In a surprising turn of events, Air Canada has canceled its order for two Boeing 777 freighters. This decision comes amid a decline in global air cargo demand and a decrease in cargo revenue for Air Canada.
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A Strategic Shift
Air Canada had initially placed an order for two Boeing 777 freighters in August 2022. However, the airline has now decided to swap these freighters for two more Boeing 787-10 passenger aircraft. This move is seen as a strategic shift to optimize revenue from passengers while also providing excellent air freight capacity. Air Canada CEO Michael Rousseau believes that the 787-10s will provide better yield and a better bottom line than the 777 freighters. He stated, "We haven’t changed our strategy. We are still committed and excited about growing the freighter business, and we’ve always run and will continue to run a very strong belly business. We did cancel two 777 freighters because it was a little bit too early for us to take those into our network, but we are looking to expand our 767 freighter business and build that business over time.”
The Impact of Global Air Cargo Demand
The decision to cancel the order is supported by International Air Transport Association (IATA) statistics, which show a decline in cargo revenue for Air Canada and a reversing decline in global air cargo demand. Air Canada reported cargo revenue of $491.7 million, which is 30% lower in 2023 for the nine months through September than in 2022. As passenger aircraft come back online with the ability to haul air cargo in their belly, coupled with a decline in global air cargo demand, the time was not right for Air Canada to take on two new Boeing 777 Freighters as planned.
Looking Ahead
Despite the cancellation of the Boeing 777 freighter order, Air Canada remains committed to its air cargo business. The airline currently operates six medium-widebody freighters and plans to expand its fleet of 767 freighters over time. The cancellation of the order demonstrates how difficult conditions in the logistics sector are impacting operators and forcing changes in investment plans. It also reflects the strong recovery in international air travel that is expected to continue.
