Air Canada Tosses its Max Plan

The next-generation 737 was supposed to serve as the backbone of the mainline narrowbody fleet. Now all of them are headed to the company's low-cost arm.

Dear readers,

Seven years ago, Air Canada’s then-president Ben Smith promised investors a new plan for the airline’s narrowbody fleet focusing on just two aircraft types: the Boeing 737 Max, and what was then called the Bombardier CS300. Smith wanted older narrowbodies out of mainline, promising that the new aircraft (with snazzy interiors and in-seat screens) would have considerably lower CASM and make the airline competitive on trunk routes from Toronto, Montreal, and Vancouver.

But Air Canada reversed half of that decision last week at its 2024 investor day, pledging to send all mainline Maxes to Rouge, which soon will have an all-737 fleet. The new commercial team is betting that Rouge can do more with the aircraft’s range and efficiency than the core airline. Meanwhile, Air Canada will take some of Rouge’s A320s (as a stop-gap measure) and A321s (for the long term), while heavily investing in the the Airbus A220-300.

This was probably the most newsworthy development from Air Canada's investor day, though executives also outlined the next four years of commercial strategy. They say the airline can grow revenue from about $22 billion Canadian this year ($16.25 billion U.S) to $30 billion by 2030 while raising its adjusted EBITDA margin by roughly 300 basis points (to 18-20 percent), pushing it above its pre-pandemic highs.

Beyond fleet, how will Air Canada do that? Let’s look at some priorities executives outlined at investor day, including some notes on how Air Canada intends to boost revenue from sixth-freedom traffic, premium products, and loyalty.