Air Canada is cutting its fleet because of the slowing economy and the expected slump in airline travel.

The Montreal-based flag carrier says it plans to retire most of its older aircraft, return a number of leased aircraft and postpone delivery of several new ones. The net effect will reduce its fleet count by 10 aircraft this year, with further cuts planned next year and in 2001.

In the past five years, Air Canada increased its fleet by more than 10% every year, primarily by introducing new Airbus Industrie models and Canadair Regional Jets. The airline's fleet size peaked at 166 aircraft during its summer season last year.

Air Canada is under pressure from financial analysts to cut back because its costs have risen substantially during the past two years. A 13-day strike in September cost the airline C$249 million ($162 million), resulting in a small loss for the year. To reduce costs, the airline has sold assets worth C$73 million in recent months, and a cost cutting study being undertaken by an analyst will be completed during March.

As part of its fleet reduction, Air Canada is selling or mothballing six Boeing 747 Classics and 12 McDonnell Douglas DC-9 30s. It plans to sell three of the 747s and eight DC-9s for a total of about C$75 million.

The airline also plans to push back the introduction of its new fleet of Rolls-Royce Trent 700-powered A330-300s that were ordered in 1997. Delivery of two A330s will be delayed until 2001, while three A340-300s will be returned to their lessors as their leases expire over the next two years.

Air Canada will also hold back on the firming up of eight A330s and A340s commitments it had planned for this year. The airline, however, intends to continue with the previously announced acquisition of 13 Airbus aircraft, including two A340-500s and three A340-600s, over the next four years.

Source: Flight International