Air Canada appears close to buying up to 60 jets -sources

Reuters

By Tim Hepher

Dec 6 (Reuters) - Air Canada appears close todeciding whether to buy up to 60 new narrowbody jets from Airbus or Boeing Co, a decision that could settle whichof the giant plane makers wins their annual order race, industrysources said.

The Canadian flag carrier has said it is looking to renewits fleet of single-aisle aircraft, which currently includesmore than 50 Airbus A320 and A321 jets, as well as 45 Embraer190 planes.

Chief Executive Calin Rovinescu had previously said he hopesa decision will be made by the end of the year, noting thedecision would involve more than 100 airplanes.

A spokesman for Air Canada said no decision had been made,but two people familiar with the matter said a decision couldcome as early as next week when the airline's board meets.

The airline spokesman declined to comment on the timing ofany board discussions.

"We typically don't talk about board meetings," said AirCanada spokesman Peter Fitzpatrick, who also declined to commenton the board's agenda. "I can tell you on the record that nodecision has been made."

Industry sources said Air Canada was expected to address itsfleet renewal needs in two phases, starting with a decision onwhether to stick with Airbus for medium-haul jets, and pick itsrevamped A320neo version, or switch to the Boeing 737 MAX.

Both plane makers claim their latest medium-haul offeringsprovide better fuel savings and easier maintenance.

The airline is expected to opt for 30 or more jetsimmediately by placing firm orders and place options for up toanother 30 as insurance against a faster than expected upturn inthe economy, the sources said, asking not to be identified.

Such a deal would be worth up to $6 billion if all theoptions were exercised.

Airbus and Boeing both declined to comment.

The decision is subject to delay or changes in volume but ifapproved, would mark the climax to a bruising and widely watchedcampaign between the world's dominant plane makers.

Airbus was ahead of its U.S. rival in the number of ordersin the first 11 months of the year, but the race for the 2013order crown looks finely balanced once recent deals that haveyet to make it into the order books are added to the tally.

The sources denied an industry report that Airbus hadalready been selected for the deal.

Boeing, which dominates Air Canada's fleet ofwide-body jets, is trying to overturn Airbus asincumbent operator for medium-haul planes at Air Canada.

A win for Boeing in its home region would mark a rebound inthe region after Airbus displaced it at Mexican low-cost airlineVivaAerobus in a fierce contest earlier this year.

However, analysts say airlines do not frequently make theswitch between different jets because of the costs ofre-training and accommodating new spare parts.

Air Canada could place additional orders for the slightlysmaller Embraer jets at a later date and is expected to comparethe new, domestically produced Bombardier CSeries withthe Embraer E2 family.

RBC analyst Walter Spracklin said in a client note on Fridaythat Air Canada could potentially put in an order for 30 CSeriesplanes.

Prospective airlines have been holding off making firm orderdecisions on the CSeries, which started flight tests inSeptember, until Bombardier releases flight data.

"A full performance data set could be two to three monthsaway," said Spracklin.

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