AIR CANADA SHOPS FOR NEW JETS.
Air Canada is considering purchases of mid-sized jets amid growing confidence the country’s biggest carrier will be profitable next year after an anticipated fifth straight loss.
Talks are under way with Boeing Co., Airbus SAS and Bombardier Inc. for more than 100 aircraft, said chief commercial officer Ben Smith.
Adding single-aisle models with the latest fuelsaving technology that can carry about 150 passengers could help Air Canada shed its status as North America’s least-efficient carrier. Its fleet is twice as old as that of discounter WestJet Airlines Ltd., which Montreal-based Air Canada is challenging by creating a low-cost unit.
“It’s always a good sign when they’re thinking about new plane orders,” said John Braive, vice chairman at CIBC Global Asset Management. “Your aircraft are starting to get older. You do have to upgrade to the newer type of planes, which have better wings, more room for passengers, better fuel efficiency.”
The stock closed Thursday at $1.79 in Toronto, up 1.7 per cent.
Chief executive officer Calin Rovinescu now has “a higher degree of comfort around what his cost lines are going to be, what his constraints are,” said Walter Spracklin, an RBC Capital Markets analyst. “Air Canada is entering a new phase of profitable growth.”
Analysts expect a return to profit in 2013, based on estimates compiled by Bloomberg.
The low-cost service will start in June with four planes, and Air Canada projects the unit eventually may reach 50. Air Canada also will take deliveries of two 777s next year, followed in 2014 by the first of the Dreamliners, for which the original order was almost doubled to 37 planes as the airline starts the biggest international expansion in its 75-year history.
“It’s going to elevate the capital expenditures and further increase the debt” even with some financing in hand, Darren Kirk, senior credit officer at Moody’s Investors Service in Toronto, said of the new twin-aisle jets. “There will be some time before they see the benefits of these aircraft.”