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Oct 25, 2017

Air Canada could order more narrow-body planes on passenger increase

Air Canada beats profit estimates in Q3

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MONTREAL - Growth in the number of passengers Air Canada carries could prompt it to order more narrow-body aircraft from Boeing and Bombardier, the airline said.

The country's largest carrier has placed firm orders for 61 Boeing 737 Max and 45 Bombardier CSeries jets, but the number of aircraft was based on its requirements in 2013.

Air Canada also has options and rights to purchase 48 more Boeing planes and an additional 30 CS300 aircraft to give it more flexibility to meet increased demand.

"So obviously there is some pretty great opportunities there to expand that and exercise more, but obviously it won't affect 2018 in any fashion," CEO Calin Rovinescu said Wednesday as the airline posted record quarterly revenue and profits.

The first two Boeing 737 Max planes will arrive this year and 16 more by next June. The remaining aircraft are scheduled to be delivered through 2021.

Delivery of the first CSeries jets are slated to be added for late 2019, through 2022.

The comments came as Air Canada (AC.TO) reported a third-quarter profit of $1.79 billion or $6.44 per diluted share, boosted by a one-time $793-million tax recovery. That compared with a profit of $768 million or $2.74 per diluted share in the same quarter last year.

 

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On an adjusted basis, Air Canada earned $950 million or $3.43 per diluted share in the quarter, up from $821 million or $2.93 per diluted share in the third quarter of 2016.

Meanwhile, revenue in the quarter ended Sept. 30 totalled $4.88 billion, up from $4.45 billion on a large growth in business cabin revenues and the carrying of a record 14 million passengers.

Passenger traffic was up 8.8 per cent compared with the same quarter last year, while passenger revenue per available seat mile increased 0.4 per cent.

Rovinescu said that expressions of interest from bank and non-bank financial institutions wanting to become a credit card partner for its new loyalty program will be submitted by year-end with a request for proposals coming in early 2018.

"There has been a tremendous amount of interest from the financial community," he said.

The airline served notice in May that it does not plan to renew its partnership with Aeroplan parent Aimia (AIM.TO) when the current contract ends. Aeroplan used to be a division of Air Canada before it was spun off as part of its restructuring.

Air Canada has invited key financial institutions to participate in bids to join the launch of the program on July 1, 2020.

Rovinescu added that Air Canada has also been approached by several technology companies interested in a separate request for proposal, or RFP, that will also be issued early next year.