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Air Canada (ACDVF) to Modernize Fleet Through Boeing Order

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Air Canada (ACDVF - Free Report) placed an order to Boeing (BA - Free Report) for 18 787-10 Dreamliner aircraft, in a bid to modernize and upgrade its fleet. Management’s decision also reflects the company’s environment-friendly stance as the usage of these jets would lower carbon emission. ACDVF expects delivery of new planes to start from the fourth quarter of 2025 and run through first-quarter 2027.

The jets, on being delivered, would replace older, less efficient wide-body aircraft, that are currently a part of Air Canada fleet. This would enhance air-travel experience of passengers.

The 787-10 is the largest model present in Dreamliner family and can carry more than 330 passengers depending on seat configuration.  These new jets boast a range of 6,330 nautical miles (11,730 km). According to Boeing, usage of 787-10 Dreamlinerwill reduce fuel emissions per seat by up to 25 % than the aircraft it replaces.

Air Canada currently operates roughly 240 jets in its mainline and Air Canada Rouge fleet. Apart from the firm order for 18 new jets, this agreement provides ACDVF with the option to order 12 more Boeing 787-10 aircraft.

The current order for 18 Boeing 787-10 passenger aircraft implies that ACDVF will no longer take delivery of two factory-built 777-300 freighters. Air Canada said it decided to convert the previously announced order for freighters to 787s instead. This change in order may have happened due to strong recovery in international air-travel demand, which has necessitated the presence of Boeing 787-10 Dreamliners in its fleet.

Zacks Rank & Other Key Picks

Air Canada currently carries a Zacks Rank #2 (Buy).

Investors interested in the Zacks Transportation sector may also consider Covenant Logistics (CVLG - Free Report) and The Greenbrier Companies (GBX - Free Report) . CVLG and GBX currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

CVLG offers a portfolio of transportation and logistics services including asset-based expedited, dedicated and irregular route truckload capacity, asset-light warehousing, transportation management and freight brokerage capability.

CVLG’s cost-control efforts are commendable. The Zacks Consensus Estimate for 2023 earnings has revised 7.44% upward in the past 60 days.

GBX is a leading supplier of transportation equipment and services to the railroad and related industries. GBX’s manufacturing segment produces double-stack intermodal railcars, conventional railcars and marine vessels. It also performs repair and refurbishment activities for both intermodal and conventional railcars.

Additionally, GBX is engaged in complementary leasing and services activities. We are impressed by the company’s efforts to pay dividends even in the current uncertain scenario.

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