Air Canada Picks Airbus for $1-Billion Order

Air Canada spurned American manufacturers Boeing Co. and McDonnell Douglas Corp. on Tuesday and placed a billion-dollar order with the European consortium Airbus Industrie for A-319 twin-jet aircraft to replace its DC-9 fleet.

Air Canada said it signed a letter of intent to lease 25 new A-319s, with options on an additional 10 aircraft. No value was given for the order, but industry analysts said it is worth about $1 billion when options are included.

Analysts said competition for the Air Canada order was fierce among major manufacturers, including Boeing, McDonnell Douglas and Fokker of the Netherlands.

The airline said last year it would modernize its aging McDonnell Douglas DC-9 fleet to extend its operating life. But Tuesday’s order with Airbus appears to have ended that deal. Air Canada said the decision means it will “review its plans” related to the DC-9s.

“The selection of the A-319 was based on obtaining attractive acquisition terms for an aircraft offering excellent operating economics and increased revenue generating capability,” Air Canada Chief Executive Hollis Harris said.