Air Canada aims to serve seven major Canadian cities with its Boeing 787s, the first of which are projected to arrive in 1Q2014. According to reports in The Globe and Mail/Business First, the carrier plans to launch 787 services from Toronto, Vancouver and Montreal in 2014 and hopes to add Calgary, Edmonton, Ottawa and Halifax by late 2014 or early 2015. Air Canada is also reportedly considering cities in India and China as prospective destinations. Air Canada has 37 787-8s on order.
Air Canada aims to serve seven Canadian cities with 787; possibly India and China too
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A decade ago it would have been unheard of for Air Canada to contemplate reaching an investment grade credit rating. The airline had emerged from bankruptcy protection, but was still struggling financially. It would teeter on the verge of another formal restructuring before setting out on a course to restructure its financial foundation – a process that has allowed the airline to improve its balance sheet and leverage.
Air Canada’s leverage targets for YE2018 will not meet the general proxy for an investment grade rating; however, its lower capital commitments and debt refinancing could create an opportunity for achieving that status beyond 2018.
Attaining an investment grade credit rating likely remains a longer term goal for Air Canada as its major financial goals in the short term remain paying down debt that is creeping up due to a fleet renewal, as well as funding growth to drive long-term shareholder value. More meaningful shareholder returns will likely occur once the company reaches what it deems as acceptable progress in debt management, and reaches a certain maturity level in growing its international network.
This is Part 2 in a two part series on Air Canada. Part 1 dealt with long haul LCC subsidiary, rouge.