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General Electric Japan to underwrite $170mn Air Canada loans

Air Canada said today it has come to an agreement with General Electric Japan, who will underwrite a loan for Air Canada valued up to USD $170.5-million for the aviation giant to finance plane purchases.

As part of the deal, $128-.5-million will be used by Air Canada to buy eight Airbus A319 planes, and four Boeing B767-300ER planes. $42-million will also be available for Air Canada as an option to purchase four additional Airbus A319 airplanes in 2012.

Each segment of the total principal will have its own respective term for Air Canada to repay the notes and to exercise the options.

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Regional Canadian airline company Porter says it wants an IPO

Porter Airlines says it is readying IPO to fund future growth

Update Apr 17 11:20am: Confirmed, RBC Capital Markets is an underwriter

The Canadian airline company, Porter Inc., confirmed today the company plans to go public with an initial public offering (IPO) to raise capital.

The company declined to answer when it could happen, nor any other information including who the underwriters would be and what type of underwriting would be used such as a firm commitment underwriting.

The regional aviation company currently flies planes from Toronto’s downtown island airport to destinations in both Canada and the United States.

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Boeing further delays Dreamliner delivery to end of 2010

Boeing 787 Dreamliner

Boeing 787 Dreamliner

Chicago-based Boeing Corp has just announced a revised schedule that will further delay the 787 Dreamliner delivery date to near the end of 2010.

Boeing is using the additional time to fine-tune the design of the aircraft, more specifically a structural design flaw with the sides of the fuselage. Boeing will also use the extra time for additional test flights to ensure the safety of the aircraft.

As of right now, Boeing currently has 850 orders from 56 customers worldwide who have contracts in place to buy the Dreamliner.

One of the first customers that are scheduled to receive the new Dreamliner, All Nippon Airways of

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Bombardier announces 3,000 aerospace job cuts, but still hiring

Montreal-based airplane and rail maker Bombardier has announced it will cut 3,000 (10% of its total worldwide headcount). jobs from its aerospace division. The jobs cuts will affect workers in Toronto, Montreal, Mexico, Ireland, and the U.S.

Bombardier sales of airplanes have fallen significantly given lower demand as a result of the global financial crisis. Bombardier reported it delivered 349 planes last fiscal year, down from 361 delivered planes the year before.

Bombardier CEO Pierre Beaudoin said today, “We believe we are well positioned to face this difficult economic environment with a strong balance sheet, high level of liquidity,”

Despite the new job cuts, Bombardier is still actively hiring for other aircraft divisions such as the CSeries division.

More recently, Bombardier’s biggest competitor Boeing announced 10,000 job cuts. Competitor Cessna Aircraft also recently announced 2,000 more job cuts.

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British Airways Profit Drops 92%

British Airlines is reporting a 92% drop in profit in the first half of its fiscal year despite an increase in revenue of 6.4% to almost £4.8bn. BA’s after-tax profit from April 1 to September 30 fell to £52 million, from £616 million. The drop in profit can again be attributed to the global economic financial crisis and record high fuel prices. The factors have also resulted in the insolvency of some major airlines. British Airways forecasts its fuel costs to top a staggering £3 billion this year despite the falling price of a barrel. However, the price of oil should become favorable as its expected to further decline. BA also plans to scale back flights to busy areas, so there could be a marginal increase in prices to accommodate the demand given the lower supply, but that may not happen because consumers may use substitutes. Another issue that could see lower profits for BA are bad  investments. BA hedged 80% of its fuel risk by buying futures for kerosene that mature in about 6 months at a strike price of about $95 per barrel, the problem is that the price of a barrel is now lower than $95, so the contract is useless. 80% is also a very material investment. The thing is no one could have forecast such steep declines in the price of oil in such a short amount of time, though I do think the future is looking good for BA once the financial crisis passes and because of lower projectd costs for oil, though of course, the airline industry remains a volitile one and traditionally has marginal profits.

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