Here is some reasoning behind it….it confirms the end of the Airbus long haul fleet at AC…

Air Canada notes efficiencies, discounts in Boeing deal
Darren Shannon, Washington DC (25Apr05, 22:47 GMT, 892 words)

Air Canada’s top executive today intimated that Boeing slashed its pricing structure to close today’s tentative deal for up to 96 777 and 787 aircraft, a contract that will effectively end Airbus long-haul operations at the Canadian carrier.

Robert Milton, chief executive of the airline’s parent company ACE Aviation, will not discuss the details of the agreement, which is valued at roughly $6 million at list price. However, during an analyst call today he noted: “From my standpoint, I’m confident that no one has done better on a deal.”

This declaration comes as Boeing gains ground on its rival amid accusations that a price war has erupted between the two large aircraft manufacturers. This discount battle was emphasized this weekend when Irish budget carrier Ryanair told shareholders it was buying Boeing 737s for $50.9 million an aircraft, or almost 27% less than the top-end catalog price of $69.5 million, and was guaranteed further “price concessions” from a credit agreement.

Boeing will not comment on the minutiae of the deal, although a spokesman notes that the agreement is structured to give Air Canada freedom to adapt the order to reflect its fleet requirements. This flexibility already allows Air Canada to pick any mix of 777-200LRs and 777-300ERs (although it appears three -300ERs are committed) and 787-800s and 787-900s to satisfy the firm order, which currently stands at 16 777s and 14 787s. This policy also applies to the 18 777 and 46 787 options also included in the deal.

The only definitive part of the contract is the delivery of two Boeing 777 freighters, which are scheduled for delivery soon after the planned certification in late 2008.

It is also unclear how Air Canada will raise the requisite funds for the Boeing purchase. During the analyst call both Milton and CFO Rob Peterson said ACE Aviation is currently in talks with the US Export-Import Bank (Eximbank) to finance a major, but unspecified, part of the deal in Canadian dollars. They also said Boeing was offering support financing, but noted both deals are still under negotiation.

An Eximbank spokeswoman tells ATI that it has not received an application from Air Canada, and would usually expect formal talks to begin closer to the delivery date on any large aircraft order. She also notes that although many Eximbank aircraft deals are loan guarantees, full loans are available on sales of US-made aircraft to foreign companies.

Milton, however, today confirmed that a payment schedule had been negotiated with Boeing that allows the airline to avoid “a significant upfront cash payment”.

Air Canada also has to negotiate a new pilot contract to reduce its current two groups of long-haul pilots to one, and complete final documentation before the widebody deal can be finalized. This is expected by mid-year.

The airline is adamant the new order is in the carrier’s best interest. It currently operates five aircraft types on its long-haul routes, including eight leased Airbus A330-300s, 10 leased A340-300, two owned A340-500s and 45 owned and leased 767-200s and 767-300s.

Reducing this to a fleet of 777s and 787 will inherently offer the carrier cost savings, as older aircraft are replaced “by one of the youngest fleets in the world”. Eventually, Air Canada mainline will operate a fleet of Embraer 175 and 190 regional jets, Airbus narrowbodies and Boeing widebodies. Air Canada Jazz affiliate will operate Bombardier regional jets.

This will eventually lead to an annual $300 million increase in mainline profitability by 2010, two years after the 777s are added to the fleet and the first year of delivery for the 787.

One major factor in Air Canada’s decision to order long-haul aircraft from Boeing rather than Airbus was the European manufacturer’s four-engine model. “That had a dramatic effect on the decision,” says Milton. “In the heightened fuel cost environment” the extra weight, maintenance and consumption that comes with four engines leaves the Airbus disadvantaged, he adds.

Milton also says Airbus’ answer to the 787, the A350, was “too large” for Air Canada’s needs.

Air Canada will retain all of its widebody Airbus until 2008 as the 777s are used for growth in Asia and Europe (the first 777-300ER is already destined to serve Vancouver-Tokyo), but will begin dropping the European aircraft in subsequent years.

Notably, Milton today said the A330s and A340s will be dropped from a massive cabin upgrade program that will see $5 million invested in each of the 767s. This will be funded by a recently brokered C$300 million ($240 million) revolving credit facility.

Air Canada has also cancelled a firm order for three A340-600s as part of its shift to an all Boeing widebody fleet.

The airline plans to add the 777 passenger variants between 2006 and 2008. Three (probably -300ERs) will be delivered in May, June and December 2006, while eight will follow in 2007 (six in the first half of the year). The final eight are scheduled for delivery early in 2008.

The 777Fs are set operations in the fourth quarter of 2008. Delivery of the 787s will begin in 2010.

Air Canada will retain the higher cost 767s for the rest of the decade, says Milton, as the airline uses the new aircraft, especially the 787s, to open new longer-haul, lower demand markets in Asia, Europe and the Middle East. The 787, however, will eventually replace the carrier’s 767s.

