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Thursday, June 9, 2005
Air Canada's parent may cancel big Boeing deal
ACE Aviation Holdings Inc., parent of Air Canada, may cancel a $6.1 billion contract for Boeing Co. planes if the carrier can't reach agreement this week on how much to pay the pilots who would fly them, ACE Chief Executive Robert Milton said yesterday.
The airline is in the final stages of talks with Air Canada pilots on terms for flying as many as 36 Boeing 777s and 60 Boeing 787s ordered in April, Milton said at a Merrill Lynch investor conference in New York. Montreal-based ACE can withdraw without penalty by tomorrow, he said.
"It is my hope that we'll get it done," he said. "If we don't, we'll have to revert to Plan B, which would be adding more used aircraft."
Failure to reach agreement with the pilots' 3,000-member union would jeopardize the first Air Canada order for Boeing since 1989 and the second biggest for the 787. Boeing is counting on the 787, its first new plane in 15 years, to regain the position as the world's biggest commercial plane maker from Airbus.
Air Canada, the country's largest carrier, must amend its contract with the pilots to take the new aircraft into account. The contract, which expires in 2009, links pilot wages to the size, speed, weight and revenue potential of the plane they fly, union President Kent Wilson said.
Wilson declined to comment on Milton's comments or the negotiations. "We remain optimistic that something will bear fruit," he said.
The Boeing 777 models are slated to replace the Airbus A340-300 in Air Canada's fleet, and Boeing 787s will replace the Boeing 767.
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