Air Canada cancels 32-jet Boeing order

0 Comments | Deseret News (Salt Lake City), Jun 20, 2005

MONTREAL (AP) -- Air Canada canceled an order for 32 widebody Boeing Co. jets after pilots rejected a contract deal that would have freed up funds for the new airplanes.

Pilots voted Saturday to reject terms that were tied to the aircraft order, which Air Canada announced April 25. The deal was worth about $6 billion at list prices, although airlines typically negotiate discounts, and was subject to employees accepting certain cost-cutting measures.

Montreal-based Air Canada emerged from bankruptcy protection last year.

"We cannot lose sight of the effort it took to get to where the airline is today," said Montie Brewer, Air Canada's president and CEO. "While the cancellation of this aircraft order will be disappointing to our employee group at large, including many of our pilots, it is the right decision given the circumstances."

The airline said it accepted the pilots' decision and notified Chicago-based Boeing the order was canceled.

Air Canada had placed firm orders for 18 new Boeing 777s next year and 14 Boeing 787 Dreamliners -- its newest jet -- which are scheduled for delivery in 2010. The airline also would have had purchase rights to 18 more 777s and 46 more 787s to replace Air Canada's Boeing 767 fleet.

In a statement posted on its Web site, Boeing said it was disappointed with the decision.

"We are seeing very strong demand for the 777 and the 787, and we believe we will have many opportunities to place these aircraft elsewhere," Boeing said.

When the aircraft deal was announced in April, Air Canada said it intended to dedicate the planes primarily to flights between Canada and various destinations in Asia, including Beijing, Shanghai and New Delhi.

Brewer said the company will look to the used market to find three 777s it needs for the planned Asian service.

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