Air Canada says it expects to take a $120-million charge in its first quarter, stemming from the March shutdown of aircraft repair firm Aveos Fleet Performance Inc.
The airline said Thursday that its charge includes “a non-cash loss on investments of $65-million resulting from the 2010 restructuring of Aveos” and “a liability and corresponding loss from discontinued operations of $55-million related to Air Canada’s commitment under an employee separation program.”
Still, Air Canada said its first-quarter EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) will range from $170-million to $180-million, surpassing analysts’ estimates.
The carrier added that it plans to obtain contract proposals from aircraft maintenance firms to help fill the void left by insolvent Aveos.
“Since the Aveos closure, the airline has sent several aircraft to both Canadian and international maintenance providers,” Air Canada said, adding that it’s working with about 40 Canadian suppliers. “The airline has been undertaking a request for proposal process with respect to longer-term maintenance work previously performed by Aveos.”
Last year, the Canada Industrial Relations Board recognized a separate bargaining unit for Aveos, formerly named Air Canada Technical Services. Private investors acquired a majority stake in Aveos in 2007, and a group of lenders took control of the company in 2010.
Montreal-based Air Canada will release its first-quarter financial results on May 4.