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Airline Insider-January/February 04

Air Canada update, Start Bright, CanJet expects to Quadruple fleet


October 1, 2007
By Brian Dunn

Topics


AIR CANADA UPDATE:

It has been a long
and arduous struggle for Air Canada to right a sinking ship. As we went
to press, the battle between Victor Li’s Trinity Time Investments and
Cerberus Capital Management for an equity deal in the ailing airline
was ongoing.

But the future direction of the flagship carrier,
led by chief navigator and CEO Robert Milton, was to continue steering
a course toward aggressive cost cutting to compete with low-cost
carriers nipping at its heels and stealing market share. This follows a
third-quarter loss of $263 million which included $273 million in costs
related to Air Canada’s restructuring under the Companies’ Creditors
Arrangement Act.

Part of the restructuring included the need to
purchase about $4 billion worth of regional aircraft over the next five
to seven years. That purchase aside, some analysts believe Air Canada
will concentrate more on long-haul international flights at the expense
of its domestic routes. As if on cue, the airline announced a major
expansion in December of its service to Latin and South America,
including San Jose, Havana, Santiago and Buenos Aires.

STAR BRIGHT:
Despite
its financial woes, Air Canada has managed to scrounge up enough cans
of paint – 200 litres to be exact – to kit out a Boeing 767 in a new
Star Alliance livery. The Boeing 767, sporting a two-by-27- metre Star
logo, is the first of several Air Canada aircraft to be repainted into
flying billboards promoting the world’s largest air transport network.

CANJET EXPECTS TO QUADRUPLE FLEET:
CanJet
Airlines wants to acquire 20 long-range aircraft with the first
delivery targeted for the beginning of February, and the remaining
aircraft to arrive gradually between 2004 and 2006.

The
Halifax-based lowcost carrier currently operates a fleet of six leased
Boeing 737-200s, which will gradually be retired, according to airline
spokesperson Wayne Morrison. While he declined to identify which
aircraft type is on the airline’s shopping list, he said, “it’s a safe
assumption it will be a Boeing product which gives us far greater range
and options. We’re also looking at our options in terms of leasing or
purchasing – or a combination of both.”

Morrison said the new
aircraft won’t be the 737-200 series and added there are three options
on the table. While the Boeing 737 has been the workhorse of the
Canadian lowcost fleet (CanJet, WestJet and Zip), AirTran Airways – the
second largest discount operator in the US – flies the Boeing 717-200,
an aircraft that Boeing is anxious to see operate in Canada.

New
aircraft are necessary for CanJet to expand its routes beyond its
existing seven Canadian and three Florida destinations. “There are
still some growth opportunities in Canada and we can maximize our
revenue if we increase our frequencies which we can’t do with six
aircraft. Our Florida routes are limited with the 200 series and we’re
also looking at serving other countries, particularly in winter with
longerrange aircraft.”


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