes necessary," he says. "They had put a more environmentally friendly coating on the engine that came off a little bit more quickly than they expected. So they have gone back to the less environmentally friendly 777 coating."