The ongoing fleet cuts continue, with Air Canada announcing their results today, and the same time choosing to wave goodbye to certain aircraft in their fleet.
Up for the cut are 79 older aircraft from its fleet. These are
- Boeing 767 (used with Air Canada Rouge) 25 aircraft
- Airbus A319 (16 in Mainline, 18 in Rouge)
- Embraer E190 aircraft (14 aircraft)
The aircraft will leave the fleet in stages, with the Embraer E-190 aircraft exiting straight away.
The airline states this will simplify the airline’s overall fleet, reduce its cost structure, and lower its carbon footprint.
So, what has driven this? Capacity has dropped – with the airline dropping capacity from 85 to 90 per cent when compared to 2019’s second quarter. The airline is expecting improvements, with a 75% reduction in the third quarter of 2020 capacity
Of course, the airline will continue to adjust capacity and take other measures as required to account for health warnings, travel restrictions, border closures globally and passenger demand.
Other ways the airline will attempt to conserve cash include:
- Drawing down US$600 million and $200 million revolving credit facilities for aggregate net proceeds of $1.027 billion.
- Securing a 364-day term loan in the amount of US$600 million, secured by aircraft and spare engines, for net proceeds of $829 million.
- Concluded a bridge financing of $788 million for 18 Airbus A220 aircraft which may be used for general corporate purposes and which Air Canada expects to replace with longer-term secured financing arrangements later in 2020 with the same lender.
- Air Canada has also started a company-wide cost reduction and capital reduction and deferral program which has now reached approximately $1.050 billion, increased from an initial target of $500 million.
- Air Canada has adopted the Canada Emergency Wage Subsidy (CEWS) for most of its workforce which allowed it to return previously furloughed Canadian-based employees to its payroll for the March 15 to June 6, 2020 period.
- Operating cargo flights, with the airline operating 500 all-cargo flights since the 22nd March, using Boeing 787 and Boeing 777 aircraft as well as four newly converted Boeing 777 and four converted Airbus 330 aircraft where it has doubled available cargo space by removing seats from the passenger cabin.
More older aircraft parked
It seems that a crisis is a perfect time to park aircraft you’ve been planning to retire, least of all your costs will head one way – downwards. However, with the industry in free-fall, it seems to rebalance the fleet to be ready when the time comes is the urgent order of the day.
With the 767s gone, Air Canada Rouge will be a much smaller airline and one that won’t ply transatlantic routes. The Airbus A220 will take the place of the E-190, whilst the A319s space will be filled by the A220 and the Boeing 737 MAX 8 (which is still grounded).
For the airline, it may be a time to wait things out, but a time to prepare when the travel bounce happens.
And for the airline – it hopes to be soon.
(Active and Parked fleet data based on https://www.airfleets.net/flottecie/Air%20Canada.htm )
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