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Air Canada finding unit revenue upside now that its network diversification reaches maturity

Air Canada is planning a pivot in its fleet and network strategy as its widebody fleet revamp draws to a close in early 2019. For the past several years the airline has charted rapid international growth, working to close competitive gaps with its large network rivals across the border in the US.

With the arrival of its first Boeing 737 MAX narrowbody in 4Q2017, Air Canada is embarking on a narrowbody overhaul, replacing mainline Airbus narrowbodies with next generation Boeing single aisle aircraft. That should result in a deceleration of Air Canada’s capacity growth as the airline works to stabilise unit revenue and yields, after longer stage lengths and a higher mix of leisure passengers drove decreases in those metrics during the past three years.

The airline now also has an ability to expand its low cost unit, rouge, and strategically deploy rouge onto regional routes as a tool to compete with potential new ultra low cost airlines aiming to enter the Canadian market place.

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