Analysts predict that Air Canada’s decision to cancel its $6 billion, 32-aircraft order for Boeing 777s and 787s will give Airbus a vital second chance to secure the fleet replacement deal at one of its key North American customers.

The cancellation came last week when Air Canada carried out a threat to scrap its fleet-renewal plan after failing to reach a labour agreement with its pilots. The cancellation came just before the deadline for Air Canada to pay Boeing a reported $200 million deposit on the order. Air Canada says the cancellation was made “without penalty”.

The airline plans to acquire five used widebody aircraft by 2007 to make up for an anticipated capacity shortfall after the cancellation. It will need two aircraft next year and three more in the third quarter of 2007, The carrier’s president Montie Brewer says in a memo to employees: “I am confident we will be able to fill these gaps and continue to grow at planned rates.”

Under the April agreement with Boeing, three 777-300ERs were due for delivery in 2006, out of a total order for 18 777s and 14 787s. Air Canada declines to say whether the used aircraft will be bought or leased. Observers believe that there may be an opportunity for Airbus to try to change Air Canada’s mind on its fleet strategy. “It opens the door for Airbus,” says Rick Erickson, an aviation consultant at Calgary-based RP Erickson & Associates.

Chief executive of Air Canada’s parent, ACE Aviation Holdings, Robert Milton said on announcing the order in April that the airline had favoured Boeing’s 787 because the A350 was too big. Analysts say Airbus may now be able to sway the airline with a good commercial offer, because Air Canada probably will not be able to place a future Boeing order at the same price as it received in April, as demand surges for the 787. “I don’t think they can get the same deal again [from Boeing], unless there’s some clause in there which we don’t know about.”

The cancellation means Air Canada will retain its Airbus widebody fleet of eight A330-300s, 10 A340-300s and two A340-500s, at least until a revised fleet plan is put in place. Some of these aircraft will need upgrading, broadening the scope of Air Canada’s programme to refurbish its cabins at a cost of about $5 million per aircraft. The airline says there is no change to Milton’s comment in April that the airline would “not be taking” three Airbus A340-600s it had on order, although these aircraft remain on Airbus’s books.


Source: Flight International