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Air Canada Warms To A321LR After Cancelling 737 MAXs

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The Airbus A321LR may have an opening to replace Air Canada’s cancelled Boeing 737 MAX 9 aircraft.

Air Canada cancelled 11 737 MAXs in March so it could have flexibility to order other aircraft, according to CFO Michael Rousseau. The change reduced Air Canada’s firm MAX order from 61 to 50.

“It gave us some optionality on potentially some other planes we might want to look at in the middle of the decade,” Rousseau told the Wolfe Global Transportation Conference. “Those 11 were basically being delivered in the middle of this decade.”

Rousseau did not specify the candidates to replace the MAX 9, but he was upbeat when asked about the A321neo.

“The LR would be more interesting to us than the neo,” he said. The A321LR has been increasingly out-performing the 737 MAX 9 on payload and range. “We’ll see how the market evolves.”

Air Canada operates 15 A321s. “They’re good, cost-efficient planes for us,” Rousseau said. “We like A321s.”

Air Canada’s 2013 selection of the 737 MAX over the A320neo family was a major win for Boeing BA since Air Canada never operated the 737 NG and has no A320neo family aircraft on order.

Rousseau is positive about the 737 MAX 8, of which it has received 24. “We still like the plane,” he said. “It’s very good for Air Canada.”

The 737 MAX can help re-build traffic after COVID-19, Rousseau said.

“We think North American markets come back first,” he said. “Planes like the Airbus A220 and the MAX are the two most efficient planes to support that market.”

Air Canada expects the 737 MAX grounding to be lifted later this year, improving financing options.

“Once ungrounded, we believe the market will finance the MAX,” Rousseau said. “Also EXIM is back in business.” Air Canada will finance future MAX deliveries via EXIM, EETC or sale and lease back.

737 MAX customer Southwest Airlines LUV noted it is hard to argue for MAX grounding compensation while COVID-19 grinds most traffic to halt. This dilemma is not applicable for Rousseau.

“We’ve come to terms with Boeing already,” he said. “There won’t be any more adjustments from what we had already negotiated.”

The MAX reduction was not because of the start of the coronavirus outbreak, Rousseau said. “It was a purely independent fleet decision we made to give ourselves a little more fleet flexibility.”

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