24left

Well, AvC is also a public forum. The video was seen by employees and the assumption is it was released before its time.

Adam Smith

Thanks for the clarification.

No surprise on the E90s, as those were leaving imminently anyway. So were the mainline 763s.

A few of the rouge 763s were coming to the end of their lives soon, so not a shocker that those wouldn't come back from this either.

A bit surprising to see them permanently retiring a bunch of middle-aged 319s and rouge 763s though. Also interesting that the 79 number I think implies all the rouge 319s in addition to the mainline ones. But not the Jetz ones.

Also, if I were looking to accelerate retirement of something, wouldn't it be more logical to retire some of the old 320s that were going to have to leave soon anyway, rather than newer 319s?

Q1 results tomorrow, hopefully there will be an update on the fleet plan then.

TheCanuckian

Do we know if the Rouge 767s are being retired, or is it merely the few remaining with mainline? I'm assuming the latter…

YYCCL3

It's official:

"Air Canada is accelerating the retirement of 79 older aircraft from its fleet – Boeing 767, Airbus 319 and Embraer 190 aircraft, with the Embraer aircraft exiting the fleet immediately. Their retirement will simplify the airline’s overall fleet, reduce its cost structure, and lower its carbon footprint."

https://www.aircanada.com/content/da...q1_release.pdf

All of the types listed for both Rouge and Mainline add up to 82, so essentially all of them are gone - maybe keeping a few middle-aged 319's around? It doesn't say in the MD&A. Someone want to dial in to the call in half an hour and ask?

TheCanuckian

I wonder if that's possible. That would reduce Rouge from around to 65 aircraft to 18.

martyYOW

that would also assume that for now Rouge is no longer doing European flights unless they moved some 787s over wouldn’t it?

YYC009

Maybe they are anticipating Transat doing the widebody flying to Europe for them when (if) the merger happens...

EdmFlyBoi

This might actually suggest that Rouge goes away for a period of time (if not forever). With what is likely limited leisure traffic to Europe over this summer and probably next, having a fleet of old 767's likely doesn't make sense. Core European flying can be done by mainline, and, if the Max ever comes back, they can cover the smaller centres in France out of Montreal if they elect to resume those destinations. The A321's can cover winter leisure flying, with the Max's making it to places the A321's can't. Hawaii will most likely all go back to mainline, especially when the Max's are back.

EdmFlyBoi

The conference call confirmed that Rouge will continue to exist, largely as a narrow body carrier, flying to leisure destinations. The 767's will wind down when the "time is right" to do so. Mainline will take over European flying for those markets where the demand continues to support the route.

A lot of the Rouge aircraft are leased so it seems they have some lease termination negotiation to do. I would imagine a number of the Rouge 67's would be ideal for cargo conversion if the demand is there (maybe AC will convert some for themselves).

This is really an interesting opportunity for AC to totally revise where and what they fly. There is going to be a glut of young aircraft on the market that they could acquire so as to ramp up Rouge flying if and when the demand returns.

Lots of liquidity to cover their cash burn, and negotiating for more. Calin seems to think it will be a 3 year recovery.

ride red

Yeah, the count of 79 aircraft lines up with all the mainline and Rouge 767s, 319s, and E190s.

Which is going to end some of the Rouge routes to Europe.

And it's a little weird because I'd think they would have ditched some of the older 320s rather than all the 319s.

Stranger

Actually adding mainline and Rouge you end up with 82. So maybe the Jetz 219s?

As to the 320s, weren't they meant to go as the max arrives? That might continue being the plan? Actually the 320 is a more efficient plane, and the 220 is the obvious 319 replacement, if somewhat larger.

About Rouge, it would seem they are now an exclusively 321 operation. Except if they end up with the/some of the Maxes.

Fiordland

Rouge being an exclusively A321 operator lines up nicely with the aircraft being absorbed into the AirTransat fleet. That is assuming the unmentioned takeover is still on track. Odd there is no word on that front.

