News / Air Canada Cargo drops order for 777Fs as turbulence hits the market

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Executive changes at Air Canada look likely to be behind it backtracking on plans to add two 777 freighters to its fleet, in favour of adding 18 787 aircraft, with options for a further 12.

During his two-year tenure as VP of Air Canada Cargo, Jason Berry made significant changes at the airline, ordering the two 777Fs, to be delivered in 2024, as well as ten 767 freighters, while the cargo market was enjoying high revenues and demand.

But one airline insider told The Loadstar: “Nobody in the business saw any sense in them buying these freighters, except a management team above Berry, who never took cargo seriously.”

Mr Berry quit the airline in March, and was replaced by Jon Turner, who was VP inflight services. One local source said it was a surprise that Air Canada opted to “tap the well internally”, as opposed to favouring a hire with cargo experience, to see Mr Berry’s plans realised.

Now Air Canada has quietly dropped the 777F order.

“The current management, we can assume, knows better and reversed the deal – smartest move they ever made. The math could never add up to a profitable operation,” said one source.

In 2022, the air freight market was still riding the highs of the Covid-19 market spike. The previous year, Air Canada reported cargo revenue of just under C$1.5bn (US$1.1bn), a 38.5% increase on 2020.

Fast-forward to this month, and the air cargo market is facing extreme difficulty in a year that will see little or no peak season, with Air Canada’s Q2 cargo earnings declining 24% from Q1.

Just last month, however, during an earnings call with analysts, when asked if Air Canada was re-thinking plans for its 777F additions, CEO Michael Rousseau replied: “We expected some decline post-pandemic, and we had budgeted [for] that, frankly, and expected that. So, we’re going to continue to add capacity over the next little while for our business plan. And we’re comfortable that we can make efficient use of that capacity.

“Right now, we’re really focused on improving the performance of our freighters and, obviously, bringing the freighters into the operation.”

Mark Galado, EVP network planning, added: “Still, we made good progress, expanding our fleet to six freighters from the three we had at the end of 2022. We’re closely watching how this market evolves to capture strategic opportunities. Our overall cargo diversified revenue stream can also offset some of the seasonality in the passenger business.”

Plans have clearly changed. One aviation insider suggested Air Canada would focus on serving its passenger network, while avoiding the harder to navigate, and turbulent, cargo market.

The economic case for the 777F may also have changed since Russia’s invasion of Ukraine. The 777 is frequently used on transpacific routes, where Air Canada has said it is slowly restoring services – but is struggling with the lack of overflight rights in Russia. The carrier had 35 flights a week into China pre-pandemic, but Mr Rousseau said: “Will it come back to 35 a week? Certainly not without the Russia overflight situation being removed.”

Air Canada told The Loadstar it had “no comment to make in addition to what was in the press release or discussed on recent analysts calls”.