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The Canadian Press - ONLINE EDITION

Air Canada leasing planes for three summer routes because of 787 delay

MONTREAL - Late delivery of Boeing's new 787 Dreamliner will alter service for some Air Canada passengers flying to Spain and South America this summer.

The Montreal-based carrier has decided to temporarily lease two euroAtlantic airways planes to provide service from Toronto to Madrid as well as to Bogota, Colombia, and Lima, Peru, between July 1 and Aug. 6.

The pilots and crew will be supplied by the charter carrier, whose Boeing 767 aircraft don't have seat-front entertainment systems and in-seat power and have a seat pitch that is different from Air Canada aircraft.

Air Canada (TSX:AC.B) said it has been trying to contact customers who purchased tickets on these flights to inform them of the change in aircraft and service. Those unhappy about the aircraft change can cancel their reservations for a full refund.

Those booked in business class will be rebooked in premium economy and be eligible for a refund between the original price and the lowest available premium economy fare.

Air Canada has received delivery in the past month of just two of the 37 Dreamliners it had ordered, with another expected later this summer.

The 787 will begin flights to Tokyo's Haneda Airport starting July 15, about two weeks later than planned. Tel Aviv will be added later, but no date has been set.

The airline is expecting to cut $100 million in costs — a 15 per cent reduction in costs per available seat mile — over five years by adding new Boeing 777s, 787 Dreamliners and expanding its cut-rate Rouge service.

The Dreamliners are said to be 29 per cent less costly for fuel and maintenance than the current Boeing 767 fleet. Once all 787s enter the fleet by 2019, Air Canada's overall costs are expected to decrease five per cent, said an industry analyst.

Meanwhile, Rouge, whose narrowbody fleet has 18 per cent more seats, is expected to operate 21 per cent cheaper than the same airplanes on the main network, helped as well by lower wages and other overhead savings. The advantage gained with the widebody 767s is even larger with a 25 per cent increase in seating to 264 passengers that lowers costs per available seat mile by 29 per cent.

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