March 1- Air Canada announced an agreement to amend the Capacity Purchase Agreement (CPA) with Jazz Aviation LP, a wholly-owned subsidiary of Chorus Aviation Inc., under which Jazz currently operates certain regional Air Canada Express flights.

 

Through the revised agreement, Air Canada will transfer operation of its Embraer E175 fleet to Jazz from Sky Regional and Jazz will become the sole operator of Air Canada Express services. The revisions to the CPA are subject to Jazz reaching an agreement with the Air Line Pilots Association, International. If this condition is satisfied, the CPA will be amended on a retroactive basis to January 1, 2021.

 

As a result of the CPA revisions and consolidation of regional flying, Air Canada expects to realize $400 million in cost reductions over the 15-year term of the agreement ($43 million per year until 2026 and $18 million per year thereafter).

 

This includes:

• Increasing near term-cost certainty as a result of the combined fleet under a single operator • Reducing Air Canada's overall regional flying compensation • Creating related operational costs savings

 

In addition, the revised CPA will lower future contractual capital expenditure and leasing costs through a restructured CPA fleet, avoiding an estimated $193 million in future capital expenditures.

 

 

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