Air Canada targets narrowbody fleet decision in 2013

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Air Canada plans to make a decision on the future of its narrowbody fleet within 12 months, say executives at the Montreal-based Canadian flag carrier.

The Star Alliance member is evaluating options from Airbus, Boeing and Bombardier for its 75- to 160-seat fleet, says Calin Rovinescu, president and chief executive of the airline, during an earnings call today.

This would include the Airbus A320neo family, Boeing 737 Max and Bombardier CSeries.

Air Canada has 38 Airbus A319s, 37 A320s, 10 A321s, 45 Embraer 190s and 15 E-175s in its narrowbody fleet, according to Flightglobal's Ascend database.

Rovinescu says that the fleet analysis will include what flying they "send down" to their regional partners - Jazz Aviation and Sky Regional Airlines - and what they keep at the mainline carrier.

Air Canada will transfer its 15 E-175s to Sky Regional between February and June 2013. The aircraft will continue to fly from its Toronto Pearson and Montreal Trudeau hubs to destinations in northeastern North America.

The transfer is allowed under a new agreement with its pilots that allows up to 60 jets with 75-seats to be operated by a contract carrier on behalf of Air Canada. The contract was selected by a government arbitrator in July.

"[The agreement] brings Air Canada more in line with the rest of the industry in North America," says Rovinescu, who notes that no other mainline carrier in the region operates 76-seat jets.

Air Canada's new narrowbody fleet will be focused on growth in the low-cost sector, says Rovinescu. The majority of new aircraft are likely to go to the new low-cost carrier (LCC) that it plans to launch in June 2013 with two A319s and two Boeing 767-300ERs.

"The kind of growth that we will have at Air Canada going forward ought to be in the lower cost environment, because that is [where] the higher growth in aviation is," says Rovinescu. He adds that mainline capacity will still increase because the airline will initially replace some 120-seat A319s that shift to the LCC with 349-seat Boeing 777-300ERs.

Air Canada will begin replacing 212-seat 767s that move to the LCC with 233-seat 787-8s in 2014, as well.

The unnamed LCC is slated to have up to 50 aircraft in its fleet, including 30 A319s and 20 767s, and will initially fly to leisure destinations in the Caribbean, Europe and Latin America. It will be part of a new combined leisure group owned by Air Canada.

Rovinescu says that the name, branding and initial destinations of the LCC will be announced before the end of the year.