Air Canada orders new Boeing planes

TORONTO — Fresh out of bankruptcy, Air Canada will spend at least $6 billion to burnish its image and operations by purchasing new Boeing aircraft that are more modern and fuel efficient than its current planes.

The agreement includes firm orders for 18 777s and 14 787s — Boeing’s newest jet, the Dreamliner. Air Canada, which emerged from bankruptcy protection in October, has options and purchase rights for 46 more 787s and 18 more 777s.

Robert Milton, chairman and CEO of ACE Aviation Holdings, the Montreal-based parent company of Air Canada said the new fleet would save the company hundreds of millions of dollars by lowering its fuel costs and eliminating the need to upgrade its current wide-bodies, which are more than 20 years old, on average.

“I am confident no one has ever done better on a deal,” said Milton, who intends to dedicate the aircraft primarily to flights between Canada and various destinations in Asia, including Beijing, Shanghai and New Delhi.

Milton said the company also plans to boost its international cargo service, eliminating costly stopovers in Alaska.

“They’re trying to reinvent themselves,” said Richard Aboulafia, an aviation analyst with the Teal Group in Farifax, Va. “If you’re striving for the best, this is how you would do it.”

Boeing Co. valued the firm orders at about $6 billion at list prices and said it would be the largest deal so far for its new Dreamliner model, assuming Air Canada buys all 60.

The 787 Dreamliner, which seats between 217 and 289 passengers, is scheduled to debut in 2008.

Air Canada said the bulk of the financing would be guaranteed by the Export Import Bank of the United States, in Canadian dollars. The airliner also recently secured $642 million in U.S. financing and officials said they had negotiated a “progressive payment schedule” so that Air Canada would not be forced to put all the cash for the deal up front.