Air Canada flips Boeing 787 Dreamliners for big gains

Strong demand for Boeing's 787 passenger jet has created a profitable sideline for Air Canada, which is selling some of its Dreamliners and leasing them back.

Canada's national airline sold two of the advanced, fuel-efficient planes to new owners for $259 million last year and leased them back, recording a $14 million gain on the sales, The Toronto Globe and Mail reports.

Air Canada Chief Financial Officer Michael Rousseau expects to flip more 787s this year and will probably sell about 10 of the 37 Dreamliners it is scheduled to receive in all from Boeing when deliveries end in 2019.

“We’re selling the plane for market value,” he told the newspaper. “When we committed to buy these planes from Boeing many years ago, we had negotiated a fairly good price and today’s market is slightly higher than what we had negotiated as a cost price from Boeing.”

Dreamliners can fly further and are more fuel-efficient than the Boeing 767s they often replace.

“They have incredible range, they open up the world for us and they have the right seat count given the demand,” Mr. Rousseau said of Boeing's wide-body jet.

Dreamliners have played a key role in Air Canada's turnaround, and passengers have enthusiastically embraced the aircraft, the airline said.

Air Canada says it sold and leased back four or five of the 24 wide-bodied 787s it's received so far, helping the airline's efforts to reduce debt on its balance sheet. If the market for 787s remains strong as its popularity increases among airlines, Air Canada could continue to book profits from the maneuver.

Chicago-based Boeing currently has 686 unfilled orders for Dreamliner jets listed on its orders and deliveries website. Boeing makes the Dreamliners in Everett and North Charleston, South Carolina.

Air Canada said in a securities filing late last year that it has taken delivery of 24 of the 37 Boeing Dreamliner s it has ordered. That includes eight Boeing 787-8 and 29 of the newer, longer 787-9 variant.

Air Canada plans to take delivery of the remaining 13 Boeing 787-9s on firm order by the end of 2019, the filing said.

Rousseau said Boeing will begin delivering some new 737 single-aisle planes to the airline later this year.

Air Canada has not decided how it will finance its purchase of the smaller jets, Mr. Rousseau said.

The airline's ultimate goal is to have a fleet that is half owned and half leased.

(Andrew McIntosh - Puget Sound Business Journal)