AC Sells/Leases Back Planes, New Exec First Service

MONTREAL (CP) – Air Canada has raised $100 million in cash by selling 11 spare jet engines, which the airline will lease back from GE Engine Leasing and Shannon Engine Support, the company announced today. Terms of the leases were not disclosed.

However, Air Canada said the cash raised in the transaction will be used to repay debts that matured in the third quarter ended Sept. 30.

At the end of the second quarter, Air Canada had nearly $5 billion in long-term debt and capital lease obligations on its books, including $540 million due within a year.

The company also had $897 million in cash and cash equivalents as of June 30.

Air Canada earned $30 million in the second quarter, but first-quarter losses left it with a six-month net loss of $189 million, $1.58 per share, on $4.8 billion in revenues.

Shortly after the World Trade Center terrorist attacks in September 2002, which cut deeply into airline revenues and caused massive losses at most carriers, there was concern that Air Canada faced a cash crunch.

However, Air Canada has recovered more quickly than most major U.S.-based airlines and those fears have abated.

GE Engine Leasing is a joint services unit of GE Engine Services and GE Capital Aviation Services Inc. Shannon Engine Support is a wholly-owned subsidiary of CFM International, jointly owned by Snecma Moteurs of France and General Electric.

New Executive First Service:

MONTREAL, Sept. 18 /CNW/ – Air Canada has re-designed its international business class product, Executive First, to offer its premium customers a unique five-star travel experience. Air Canada’s new Executive First service, the result of two years of extensive customer research and a multi-million dollar budget, features refined in-flight service, quality Canadian products and contemporary design to create a complete, innovative travel experience that promises to set new standards for Air Canada’s international customers. Beginning in September 2002, Air Canada has begun unveiling to rave reviews its new Executive First service on flights to Europe, to be followed by flights to Asia, Australia and South America. Air Canada’s award-winning premium service on flights within Canada and the United States, Executive Class, is undergoing a similar re-design planned to be launched in 2003.

Full details and specific changes at http://www.aircanada.ca.