Air Canada Defers Bombardier CSeries Purchase
By Esther Tanquintic-Misa | May 16, 2014 3:15 PM EST
Air Canada has suspended a planned purchase of Bombardier's CSeries and announced it will keep its 25 Embraer SA planes instead of replacing them with the new narrow-body aircraft.
The company said on Thursday the deferment is generally to avoid more capital expenditures and debt, noting the 90-seat Embraer aircraft are still relatively young anyway.
Air Canada aircraft pictured at Toronto Pearson International Airport. The airline's flight attendants have threatened to walk out, although Canada's Labour Minister said the government will block the strike.
"Given other priorities, we did not want to further increase capital expenditures nor debt levels," Mike Rousseau, Air Canada's chief financial officer, told analysts and investors on a conference call on Thursday, adding the Embraer E190 planes are well accepted by travellers on existing routes.
In December 2013, Air Canada placed an order for narrow-bodied 737s. This weekend it expects to start receiving the deliveries of wide-bodied Boeing 787 planes ordered nine years ago. Combined, the purchase acquisition totaled more than $10 billion.
"We are ready to move from a period of survival and transformation to a period of investment, profitable growth, and opportunity," Calin Rovinescu, chief executive officer, said on Thursday.
Air Canada, on the same day, disclosed a first-quarter net loss of $341 million, or $1.20 per diluted share, affected by a lower Canadian dollar.
Bombardier class B shares immediately fell 30 cents or 7 per cent to $3.90 on Thursday.
"It is disappointing as it could have been a good order and it would have been from a brand name airline," analyst David Tyerman told Globe and Mail. "Air Canada's decision is not a negative comment about the C Series aircraft, but it is disappointing from the order-book standpoint."
But Rovinescu hasn't exactly ruled out pushing through the purchase of Bombardier's CSeries.
"These 25 airplanes still have life to them, and we have determined to stay with that for the foreseeable future," he said. "Obviously, when they are closer to end of life . . . we can consider more our narrow body position, just not in the short term."
"The CSeries is a great airplane. It's a question of cost and benefit. It's as simple as that."
Marianella de la Barrera, a spokeswoman for Montreal-based Bombardier, said they would just wait when Air Canada will push its acquisition.
"We're just going to wait, and when they are ready to move forward, we will be there. The plane is well suited for the North American landscape. We are fairly optimistic that when the time is right, we will restart discussions."
To report problems or to leave feedback about this article, e-mail:
To contact the editor, e-mail:
Most Popular Slideshows
- Flight MH17 Attack: Russians Claim 'Putin A Terrorist,' Memorial at Dutch Embassy Overflows [PHOTOS]
- Typhoon Rammasun Claims 18 Lives in China, Incurs $4.32B Losses (PHOTOS)
- Ellen DeGeneres Caught Cheating with Mutual Friend Before Portia de Rossi’s Rehab – Reports [PHOTOS]
Join the Conversation
- China Military PLA Drills Affect Flights, Hundreds Cancelled
- Malaysia Airlines MH17: EU Feared Won't Ever Enforce Sanctions on Russia; All Talk, No Force
- Health Canada Orders Labeling of Mechanically Tenderized Beef Meat
- Reserve Bank of New Zealand Raises Interest Rates Due to 'Unsustainable' Kiwi
- Embattled Malaysia Airlines Could Run Out of Cash 2015; Diverts Plane Over Another War Zone After MH17 Crash
- Samsung Galaxy Note 4 Apps Leak Online, Five Fresh Features to Expect from the Android Smartphone
- Windows Phone 8.1 Update Rollout: 20 Nokia Lumia Phones Eligible and 13 New Features to be Added
- Google Nexus 8 Release Date Soon Along with 2 More HTC Android Tablets – Reports
- Three New Moto G Successors Spotted in FCC Document Dubbed Moto G2, Moto M and More --Reports
- iPad Air 2 Release Date Will Skip IGZO Panel; To Rollout with Super-Slim iPad Mini Air