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Air Canada to Convert Air Canada Technical Services Into Wholly-Owned Subsidiary

5 July 2002

Air Canada today announced that it has created a separate company for its Air Canada Technical Services Division to facilitate its transition as a separate profit centre. This initiative will allow Air Canada to improve efficiencies through increased scale and grow the business while maintaining a safe and reliable maintenance, repair and overhaul (MRO) operation for airline customers worldwide.

"Air Canada Technical Services has become a separate corporate entity, consistent with our strategy to create new profit centres within the Corporation to illuminate shareholder value and increase the focus on certain ancillary profitable operations of the Corporation," said Calin Rovinescu,  Executive Vice President, Corporate Development and Strategy. "With this objective in mind, we are currently developing the business model to allow for a transfer of assets planned by the end of 2002. At this stage, no decision has been made with respect to the sale of any part in Air Canada Technical Services."

"The mandate of Air Canada Technical Services is to fully develop its potential and realize its true value as an international leader in providing maintenance repair and overhaul services not only to Air Canada but also to other airlines around the world," said Robin Wohnsigl, President, Air Canada Technical Services. "The positioning of Air Canada Technical Services as a stand alone MRO business provides the focus required to create a company that can compete for its portion of the global aviation maintenance business estimated to represent USD $40 billion in annual revenues." 

Air Canada Technical Services experienced 12 per cent growth 2000-2001 and plans to significantly increase its third party work over the next three years. Revenue from third party work represented more than CAD $200 million in  2001 and currently represents approximately 25 per cent of its activities, in addition to work performed for Air Canada. Air Canada Technical Services currently supplies services to more than 60 airlines around the world. 

Growth will be pursued through direct sales as well as joint ventures with other companies. Two recent agreements for third party work include components and heavy maintenance for Atlantic Coast Airlines and engine repair for Lufthansa German Airlines, together valued at more than USD $200 million over the next five years. 

In addition, Air Canada Technical Services will continue to exploit business opportunities such as Aeroxchange for e-procurement, and joint ventures including AirLiance for surplus materials management and ACETEK Composites  for parts repair. Using its expertise developed in Canadair Regional Jet maintenance, Air Canada Technical Services has expanded into the CF34 Regional Jet engine maintenance business at its Montreal facilities. In addition, heavy maintenance facilities in Calgary, previously owned by the airline's regional subsidiary, Air Canada Jazz, were acquired to complement its other facilities located coast to coast. 

Air Canada has made significant investments in its technical services operations over the years. Most recently, to consolidate the competitive leadership position of Air Canada Technical Services, investments of CAD $20 million were made for for a fixed wide body heavy maintenance docking station in addition to over CAD $10 million in improvements to aircraft component and engine maintenance facilities, both at its Montreal maintenance base. Air Canada Technical Services has also invested in SINEX, a state-of-the- art automated aircraft heavy maintenance system for check planning and management. 

Air Canada Technical Services provides maintenance, engineering, repair, supply and purchasing to support Air Canada's mainline fleet of more than 220 aircraft, as well as other airline customers, in five maintenance categories: airframes, engines, components, line and aircraft cabins. It also provides material and supply chain management services to the airline industry. Air Canada Technical Services employs approximately 8000 staff in Canada, the U.S. and Europe, with six major maintenance base centers located across Canada: in Halifax, Montreal, Toronto, Winnipeg, Calgary and Vancouver.

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