In a hugely important deal for a struggling homegrown plane-maker, AC has entered into a letter of intent with Bombardier Inc. for the purchase of up to 75 Bombardier CS300 aircraft as part of its narrow-body fleet renewal plan. At list prices the deal could be worth up to $3.8 billion.
The deal couldn’t come at a better time for Bombardier, which today also announced 7,000 job cuts over the next 2 years.
The letter of intent describes 45 firm orders plus options to purchase up to an additional 30 aircraft and includes substitution rights to CS100 aircraft in certain circumstances.
Deliveries are scheduled to begin in late 2019 and extend to 2022. The first 25 aircraft on delivery will replace AC's existing mainline fleet of Embraer E190 aircraft, with the incremental aircraft supporting AC’s hub and network growth,
The result, says the airline, will be one of the world's youngest, most fuel efficient airline fleets.
"We are delighted to announce this important agreement with Bombardier for the purchase of CS300 aircraft as part of the ongoing modernization of Air Canada's narrow-body fleet," said Calin Rovinescu, President & CEO of Air Canada. "With its high fuel efficiency performance and greater seating capacity, the next generation technology of the C Series is very well suited for our current and future network strategy and will be an extremely efficient addition to our fleet.”
Rovinescu says the planes will yield significant cost savings. "We have estimated that the projected fuel burn and maintenance cost savings (on a per seat basis) of greater than 15% should generate an estimated CASM reduction of approximately 10% compared to the aircraft it will replace.
AC says the deal complements the acquisition of 61 Boeing 737 MAX aircraft announced in December 2013 to replace the larger end of the airline's mainline narrow-body fleet.