ChrisA330

3 mainline 767s were already parked, so excluding those, it's 79.

rouge also has 5 A320s in addition to the A321s. These A320s came from InterJet rather than mainline with an average age of 13 years.

Stranger

Except, parked is not quite the same as retired.

Adam Smith

Note that as with its financial guidance, AC has suspended the fleet plan tables that it used to provide every quarter, looking out the next 1-2 years, so we're going off a small number of statements rather than detailed numbers at this point...

What's interesting about this is that they're not "retiring" the aircraft, they're "accelerating the retirement" of the aircraft, and that, per EdmFlyBoi 's post, the 763s will go "when the time is right".

As someone who has extensive experience in both preparing and interpreting public company disclosures like this, I would translate that as "we know we're going to need fewer aircraft because it's going to be a while before things recover. We're really not sure how many, but we need to tell the market something, so what can we say?"

The E90s, as discussed previously, were going anyway, so those were easy. Same with the mainline 763s and older rouge 763s that were going out the door in the next few months.

But the language leaves them some wiggle room on the 319s and other 763s. For now, they'll probably stay parked in the desert rather than scrapped. And if things turn around more quickly than expected, AC has the ability to bring them back. It's also possible that they won't "retire" some of those aircraft right away because they're leased, and "accelerating the retirement" means "we won't renew the lease when it comes up in a year or two".

Demand for aircraft is not exactly going to be high at the moment, and there's no sense in sending something to the scrappers pre-emptively, so we could see a bunch of those fins staying parked and in limbo - not retired, but targeted for retirement - for a while.

I think we should hold off on making a lot of long-term judgments at this point. Rouge has been around for what, about seven years now? AC has spoken often of rouge's value in its overall strategy. It's clear that AC sees demand for rouge's services being hammered in the near term, but disappearing altogether seems unlikely.

With nowhere else to place the aircraft, lessors are unlikely to be in a very generous mood when it comes to negotiating. They'll probably tell AC they can either continue to pay the leases or pay whatever termination penalty is already specified in the lease agreement.

The 763 P2F market was hot a while ago, but not sure whether the demand will still be there at the moment. Air freight rates are high right now, but for a cargo operator to spend the large sum to acquire and convert the aircraft requires confidence in the cargo market not just in the next few months, but looking out several years.

Cargo rates are very high right now because of the lack of belly space on passenger flights as well as a spike in the need to ship PPE and some other urgent items. As things normalize, passenger flights will resume, bringing back belly cargo space, and there will be less of the urgent medical shipping. Meanwhile, the recession will likely reduce overall demand for expensive air freight shipments.

So I'm not sure that cargo operators will be as keen to take on those frames as they would have been 6-12 months ago.

I'm not sure it's really an "opportunity". There are no new open skies agreements being signed or anything else that would allow them more flexibility, and AC already has significant discretion on where it flies. They've added huge numbers of routes in recent years, but also dropped routes that didn't work. They'll have to revise where they fly, but I don't think anyone at AC HQ is excited about what it represents.

The only potentially exciting thing for AC in terms of route planning out of this is if it kills off competitors. That might allow AC to add a couple of lucrative routes here and there, or increase service or pricing on existing routes. So far, though, we've seen very few failures, and no one is likely getting excited about the potential to pick up some hypothetical traffic in 2-3 years when the short term looks so ugly.

The Jetz 319s are what made the most sense to me. But hard to say.

EDIT: I see ChrisA330 mentioning three 763s already being parked, but since those were still on the books per AC's fleet disclosure, I think it's more likely the Jetz planes.

Yes, the 320s were meant to go as the 7M8s came in. A few have already been retired and a whole bunch were scheduled to leave this year. Odd that there's no commentary on that.

The 320 has lower CASM than the 319, but isn't "more efficient" if you don't fill the extra seats.

They won't be all 321s, as they also have a few 320s.

EDIT: I see ChrisA330 beat me to it while I was typing this