Air Canada confirms 90 aircraft order from Bombardier and Embraer

Air Canada today announced it has reached agreements in principle to purchase 45 Bombardier and 45 Embraer aircraft as part of its previously announced North American fleet strategy. 

The airline said a decision on an additional 15 aircraft will be made following further negotiation. The manufacturers were chosen following an evaluation by Air Canada of aircraft types in the 50-, 70- and 100-seat categories from amongst the world's leading aircraft manufacturers.

"Now that we have clarity in the completion of our equity process, pressing matters relating to Air Canada's restructuring should proceed without delay in the interests of all stakeholders. The small jet aircraft are fundamental to our emergence as a stronger, more cost effective airline. For this reason we are moving forward with this order now," said Robert Milton, President and Chief Executive Officer.

"We are confident that our decision is in the best interests of our customers and economic stakeholders. For customers, these aircraft mean low cost, high frequency jet service to a wide selection of destinations in Canada and the United States. For Air Canada, they will provide the flexibility and cost-competitiveness to serve dozens of North American markets on a financially viable basis.

"The choice of Bombardier and Embraer aircraft was made following a lengthy and rigorous evaluation during which we considered the feedback from all stakeholder groups including customers and employees. Air Canada was one of the original launch customers for the Canadair Regional Jet and today's announcement reflects our continued support of Canada's aerospace industry and its ability to meet our requirements for regional jet aircraft given the complexities of our business environment."

The Bombardier Purchase

The Bombardier order consists of 15 firm 50-seat CRJ-200 and 30 firm 74- seat CRJ-705 aircraft. Aircraft deliveries are scheduled to begin in September 2004. The order also contemplates the potential for Air Canada to exercise options to acquire 45 additional aircraft.

Air Canada will configure the CRJ-200 aircraft in a single Hospitality class of service with 50 all-leather seats, four seats abreast offering 31 inches of legroom. The Bombardier CRJ-200 aircraft has a cruising speed of  860 km/h and a range of up 3,700 kms with a total payload of 6,124 kgs.

The CRJ-705 aircraft will be configured in two classes of service with nine seats in Executive Class featuring three abreast seating offering 38 inches of legroom, and 65 seats in Hospitality with four abreast seating offering 33 inches of legroom. Both cabins will feature all leather seating. The Bombardier CRJ-705 aircraft has a cruising speed of 827 km/h and a range of up to 3,816 kms with a total payload of 7,778 kgs including a cargo payload of 700 kgs.

Air Canada currently has 47 Dash 8-100s, 26 Dash 8-300s, 25 CRJ-100s and 10 CRJ-200s in service.

The Embraer Purchase

The Embraer order consists of 45 firm 93-seat Embraer 190 aircraft. Deliveries are scheduled to begin in November 2005. The order also contemplates the potential for Air Canada to exercise options to acquire 45 additional aircraft.

Air Canada will configure the Embraer 190 aircraft in two classes of service with 9 seats in Executive Class with three abreast seating offering 38 inches of legroom, and 84 seats in Hospitality with four abreast seating offering 33 inches of legroom. Both cabins will feature all leather seating and spacious overhead bins. The Embraer 190 aircraft has a cruising speed of 769 km/h and a range of up to 2,963 kms with a total payload of 9,800 kgs including a cargo payload of 1,100 kgs.

Both purchase commitments are subject to a number of conditions including financing on satisfactory commercial terms, final documentation and obtaining requisite approvals, which may include those from Trinity Time Investments under the Court-approved Trinity Time Investment Agreement, GE Canada Finance Inc. in its capacity as DIP financing lender and the Court overseeing the company's restructuring under the Companies' Creditors Arrangement Act (CCAA).

As previously announced, GECAS has also agreed in principle to provide a maximum of approximately USD $950 million to finance up to 43 regional aircraft, for which financing is expected to occur through a series of transactions. This regional aircraft financing is subject to, among other things, maintaining a specified credit rating following Air Canada's emergence from CCAA.

As part of the labour restructuring negotiations last spring, an arbitration process was established to determine which pilot group, as between ACPA (for Air Canada) and ALPA (for Jazz) would operate any new aircraft in the small jet category. As a result of these orders, this process will commence shortly and the final aircraft manufacturer and model selection may vary depending upon the outcome of this process.