Aerospace |
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Airbus
Captures Orders Worth $4 Billion
Last week, Virgin Atlantic Airways announced its plans to order a fleet of new Airbus A340-600 jets, worth $2 billion. The British airline is the first customer of the wide-body, long-haul aircraft, premiered at the Paris Air Show in June. Deliveries are set to begin by the year 2002.
Virgin Atlantic plans to order two more jets next year, bringing the total value of the deal to about $2.5 billion. As if that wasn't enough, Air Canada also announced that it signed a letter of intent to acquire eight A330 and A340 aircraft from Airbus Industrie, with options for 20 more. This brings Airbus' newest orders to a total 26 planes, worth $4 billion.
Lamar Durrett, president and chief executive officer, said, "Current aviation market conditions present an excellent opportunity for Air Canada to renew its wide-body fleet. This program has been designed to allow Air Canada both to renew and enter a new growth phase with optimal flexibility to respond to market demand in a cost efficient manner. Based on the airline's financial performance, I am confident that our growth strategy is on track and that we will require a renewed and expanded wide-body fleet to serve lucrative markets economically as opportunities arise and our finances permit." Air Canada will take delivery of five twin-engine A330-300 high gross weight aircraft and three four-engine A340-300 aircraft. The new aircraft will replace its fleet of six Boeing 747-100/200 aircraft and two A340 aircraft currently under operating leases. Officials say the new Airbus aircraft will lower operating expenses significantly on the carrier's long haul routes as well as provide maximum flexibility for a wide range of route structures. Deliveries are scheduled to be completed by August 2000. The aircraft seats 292 passengers and is designed for flights of up to 9,300 km. The aircraft is therefore capable of providing non-stop service on routes such as Vancouver-London and Toronto-Frankfurt. It has a cargo payload of about 17 tons with capacity for up to 33 LD3 containers or 11 pallets. "Air Canada's renewed wide-body fleet will give the airline an added competitive advantage. In fact, it will improve profitability immediately,'' Durrett said. "With one of the youngest and most efficient fleets in the world, Air Canada will be positioned to improve further its operating performance.'' Air Canada's wide-body fleet renewal program may be extended to include two subsequent phases that feature unprecedented commercial and financial flexibility for the airline. According to its letter of intent with Airbus, Air Canada may choose at a later date to replace and expand further its wide-body fleet in order to respond to market demand, particularly on lucrative Asian routes the carrier is targeting as part of its strategic growth plan. Moreover, Air Canada has capitalized on advantageous market conditions to secure favorable prices on current and future deliveries in order to carefully control capital investment demands. If Air Canada decides in March 1998 to extend its wide-body fleet renewal program, the second phase would consist of the delivery of five A340-500/600 aircraft, with options for an additional 10, beginning in 2002. Air Canada's plan to acquire two A340-500 and three A340-600 aircraft would make Air Canada the first airline in the world to operate these new types. Once in operation, the A340-500 will seat 308 passengers and will be one of the longest range airliners in the world capable of providing non-stop service on routes such as Toronto-Hong Kong. The -600 version will seat 360 passengers and is designed for high density or slot constrained markets. Phase three would see up to eight additional wide-body aircraft join the Air Canada fleet beginning as early as 2000. Three of these aircraft would replace the carrier's Boeing 747-400 fleet, resulting in a standardized wide-body fleet and added savings. The decision to implement this phase will be made during 1999. The carrier will review market opportunities and will determine whether deliveries will consist of A340-300 or A330-300 aircraft. Air Canada would retain the flexibility to reschedule some of the deliveries for both phases two and three if it wishes. Air Canada became the first carrier in North America to operate the A340 when it took delivery of two aircraft in June 1995. The airline currently operates eight A340-300, 34 A320 and 12 A319 aircraft (with orders for 23 more). The European consortium of Airbus partners -- Aerospatiale, Daimler-Benz, British Aerospace and CASA -- purchase more than $325 million annually from Canadian companies. The wide-body Airbus aircraft Air Canada is acquiring will bring substantial cost savings through commonality with the other Airbus aircraft it already operates. Airframes and on-board systems are similar while flight decks and handling characteristics are almost identical across Airbus aircraft family types in the Air Canada fleet. Consequently, training and maintenance costs for the airline will be minimized. "Renewing our wide-body fleet has important implications for our
customers, our shareholders and our employees,'" Durrett said. "Air
Canada will continue to focus on strategic growth through market leadership
and building a strong Air Canada in a global marketplace. In addition to
serving directly leading international destinations, our participation in
Star Alliance has created a powerful network for further expansion." |
Air Canada will
undertake a three-year program to replace its wide-body fleet with fuel-efficient
aircraft designed to reduce operating costs. With this order, Air Canada
will become the first scheduled airline in North America to operate the
A330-300 by the time it takes delivery of the first aircraft in October
1999. The value of the eight aircraft, based on list price, is about $1.4
billion.