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Airline won't buy new craft until ready: CEO

Country’s largest airline is in no rush to buy new narrowbody aircraft and will wait until Boeing and Airbus decide how they will challenge Bombardier’s new CSeries, Air Canada’s chief executive said Monday.

MONTREAL — Country’s largest airline is in no rush to buy new narrowbody
aircraft and will wait until Boeing and Airbus decide how they will
challenge Bombardier’s new CSeries, Air Canada’s chief executive said
Monday.


Calin Rovinescu expects the airline will decide within the next year if
it will stick to its Airbus series of planes or purchase new
fuel-efficient aircraft.


Refleeting is a balancing act between cost and the benefits of new
products, he told reporters following a speech to an international
aviation organization.


Everybody would love to have the newest product at the lowest cost, but
Air Canada (TSX:AC.B) also has a huge capital commitment from having
ordered 37 new Boeing 787 Dreamliners, Rovinescu said.


The first of the longer range and more fuel-efficient planes are expected to be delivered in the second half of 2013.


``There’s a lot of moving pieces here. This is something we need to address but it’s not a today issue,’’ he said.


Earlier, Rovinescu said airlines will earn ``razor-thin’’ profits next year as the world experiences a slow recovery.


An industry association forecast for $8.9 billion of profits represents
margins of less than two per cent. The profit will follow nearly $50
billion in losses accumulated over the last decade.


In Canada, pre-tax profits are expected to total $192 million as pricing
remains soft and business traffic has yet to return to pre-recession
levels.


Rovinescu says government regulations and imposition of fees and airport rents are a roadblock to the industry’s sustainability.


Airport rent, airport infrastructure, navigation fees and charges,
security charges, fuel excise taxes and other taxes cost the airline
nearly $1 billion annually more to operate in Canada than the U.S., with
the same business volume, he said.


Last week, the International Air Transport Association said global
airlines have rebounded faster than expected from the recession after
losing nearly US$26 billion over 2008 and 2009.


The industry group said airline profits for 2010 will likely total $8.9
billion on revenue of $560 billion, more than the group’s forecast in
June of $2.5 billion profit on sales of $545 billion.


The global economy, led by Asia, has made a quicker recovery from last
year’s recession than the IATA expected, helping to boost passenger
numbers and cargo.


Airlines had losses of $9.9 billion last year and $16 billion in 2008.
The IATA represents about 230 airlines accounting for 93 per cent of
international air traffic.


Rovinescu has overseen efforts by Canada’s largest airline to prepare
for a recovery from a recession that cut passenger revenues,
particularly among premium and business travellers.


Air Canada plans to focus on reducing nearly $1 billion of debt coming
due over the next two years instead of adding planes to its fleet.


Rovinescu made his comments a day before ICAO, the United Nation’s body
that governs civil aviation, signs an international agreement aimed at
improving aviation safety.


ICAO, the U.S. Federal Aviation Administration, the European Union and
the International Air Transport Association will all sign the deal in
Montreal to share safety data.


The information in the database will include the airworthiness of
aircraft and how many inspectors of a country are overseeing the
airlines, ICAO secretary general Raymond Benjamin told The Canadian
Press.


According to ICAO figures, there were 14 accidents involving scheduled
air services — aircraft with seven passengers or more — in 2009,
resulting in 654 fatalities. That number includes crew members.


Statistics collected over the past two decades reveal the worst year in
terms of strictly passenger fatalities was 1996 when 1,173 died in 24
accidents.


ICAO said three people were killed worldwide during 23 so-called acts of unlawful interference in 2009.

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