By Skies Magazine | February 25, 2016 Estimated reading time 6 minutes, 38 seconds.
Air Canada has entered into a Letter of Intent to acquire up to 75 Bombardier CS300 aircraft. Bombardier Image
Air Canada announced it has entered into a Letter of Intent (LOI) with Bombardier Inc. for the acquisition of up to 75 Bombardier CS300 aircraft powered by Pratt & Whitney PurePower PW1500G engines as part of its narrow-body fleet renewal plan.
The LOI contemplates 45 firm orders, plus options to purchase up to an additional 30 aircraft, and includes substitution rights to CS100 aircraft in certain circumstances.
“This is a landmark deal with Air Canada, and we are very proud of it,” said Fred Cromer, president of Bombardier Commercial Aircraft, at a press conference on Wednesday, Feb. 17, 2016.
“And today is a defining moment and strategic marker for the C Series aircraft program … We are pleased to contribute to Air Canada’s continued success.”
Deliveries are scheduled to begin in late 2019 and extend to 2022. The first 25 aircraft on delivery will replace Air Canada’s existing mainline fleet of Embraer E190 aircraft, with the incremental aircraft supporting Air Canada’s hub and network growth, creating one of the world’s youngest, most fuel efficient airline fleets.
The C Series purchase is subject to completion of final documentation and satisfaction of certain other closing conditions.
“With its optimal mainline performance range, superior economics and greater seating capacity, the CS300 will allow us to compete more effectively, providing increased point-to-point service to domestic and trans-border markets, as well as feeding our network,” said Calin Rovinescu, president and CEO of Air Canada.
“The renewal of our North American narrow-body fleet with more capable and efficient aircraft is a key element of our ongoing cost transformation program—plus the enhanced passenger cabin comfort provided by the CS300 will help us to retain Air Canada’s competitive position as the only Four-Star international network carrier in North America,” Rovinescu added in a news release.
“The entry of the C Series into our fleet is expected to yield significant cost savings. We have estimated that the projected fuel burn and maintenance cost savings (on a per-seat basis) of greater than 15 per cent should generate an estimated CASM reduction of approximately 10 per cent, when compared to the aircraft it will replace.
“Air Canada has a long history of collaboration with Bombardier. Air Canada Express regional partners operate one of the largest fleets of Bombardier aircraft in the world, with a mix of over 135 regional jets and turboprop aircraft [anticipated] by Dec. 31, 2016.
“We were one of the launch customers for the Canadair Regional Jet, and today’s announcement reflects our continued support for Canada’s aerospace industry and for the new technologies the industry may develop. We fully expect the new technology of the C Series to efficiently meet the demanding needs of our current and future network strategy,” concluded Rovinescu.
The acquisition of the C Series aircraft represents a key element of Air Canada’s narrow-body fleet renewal program, and complements the acquisition of 61 Boeing 737 MAX aircraft announced in December 2013 to replace the larger end of the airline’s mainline narrow-body fleet.
The Boeing agreement provides for Boeing to purchase up to 20 of the 45 Embraer E190 aircraft in Air Canada’s fleet and the first 25 C Series will replace the remaining E190s. Boeing 737 MAX deliveries are scheduled to begin in late 2017 and extend to 2021, while the C Series deliveries are scheduled to start in late 2019 and extend to 2022.
Air Canada also announced it has agreed to have its C Series airframe heavy maintenance work performed in Quebec by a recognized maintenance provider for a minimum of 20 years from first delivery in 2019.
It is expected Air Canada’s commitment in this regard will help establish a centre of excellence for C Series aircraft maintenance in the province, the airline said in a news release.
News of the Air Canada deal came on the same day as an announcement Bombardier will reduce its workforce by 7,000 positions over two years, including 2,000 contractors.
The workforce reduction will be partially offset by hiring in certain growth areas, notably to support the ramp-up of strategic programs and products, such as the C Series, Bombardier said in a news release.
The number of employees directly assigned to the C Series program has increased in the past few months, reaching 3,450 employees worldwide, Bombardier said. That number is expected to keep growing over the next few years.
As of early afternoon on Wednesday, Feb. 17, Bombardier was still awaiting word of federal support for the C Series program. Innovation, Science and Economic Development Minister Navdeep Bains told reporters Feb. 16 that the government remains “engaged” with Bombardier over its request for $1 billion in federal support, but that the “business case,” including the company’s financial situation, was still under review.
“Throughout 2016 and 2017, we will adapt our global manpower to current market conditions, while hiring to support growing segments, such as the C Series,” said Alain Bellemare, president and chief executive officer of Bombardier.
“These adjustments are always difficult. They are important to ensure that, with our 64,000 employees worldwide, we continue to create superior value for our customers, be more competitive, and deliver improved financial performance,” he added.
