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Air Canada Cancels Aircraft Orders
Earlier this week, Air Canada announced that it will be canceling orders for 22 narrowbody aircraft as the airline works to size itself properly to operate in a smaller market, as consumer behavior indicates that demand will take around half a decade to recover to pre-pandemic levels.
The Canadian flag carrier is cutting orders for 12 Airbus A220 aircraft, leaving the airline with commitments for 10 of Airbus’s newest and smallest narrowbody airliner. Along the same line, the airline is also canceling commitments for 10 Boeing 737 MAX aircraft, out of the 26 aircraft it could receive. Meanwhile, Air Canada’s low-cost branch — Air Canada Rouge — has returned 25 Boeing 767s that would fly to leisure-heavy destinations in the U.S, the Caribbean and Europe. These aircraft are planned to be converted into cargo freighters once the airline reaches an agreement with pilots.
At the airline’s third-quarter earnings call held on Monday, Calin Rovinescu, Air Canada’s president and chief executive officer, said, “We have taken several measures to carefully rationalize our existing fleet. We are accelerating the retirement of 79 mainline and Rouge aircraft. We are deferring delivery of new Boeing 737-8 and Airbus A220 aircraft scheduled for delivery in 2021 and 2022 and canceling 10 Boeing 737-8s and 12 Airbus A220s, representing about 40% of the remaining scheduled deliveries.”
In Need of Assistance
Rovinescu also commented on the carrier’s COVID-19 mitigation and recovery plan, which seeks to reduce the size of the operation and lower costs in order to increase liquidity to navigate through the pandemic. In this way, the Montreal-based carrier has reduced its capacity by 80% in the third quarter of the year compared to pre-pandemic levels.
Air Canada has indefinitely suspended 30 domestic routes across Canada and shat down eight regional stations. The carrier has also laid off more than 20,000 staff since March and has adjusted airport terminal and ground handling operations to the smaller number of flights it is currently operating.
Canadian airlines are waiting for government support, something that has been pleaded for not only by airlines themselves but also local provincial authorities, which have deemed government support essential in order to minimize job losses in their areas.
However Canadian transport minister Marc Garneau has raised issues regarding Canadian airlines offering vouchers for future travels to consumers rather than cash refunds and has said it will not lend taxpayer money as support until airlines guarantee consumers they will be refunded with cash if they flight is canceled.
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