Source: Air Transport Intelligence news

Thought you may like an update on Boston Maine…

Boston-Maine plans new 727 services
Mary Kirby, Philadelphia (25Apr05, 16:13 GMT, 271 words)

Boston-Maine Airways this summer is planning to launch new flights to Caribbean and US destinations, and boost its fleet of Boeing 727-200s.

An affiliate of now-defunct Pan American Airways, Boston-Maine currently flies under the banner Pan Am Clipper Connection using three 727s and ten BAe Jetstream 31 turboprops.

Beginning June 23, the Portsmouth, New Hampshire-based carrier will offer scheduled service linking its base with Columbus, Ohio and Orlando Sanford in Florida. The airline will then offer connecting flights to San Juan and Aguadilla, Puerto Rico and Santo Domingo and Punta Cana in the Dominican Republic.

On June 30, Boston-Maine will also introduce scheduled service from Newburg, New York to Clearwater/St Petersburg, Florida and Orlando Sanford.

Some of these services were previously operated by Pan Am, which closed in November 2004 amid a dispute with the Air Line Pilots Association (ALPA). The union, which represented Pan Am pilots, accused the carrier’s parent Guilford Transportation Industries of shifting 727 flying to non-unionized Boston-Maine in anticipation of the shutdown.

However, ALPA recently lost a court case against Guilford. A US federal appeals court in a split decision in March ruled that Guildford acted legally when it transferred operations to Boston-Maine.

Boston-Maine hopes the ruling will assist its two-year US DOT application to expand its fleet of 727s.

Director of marketing Alexander Mouzas says Boston Maine is “optimistic” it will be granted the authority soon.

He says the carrier has a fourth 727 in its possession that can be flown as soon as regulatory authority is granted. The airline is also looking to add more 727s to the fleet, but under a “very conservative approach”.

Source: Air Transport Intelligence news

Well the current widebody fleet consists of:
B767-200 – 20 (incl 7 in storage and 13 in active service)
B767-300ER – 30
A330-300 – 8
A340-300 – 9
A340-500 – 2

In addition they also have 1x 747-400 in storage and possibly 2x 747-200s in storage. So I guess the answer in part is yes, at least some of the Airbus’ must go in order to reach 60 aircraft, even accounting for the aircraft in stroage the company needs to get rid of at least 7 Airbus’ to reach the total, it could be more depending on the actual status of some of the aircraft in storage.

In addition to this one must remember that AC does not own all its widebody aircraft so the question is whether the 60 quoted means aircraft in servcie or owned. Looking at how many are leased I guess it must include leased aircraft.

More Details…

Air Canada orders 14 firm 787s, 18 777s
(25Apr05, 12:21 GMT, 259 words)

Star Alliance carrier Air Canada is to place firm orders for 14 Boeing 787s and 18 Boeing 777s, together with options on a further 64 aircraft as part of fleet renewal plans.

Air Canada parent ACE Aviation Holdings says its fleet-renewal plans call for firm orders on 14 Boeing 787s. It will also take options and purchase rights on 46 more of the type. The first of its 787s on firm order will be delivered in 2010.

The airline is also ordering 18 Boeing 777s and taking purchase rights on 18 more. It is still to determine the precise mix of 777 types but says the order will be a mix from the family’s newest models – the 777-300ER, 777-200LR and the newly-announced 777 freighter.

Air Canada, however, does say deliveries will begin with a trio of 777-300ERs in 2006. These will be deployed on its Vancouver-Tokyo service.

Chairman, president and CEO of ACE Aviation Robert Milton says: “The agreement with Boeing is very attractive financially as the operating cost of the 777 and 787 will be significantly less than our current aircraft they will replace, the acquisition costs will be spread over several years, and the asset values of the aircraft we will replace and sell are significant.

“As we are planning to dispose of more than 60 widebodies over the next decade, the net cash outlay for acquisition of these new aircraft is expected to be greatly reduced.”

The order is subject to several conditions including final documentation and the companies expect to finalise the agreement by mid-year.

Source: Air Transport Intelligence news

I thought boeing were also considering doing a 737X???

You don’t mean the 737-900X do you? This is simply a variation of the 900 with an extra emergency exit aft of the wing to enable the aircraft to carry more passengers (because it is currently restricted to 189 max, as with the 737-800 despite greater length), thus enabling it to compete better with the A321.

A lot of Sky Europes passengers already come to Bratislava from Vienna.

Here we go again. I ll say it one more time for those of woh who find it hard to understande. If you dont want to fly to a Ryanair destination then go and pay the extra money but aboive all dont complain.

I don’t mean to laugh too hysterically here, but I think you are a bit TOO hypersensitive about comments regarding Ryanair. Did I ever state that I did/did not choose to fly Ryanair for this or any other reason?? Did I complain about the location of its destinations?? NO, I didn’t do either, so take a chill pill m8!

I actually think my comment hit the nail on the head to be honest. Ryanair are good at what they do, that is providing generally low cost flights, even if that is flying people to the middle of nowhere.