Air Canada To Keep Some Work With Aveos

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Published: June 8, 2012

Air Canada and Aveos have reached an agreement that will help facilitate a sale of some assets of the bankrupt aircraft maintenance firm, and the airline promised to offer some service contracts to a buyer of the Aveos assets.

Aveos Fleet Performance, once the airline’s maintenance division, halted operations in March and laid off about 2,600 workers, most of whom were employed at maintenance facilities in Montreal, Winnipeg and Vancouver.

The monitor’s report said Air Canada has agreed to waive any rent on facilities leased by Aveos until September 30. It has also offered a buyer an exclusive contract for its engine maintenance business until 2018, in an effort to drum up bids.

“Air Canada has agreed to provide its support and consent to the assignment of the new engines contract, so long as the successful purchaser meets Air Canada’s requirements,” according to the court filing.

Air Canada, which was Aveos’ main customer, filed a motion in May seeking to terminate its contracts with Aveos. Aveos said that would curb interest in its asset sale process and the two sides agreed to negotiate a resolution.

Aveos is seeking to sell its engine, component and airframe segments independently.

The filing indicates that Aveos has been unable to find a buyer for its main airframe division, which carries out major work such as hull repairs, window replacements, and corrosion treatment as well as related inspections.

“The Air Canada agreement results in a higher probability that both the engines and components business will be sold to a party that can restart operations as it will have the support of Air Canada,” said the monitor’s report.

Air Canada has itself been struggling with union disputes and rising costs. It agreed to terms that will potentially result in certain components work being done at facilities owned by Aveos.

Laws drawn up ahead of Air Canada’s 1988 privatisation require the airline to maintain operations and aircraft-overhaul centres in Montreal, Winnipeg, Manitoba, and Mississauga, Ontario.

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