Air Canada Cancels Boeing Order - Blames Pilots

[B747FR8DAWG]

Air Canada cancels $6 billion Boeing jet order
Sun Jun 19, 2005 11:05 AM ET
(Amounts in U.S. dollars unless noted)



MONTREAL, June 19 (Reuters) - ACE Aviation Holdings Inc. (ACErv.TO: Quote, Profile, Research) unit Air Canada said late on Saturday that it canceled a $6 billion order for 32 jets from Boeing Co. (BA.N: Quote, Profile, Research) , after the airline's pilots rejected an agreement on costs related to the jet purchase.

"The company accepts the pilots' decision and has notified Boeing of the order cancellation," Air Canada said in a statement.

The April 25 agreement with Boeing for 18 of its 777 jets and 14 of its 787 Dreamliners was subject to the Air Canada pilots' union ratifying an agreement on costs and other matters related to use of the jets. The airline had reached a tentative agreement with the pilots earlier this month.

Air Canada said it was disappointed by the cancellation, for which it is not subject to a penalty from Boeing.

The airline added that it would turn to the used aircraft market to find alternative aircraft to the three Boeing 777-300ER jets contemplated for 2006 delivery under the canceled order.

"The critical component of the Boeing order were the 787 aircraft scheduled for delivery in 2010 and beyond to replace our Boeing 767 fleet. In time we will readdress this requirement," Air Canada said.

The order cancellation may bring Airbus (EAD.PA: Quote, Profile, Research) back into the fleet renewal plans at Air Canada, which already flies the European aircraft maker's aircraft.

The airline had planned to renew its long-range, wide-body fleet with the Boeing jets in efforts to lower operating costs and improve efficiency. Air Canada did not mention Airbus in its statement. The airline, which is Canada's largest, emerged from 18 months of bankruptcy protection at the end of September with a much-reduced work force and debt level and a trimmed back aircraft fleet. Its stock, new shares that trade as holding company ACE Aviation, have almost doubled since being issued in early October as the airline's operating ratios have improved.

 

[labbats]

I don't understand how this applies to airbus. The pilots rejected a contract, good for them. However, this article seems to imply that since the contract is rejected, they'll replace Boeing with Airbus. Both still cost money.

 

[Boogie]

Refuse the planes simply due to a pilots' vote? Get real. There's got to be something else going on here....

 

[Heavy Set]

Well, maybe those 787s will be taken by someone south of the border in the US... Too bad for those Air Canada pilots (those would be some great airplanes to fly) - but good for them for sticking up for themselves... I wonder how much Air Canada will stand to lose in terms of non-refundable aircraft order deposits??????

 

[I.P. Freley]

I wonder how much Air Canada will stand to lose in terms of non-refundable aircraft order deposits??????

From the article:

"Air Canada said it was disappointed by the cancellation, for which it is not subject to a penalty from Boeing."

 

[B6Busdriver]

Air Canada cancels $6 billion Boeing jet order
Sun Jun 19, 2005 11:05 AM ET
(Amounts in U.S. dollars unless noted)



MONTREAL, June 19 (Reuters) - ACE Aviation Holdings Inc. (ACErv.TO: Quote, Profile, Research) unit Air Canada said late on Saturday that it canceled a $6 billion order for 32 jets from Boeing Co. (BA.N: Quote, Profile, Research) , after the airline's pilots rejected an agreement on costs related to the jet purchase.

"The company accepts the pilots' decision and has notified Boeing of the order cancellation," Air Canada said in a statement.

The April 25 agreement with Boeing for 18 of its 777 jets and 14 of its 787 Dreamliners was subject to the Air Canada pilots' union ratifying an agreement on costs and other matters related to use of the jets. The airline had reached a tentative agreement with the pilots earlier this month.

Air Canada said it was disappointed by the cancellation, for which it is not subject to a penalty from Boeing.

The airline added that it would turn to the used aircraft market to find alternative aircraft to the three Boeing 777-300ER jets contemplated for 2006 delivery under the canceled order.

"The critical component of the Boeing order were the 787 aircraft scheduled for delivery in 2010 and beyond to replace our Boeing 767 fleet. In time we will readdress this requirement," Air Canada said.

The order cancellation may bring Airbus (EAD.PA: Quote, Profile, Research) back into the fleet renewal plans at Air Canada, which already flies the European aircraft maker's aircraft.

The airline had planned to renew its long-range, wide-body fleet with the Boeing jets in efforts to lower operating costs and improve efficiency. Air Canada did not mention Airbus in its statement. The airline, which is Canada's largest, emerged from 18 months of bankruptcy protection at the end of September with a much-reduced work force and debt level and a trimmed back aircraft fleet. Its stock, new shares that trade as holding company ACE Aviation, have almost doubled since being issued in early October as the airline's operating ratios have improved.

Taken right from the Stephen Wolf playbook. He probably told them they would get more airplanes than God can count. So now the order gets cancelled and the real negotiations begin. Let's see if this old play works in Canada too.

 

[Ty Webb]

Good for the Air Canada pilots. Someone has finally drawn a line in the sand and called Bulls#it. Now if some of the US carriers would do likewise . . . .

I can tell you that the AirTran pilots have sent a loud and clear message to our management that we are not playing this game either. . . . .