Air Canada plans to phase out two of the Boeing freighter aircraft it recently added to its fleet. The move comes less than three years after the airline launched a dedicated cargo operation despite expectations that by 2024 the air cargo sector would recover strongly.
An executive review of its second-quarter earnings report showed that Boeing’s 767-300 fleet had been reduced from ten to eight. A footnote in the report noted that the two jets were removed from service in April 2024.
During an analyst call, Air Canada’s Executive Vice President Mike Galardo briefly acknowledged the withdrawal of the two freighters in the early part of the second quarter. However, the airline did not provide further details on the status of the grounded aircraft or the reasons behind their removal from service, though they clarified it was a “temporary” move.
The two grounded cargo jets were the recently delivered models from Boeing that began operations in the first half of 2023. Flight tracking data indicates these aircraft completed their last flights to Kansas City International Airport in mid-April, and they were spotted on the ramp of an aircraft maintenance company there.
This decision to downsize its freighter fleet contrasts with the current upward trend in air cargo demand. Since a year ago, when volumes have been increasing by 12% YoY for eight consecutive months (since December 2023), the airfreight industry has maintained growth momentum after staying in an 18-month recession.
The transition shows the airline no longer has its prior aggressive strategy to expand its cargo operations where dedicated freighters are mixed with passenger aircraft shipments. In 2022, the CEO of the airline communicated his plans to operate 12 freighter planes and increase cargo revenue twofold by 2025.
Air Canada’s freighting department is nearly two and a half years old now and comprises eight Boeing 767-300F – six converted passenger jets and two factory models. As a result of this action, the company took one-time charges of $14.5 million in the first quarter of 2024 for cancellation of orders that were meant for converting two more Boeing 767-300s into freighters.
However, despite these challenges, Air Canada’s cargo division was one of the top performers among its peers in Q1’24. Cargo sales decreased to $156.2m down by 9% YoY while volume growth proved not enough to offset softer yields. The carrier is still committed to expanding its freighter business and intends to grow its fleet of B767 freighters over time.
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