Ace aviation Holdings, parent of Air Canada, canceled a $6 billion plane order with Boeing after the airline's pilots rejected a contract...
ACE Aviation Holdings, parent of Air Canada, canceled a $6 billion plane order with Boeing after the airline’s pilots rejected a contract related to flying the new jets.
Air Canada’s pilots Saturday voted against an agreement endorsed by union leaders that would have altered how the airline links wages to the size, speed, weight and revenue potential of planes they fly. That prompted the airline to cancel the order for 18 Boeing 777s and 14 Boeing 787s.
The cancellation of the April 25 order, the second-biggest for the 787, may slow Boeing’s attempt to regain its position as the No. 1 maker of commercial planes from Airbus.
“It hurts but it was part of a string of important victories over the last couple of months,” said Richard Aboulafia, vice president of the Teal Group, a Fairfax, Va., consulting company. “I doubt that this is a completely settled matter.”
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For Montreal-based ACE, which emerged from bankruptcy in September, it means Air Canada won’t have a plane that’s as much as 30 percent cheaper to operate than the Boeing 767 it was to replace.
“Clearly we are disappointed,” ACE spokeswoman Laura Cooke said yesterday. “We are going to look at used aircraft” to update the Air Canada fleet.
There is no penalty for scuttling the order, Boeing’s first from Air Canada since 1989.
Negotiators for the Air Canada Pilots Association reached a deal with ACE on June 9 before putting it to a vote of the union’s 3,000 members.
Cooke said she wasn’t advised of any new discussions. A call to pilots-union spokesman Peter Foster wasn’t immediately returned.
The Air Canada deal also included an option to buy 18 Boeing 777s and 46 787s.
The twin-aisle 787, introduced in 2003, is more fuel- efficient than existing models, because about 50 percent of the new plane by weight will be made from carbon fiber composites, making it lighter. It’s being marketed to replace Boeing’s 757s and 767s.
“We believe we will have many opportunities to place the aircraft tagged for Air Canada elsewhere,” Boeing spokesman Todd Blecher said. “I would point out that we are seeing very strong demand for the 777 and 787.”
Air Canada would have taken delivery of the first 777s in 2006 and the first 787s in 2010.
The contract rejection “isn’t material to our business plan,” Air Canada chief Montie Brewer said in a statement.
Air Canada had said it would use the planes mainly to fly 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,” Brewer said. “In time we will readdress this requirement.”
Material from The Associated Press was included in this report.