Capacity Purchase Agreements

“Things are changing. We have found that they will become more open to longer-term contracts with SAS and LOT. It gives us and our owners a little more rest. At the end of the day, we want a situation like North America with longer-term contracts of a decade or more. This would then allow us to think about purchasing decisions; we could go straight to the OEM and cut out the owners completely. “What we are seeing is that Europe is becoming a model based on the American model, with longer-term capacity purchase contracts. For us, we want this model to work in Europe. One company that offers these capacity purchase services in Europe is Regional Jet, headquartered in Estonia. Patrick Fennell, Chief Operations Officer of Regional Jet, spoke at the recent AviaDev Europe conference on the growing interest in purchasing capacity agreements (CPAs). He said that capacity purchase contracts are a big deal in the United States. They enable regional routes to operate for major airlines, eliminate the risk of operating regional routes and allow greater flexibility. However, the idea of purchasing capacity has not changed in Europe, at least not in the order of the United States.

Here`s what`s good with CPAs and why European airlines should look to use this type of service. The ability to acquire capacity is a much more economical way to expand an airline than to buy or pay for its own aircraft. It can allow for rapid expansion instead of waiting for new aircraft from the manufacturer and can allow airlines to use fast and with the right planes new markets for the connection. “I think it`s time. The capacity provider model [in Europe] differs slightly. It is not so much that you will see the name of the regional airline at the front; I think it`s really about the brand. We see a mix in some major airlines that are not really attentive to this occasion and others that are really suited to this, the big time. . “We are very pleased to have secured this win-win agreement with Jazz and Chorus, which will give us long-term stability, greater security of competitive costs and the flexibility needed to modernize the regional fleet for the benefit of our customers. The amendments will allow us to offer regional services at a lower cost so that we can compete more efficiently, use the most suitable aircraft for a given regional market, and also generate additional traffic to power our international network,” said Calin Rovinescu, President and Chief Executive Officer of Air Canada. “As further evidence of Air Canada`s commitment to a successful long-term partnership, once the CPA amendments come into effect, we will make a $97.26 million interest in Chorus. We are not only coordinating our mutual interests, but also of exceptional value to Air Canada shareholders. “Right now, one of our biggest risks is balancing our aircraft leases with the contracts we have.

Short-term contracts can leave you with many planes that you no longer need. However.B, airlines like SAS and LOT, which are two of our biggest partners, are slowly changing. I think they have understood that the CPA model in Europe has many advantages for them, because we can generally make things much cheaper than they can. This does not mean that we are realigning their brands, but we have an element that allows us to offer the cost control that we have. Air Canada does not intend to comment further pending the ratification process of the interim agreement between Jazz and ALPA; a press release on the market update is issued if all closing conditions are met prior to the closing of previous transactions. Calgary-based WestJet Airlines announced another good year in 2012. Revenue increased to $CDN $3.42 billion, resulting in net income of $CDN $242 million (net margin of 7.1%), and 2013 will be a major year for the