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Air Canada comments on Aveos restructuring

Air Canada has provided the following comments on the fifth report of the Chief Restructuring Officer (CRO) of Aveos, providing an update following an agreement reached May 30 between Aveos and Air Canada in which the airline agreed to arrangements with Aveos to assist the maintenance, repair and overhaul (MRO) firm to find potential purchasers for certain of its divisions. In a July 25 report, the CRO of Aveos advised that Aveos has received offers for the sale of all or certain assets of its components maintenance division and discussions are ongoing. Air Canada continues to work diligently through an RFP process to secure an experienced, cost competitive MRO supplier for its components requirements and is updating the CRO on the status of bids on an ongoing basis. The CRO of Aveos also reported on July 25 that despite the concerted efforts undertaken by Aveos, there were no offers received from parties willing to buy or restart its engine maintenance business as a going concern and resume operations at its facility. As stipulated in the May 30 agreement between Aveos and Air Canada, both parties entered into an exclusive contract until 2018 for engine maintenance at current market rates of certain engine types used by Air Canada. The new contract would become effective upon assignment by Aveos to a purchaser that is among five parties identified by Air Canada to be equally acceptable in terms of operational requirements. Air Canada remains confident in the suitability of all five downselected engine MROs to meet its engine maintenance requirements and the selection and awarding of the engine maintenance contract is entirely at the discretion of the CRO of Aveos. As reported by the CRO of Aveos in his report of June 26, discussions with various North American and global airframe MROs “revealed that there was no party who was prepared to entertain a restart option.”Consequently, Air Canada proceeded with a request for proposal (RFP) process to select airframe MRO providers that meet the airline’s safety, reliability and performance standards in compliance with Transport Canada requirements. On that basis, Air Canada is concluding terms with the following MRO providers to perform scheduled airframe maintenance on its fleet of 205 aircraft: Premier Aviation Overhaul Center Inc. located in Trois-Rivieres, QC, and Embraer Aircraft Maintenance Services, Inc. (EAMS) located in Nashville, TN for its Embraer fleet; AAR Corp. based in Wood Dale, IL, for its Airbus narrowbody fleet (Airbus A319, A320 and A321 aircraft); Israel Aerospace Industries’ Bedek Aviation Group for its Boeing 767-300ER fleet; Singapore-based ST Aviation Services Co. Pte. Ltd. (SASCO) for its fleets of Boeing 777 and Airbus A330-300 aircraft. The closure of Aveos’s MRO facilities in Canada has no impact on Air Canada’s day-to-day aircraft maintenance and repair activities. The airline’s day-to-day maintenance work is performed directly by Air Canada at its own facilities across Canada — including Montreal, Winnipeg, Vancouver and Toronto — by Air Canada’s 2,300 maintenance employees.

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