Air Canada announced (04-Dec-2013) a preview of the cabin interiors that the carrier plans to present on its Boeing 787 fleet with plans to take delivery of the first of 15 787-800 aircraft in spring 2014. Air Canada plans to take delivery of 22 787-9 aircraft in Jul-2015 with all 37 787 aircraft scheduled to be delivered by the end of 2019, transferring its current 767 and A319 aircraft to Air Canada rouge. Air Canada will deploy its first 787 on Toronto-Tel Aviv service from Jul-2014 and will offer previews of the new 787 service on select domestic and transatlantic flights on a temporary basis. The carrier will provide three cabins of service on the 787 with a new contemporary decor and seating. The cabins include 20 180-degree full flat-beds in its international business class cabin, 21 seats in the premium economy cabin, and 210 slimline seats in the economy cabin. Air Canada's executive VP and CCO Ben Smith stated, "The introduction of Boeing 787-8 and 787-9 aircraft featuring our new onboard product is a key component of Air Canada's international expansion plans. The fuel efficient Boeing 787 aircraft will open up opportunities for Air Canada to serve new international destinations, and convert existing routes to Dreamliner service, as we continue to renew our fleet and develop Toronto Pearson into a preferred North American gateway and truly global airline hub." [more - original PR]
Air Canada reveals preview of 787 cabin interiors
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Air Canada is undertaking a significant international push, just as the UK has voted to exit the European Union and terrorist attacks have swept Belgium, France and Turkey. Despite the pressure those circumstances are creating for revenue and yields, Air Canada has a reasonably positive outlook for demand in 3Q2016.
The airline has posted declines in yields and unit revenues for numerous quarters, but stresses that outcome remains a by-product of its strategy to grow internationally. Expansion by the company’s low cost subsidiary rouge has increased Air Canada’s mix of leisure customers and its growing average stage lengths have also pressured unit revenues. However, the company continually declares that its expansion is margin-accretive.
Air Canada no longer provides specific capacity guidance but has no plans to slow its growth in 2016, the bulk of which is directed to international markets. The company’s message is that its capacity increases should in fact be absorbed, even accounting for a major capacity push that started in late 2Q2016.
Air Canada's outlook lifted by slowing domestic capacity as it works to maximise fleet flexibility
Air Canada believes that changes it is making to business strategy – aircraft densification and the expansion of its low cost subsidiary, rouge – are positioning the airline to weather uncertain economic conditions in Canada and in other geographical regions.
A decline in industry domestic capacity later in 2016 should benefit Air Canada and rival WestJet, but Air Canada’s yields will continue to decline because certain components of its strategy blueprint – longer stage length and a higher proportion of leisure travellers – dictate a decrease in yields.
Although Air Canada has ceased offering capacity guidance, most of its planned expansion of supply in 2016 is pegged for international markets as it works to craft a global network that rivals that of its large North American peers. Perhaps to reassure investors that it is prepared to act rationally if conditions suddenly worsen, Air Canada is stressing the flexibility it retains to adjust its fleet and redeploy capacity from underperforming markets to other regions of its network.