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Bombardier may see jet order shrink-Memo says Air Canada turns to Embraer

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Source : GlobeAndMail.ComBombardier may see jet order shrinkMemo says Air Canada turns to EmbraerBy JOHN PARTRIDGEWednesday, March 10, 2004 - Page B4 It appears that Bombardier Inc. may be getting orders for fewer of its regional jets from Air Canada than the 45 announced before Christmas -- and that archrival Embraer SA of Brazil may be getting more.On Dec. 19, Air Canada announced plans to buy 15 50-seat CRJ-200 jets and 30 74-seat CRJ-705s worth a total of about $1.3-billion (U.S.) from Montreal-based Bombardier. It also announced a $1.3-billion order for 45 EMB-190 jets, which can seat up to 106 passengers, from Embraer. It also said it had options to buy another 45 aircraft from each manufacturer.The insolvent airline has pegged the new, smaller jets as a key element in its restructuring, and has been retiring some larger aircraft. It sees the smaller planes as a way to lower costs by cutting seats without having to cut flights.However, according to a March 5 memorandum to mainline pilots from their union, the Air Canada Pilots Association (ACPA), the airline now plans to order just 15 of the Bombardier CRJ-705s, which will be placed with its regional unit, Air Canada Jazz.The order for 15 other CRJ-705s, which were to be placed with the mainline service, "will be changed to Embraer 170s or 175s," the ACPA memo says.The Globe and Mail obtained a copy of the memo, which outlines a confidential tentative agreement reached last Thursday evening by Air Canada, Jazz, ACPA and the Airline Pilots Association, which represents Jazz pilots, in a dispute over how the new aircraft will be allocated between the mainline and regional services. The negotiations were mediated by Toronto lawyer Martin Teplitsky.Bombardier and its Brazilian rival are locked in a fierce battle for market share, and the December order was the first Embraer has won from Air Canada. Bombardier chief executive officer Paul Tellier has been campaigning for more government financial support.Air Canada spokeswoman Laura Cooke would not comment on the apparent change in the Bombardier order, citing the confidentiality of the tentative agreement. Bombardier spokesman Jean Paul Macdonald said that there has been "no change" to the memorandum of understanding signed with Air Canada. "That's where we stand at this point in time."Settling the allocation dispute is one of the key conditions that Air Canada's would-be major shareholder, Trinity Time Investments Ltd., has set for consummating its planned $650-million (Canadian) investment in the airline. Pilots are to vote on the tentative pact, and the results are expected by March 19.Among the other key elements of the tentative agreement outlined in the ACPA memo are that the 15 CRJ-705s to be allocated to Jazz will be restricted to a maximum of 74 seats apiece, and that the regional airline will be allowed to maintain a fleet of 50 of the smaller CRJ-100s and -200s. The fleet will be made up of 10 planes Jazz already has, 25 that are currently in service with the mainline and the 15 CRJ-200s ordered in December.The memo also says Air Canada is planning to purchase an additional 15 "undetermined" aircraft and that if they turn out to be Bombardier regional jets or EMB-170s or -175s, the four parties will try to decide how they are to be allocated. If they cannot agree, Mr. Teplitsky will decide "based on the company's business case and the impact on the pilot groups."As well, the parties have agreed to maintain an existing passenger capacity ratio under which 100 available seat miles (ASMs) are to be flown by the mainline service for every 12 flown by Jazz. ASMs are calculated by multiplying the total number of seats available for sale by the number of miles flown.

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But this fight is only starting look :source : GlobeAndMail.ComQuebec labour group takes aim at Air Canada Organization wants Ottawa to stop carrier from slashing Bombardier jet order By JOHN PARTRIDGE With files from reporter Steven Chase Friday, March 12, 2004 - Page B4 The Quebec Federation of Labour wants Ottawa to block Air Canada from slashing its order for new Bombardier Inc. regional jets. QFL president Henri Mass

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