Air Canada threatens to bail on CSeries deal if legislation isn’t passed.
‘ THERE ARE OTHER MANUFACTURERS’
Air Canada is threatening to walk away from its plan to buy up to 75 CSeries jets from Bombardier Inc. unless the federal government gives it more flexibility over where it does its maintenance work.
In testimony that appears to contradict the airline’s claims that politics had nothing to do with its decision to order the CSeries, an executive told a Senate committee reviewing changes to the legislation that governs Air Canada that it won’t buy the aircraft unless the government gives it more latitude.
“The point around this is that we are not prepared to make that scope of a financial commitment in an environment of legal uncertainty,” Kevin Howlett, Air Canada’s senior vice- president of government affairs and regional markets, told the Senate’s transport and communications committee this week.
“There are alternatives to the CSeries, as I’m sure you know. There are other manufacturers that make comparable airplanes.”
He added that Air Canada will also cancel plans to create new maintenance jobs in Manitoba and Quebec if the legislation isn’t passed.
“What I can tell you is if this bill does not go forward, we will not create the centres of excellence in Manitoba and we will not create the centres of excellence in Quebec,” Howlett said.
Conservative Senator Don Plett, who was questioning Howlett, took issue with the company’s stance.
“So in plain words, ‘ You do what we want or we’re going to stick it to you,’” he said.
Air Canada and Bombardier did not immediately respond to requests for comment.
The Senate was reviewing amendments to the Air Canada Public Participation Act that were passed by the House of Commons last month. The committee passed C-10 Tuesday. It was to come up for third reading in the Senate on Wednesday.
Currently, Air Canada is required by law to maintain operational and overhaul centres for its aircraft in Winnipeg, Montreal and Mississauga, Ont. The proposed changes would require the airline to continue to do some maintenance work in Manitoba, Quebec and Ontario, but would allow it to “change the type and volume of any or all of those activities in each of those provinces, as well as the level of employment in any or all of those activities.”
In February, Air Canada announced a letter of intent to buy 45 CS300 jets with options for 30 more. At the time, Transport Minister Marc Garneau told reporters that he would “clarify” the legislation that governs Air Canada to allow it “to respond more effectively to changing market conditions.”
The Quebec government also agreed to drop a lawsuit over Air Canada’s decision to move maintenance work out of the country in exchange for an agreement to have the CSeries maintained in Quebec for at least 20 years, and the Manitoba government l ater ended legal proceedings after the airline signed a new maintenance agreement that is expected to create at least 150 jobs in the province.
Air Canada maintains that it was under no political pressure to order the CSeries from Bombardier, and Howlett reiterated this week that the CSeries order “was based on the opinion of Air Canada that it is the right airplane to do the mission and serve the market that the airplane is capable of.”
When asked about Air Canada’s comments Wednesday, Prime Minister Justin Trudeau responded that “that is an issue for Air Canada.”
Air Canada’s CSeries order was i nstrumental in helping build momentum f or t he program, which had languished through a 17-month order drought prior to that.
In April, Delta Air Lines Inc. placed a firm order for 75 CS100 aircraft with options for 50 more.
The Air Canada order still needs to meet certain unspecified closing conditions before it can be upgraded from a letter of intent into a f i rm deal. Air Canada CEO Calin Rovinescu told reporters in early April that the CSeries order would be firmed up within “weeks.”