Air Canada 2007 Annual Report Download - page 13

Download and view the complete annual report

Please find page 13 of the 2007 Air Canada annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 144

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

Management’s Discussion and Analysis of Results and Financial Condition
13
In order to support the expansion of our international operations and deliver a superior aircraft product in the
international market to and from Canada, we are progressively introducing Boeing 777 aircraft into our fl eet. In 2007,
we introduced eight Boeing 777 aircraft into our fl eet. In 2008, we plan to take delivery of an additional nine Boeing
777 aircraft, one of which was delivered in January 2008. The new Boeing 777 aircraft is allowing us to modernize
and re-size our fl eet and reduce operating costs through fuel and maintenance savings in addition to gaining greater
manpower effi ciency and economies of scale. This new aircraft is also providing us with the ability to serve new
markets that could not be previously served in an effi cient manner.
To remain competitive, in addition to acquiring new aircraft, we offer our customers a world class product. The new
Embraer and Boeing 777 aircraft are being delivered with the new seats and entertainment systems. We continue to
refurbish aircraft that fl y international routes so that all seats in the Executive First cabin will convert into lie-fl at beds.
Our Boeing 767-300 aircraft are scheduled to have refurbished interiors by June 2008. Our other aircraft are planned
to have refurbished interiors by the end of 2008, with the exception of the Airbus A330 aircraft which are expected
to be completed by early 2009. Refurbished aircraft will have new seats and personal in-fl ight entertainment systems
and in-seat power outlets at every seat in Economy Class, Executive Class and Executive First. In the domestic
market, Air Canada will have a world class product to build on the signifi cant travel awards already received. In the
fi rst quarter of 2008, we also expect to have completed our fl eet transition to the planned 60 Embraer aircraft which
have been deployed to open new markets and to add frequencies in previously single daily markets. We are planning
to add seven new routes in North America in the summer of 2008.
We believe that Canada’s multi-ethnic demography provides us with growing demand for international travel.
Coupled with the large number of available route authorities, we believe Air Canada is well poised for growth in the
Canada-international market.
In 2007, in comparison with 2006, we added 3% more fl ights on international routes, mainly composed of new
non-stop and expanded services on the Atlantic market from western Canada, Maritimes to London and seasonal
Montreal – Rome, and by a 10% increase in fl ights to sun markets such as the Dominican Republic and Mexico. Our
strategy for the Pacifi c market is to operate our new and larger Boeing 777 aircraft on the key routes from Toronto to
such destinations as Japan, Hong Kong and China. By the end of 2008, we are scheduled to have received 17 of our
planned 18 Boeing 777 aircraft, with which we expect to continue to expand our international presence. Air Canada’s
plans for the China and broader Asia market are to deploy Boeing 777 aircraft on all Toronto services and gradually
increase frequencies. Current plans include an increase to fi ve fl ights per week in the winter 2008-2009 season on
Toronto-Beijing and four fl ights per week on Toronto-Shanghai. Current route authorities between Canada and China
would allow Air Canada to add additional non-stop routes and, with the planned delivery of Boeing 787 aircraft in
2010, the Corporation will look at opportunities to add new markets in the broader Asia-Pacifi c region. With our
partner Lufthansa, we are planning to increase by 19% our capacity to the important German market in the summer
peak. We are adding new destinations such as Ottawa-Frankfurt and Toronto-Madrid to enhance our year-round
presence in business markets in Europe.
We use three main hubs (Toronto, Montreal and Vancouver) across Canada for our domestic, transborder and
international routes to serve customers traveling to or from the U.S to Asia and Europe. In addition, our Toronto
operation has been consolidated into one terminal which has provided us with the ability to more seamlessly
transfer passengers to and from the US to Europe and Asia, thus increasing customer satisfaction while generating
cost savings.