Investor Presentaiton
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generates 18% lower trip costs as compared to the Airbus 319 aircraft. These new aircraft are integral to Air Canada's
North American strategy, which involves offering high flight frequency on key domestic and transborder routes, while
maintaining competitive frequency on other domestic and transborder routes. The use of regional jet aircraft also allows
Air Canada to better match capacity with demand by reducing the average seating capacity per departure, and supports
the more efficient use of Air Canada's network and hubs. This initiative will result in Air Canada, together with Jazz,
having added 90 new regional jet aircraft to their fleet by January 2008.
In order to support its business strategy and deliver a superior aircraft product in its international markets, Air
Canada is scheduled to start receiving 19 Boeing 777 aircraft beginning in March 2007 and 14 Boeing 787 aircraft
beginning in 2010. All of the new aircraft will be used to modernize and re-size the fleet, improve passenger load
factors and yields, and reduce operating costs through fuel efficiencies. The Boeing aircraft offer superior comfort and
operating economics through greater fuel efficiency and maintenance cost savings. Air Canada estimates that the fuel
usage and maintenance costs of the Boeing 787 aircraft will be approximately 30% less than that of the Boeing 767-300
aircraft. The Boeing 787 aircraft also feature better operational performance in terms of speed and flight range and
provide Air Canada with the ability to serve new markets that could not be previously served in an efficient manner.
The fleet structure simplification is also focused on reducing the number of aircraft types in order to reduce the costs
related to maintenance and pilot training.
Refurbishment of Existing Aircraft
In addition to acquiring new aircraft, Air Canada commenced a major refurbishment of the interior of its existing
aircraft in 2006. All existing aircraft, except for the Airbus A340 aircraft, will have refurbished interiors, including new
seats and personal in-flight entertainment systems and in-seat power outlets at every seat in Economy Class and
Executive Class. For aircraft that will be flying international routes, seats in the Executive Class cabin will also convert
into lie-flat beds. The new Boeing and Embraer aircraft are being delivered with the new seats and in-flight
entertainment systems already installed. As of March 27, 2007, Air Canada has completed the refurbishment of 23
Airbus A320 aircraft, five Boeing 767-300 aircraft and two Airbus A319 aircraft. The aircraft refurbishment process is
scheduled to be completed by the middle of 2008.
Widebody Aircraft Fleet
Current Fleet of Widebody Aircraft
As at December 31, 2006, Air Canada's operating widebody fleet was comprised of 64 aircraft, each configured in
two classes of service: Executive First or Executive Class, and Economy Class. The Airbus A340-300 is a four-engine
286-seat aircraft that serves Air Canada's trans-Pacific and trans-Atlantic routes. The Airbus A330-300 aircraft, with
274 seats, is a twin-engine variant of the Airbus A340-300 aircraft that Air Canada operates mainly on trans-Atlantic
routes. The Boeing 767-300 ER is a long-range 203-222-seat aircraft used mainly on international routes. The Boeing
767-200 is a 207-seat aircraft used on domestic and international routes.
Boeing Orders and Financing Terms
In November 2005, Air Canada concluded agreements with Boeing for the acquisition of up to 36 Boeing 777
aircraft and up to 60 Boeing 787 aircraft. The agreements include firm orders for 18 Boeing 777 aircraft and 14 Boeing
787 aircraft and options and purchase rights for an additional 18 Boeing 777 aircraft and 46 Boeing 787 aircraft. In
addition, Air Canada has entered into a 10-year lease agreement with International Lease Finance Corporation ("ILFC")
for one Boeing 777-300ER aircraft, which is scheduled to be delivered in May 2007.
As a result, Air Canada is scheduled to start receiving 19 Boeing 777 aircraft, beginning in March 2007, and 14
Boeing 787 aircraft, beginning in 2010. Air Canada plans to take delivery of five Boeing 777-300ERs and three Boeing
777-200LRs in 2007 and six Boeing 777-300ERs and three Boeing 777-200LRs in 2008. The two Boeing 777-200F
aircraft scheduled to be delivered in 2009 have been converted into two Boeing 777 passenger aircraft, the models of
which have yet to be confirmed. The 14 Boeing 787 aircraft are scheduled to be delivered during 2010 and 2011.
The operating costs of the Boeing 777 and 787 aircraft will be significantly lower than the operating costs of the
aircraft they will be replacing. A Boeing 777-200LR aircraft uses on average 11% less fuel than an Airbus A340-500
aircraft. Maintenance costs for the Boeing 777 aircraft are also lower than the Airbus A340 aircraft as the Boeing 777
aircraft has two engines to maintain while the Airbus A340 has four engines. Air Canada estimates that the fuel usage
and maintenance costs of the Boeing 787 aircraft will be approximately 30% less than that of the Boeing 767-300
aircraft they will be replacing. The Boeing 787 aircraft also feature better operational performance with respect toView entire presentation