From the Globe & Mail http://www.theglobeandmail.com By TAVIA GRANT Monday, April 25, 2005 Updated at 12:06 PM EST Globe and Mail Update ACE Aviation Holdings Inc. said it plans to modernize Air Canada's fleet with the purchase of as many as 96 new Boeing Co. airplanes. Boeing said the firm part of the order for 32 planes has a list-price value of about $6-billion (U.S.). Air Canada didn't disclose terms of the purchase or details on payment. The agreement covers 36 Boeing 777s and 60 Boeing 787 Dreamliners, a move that will help the company improve efficiency and lower costs. It will also help Canada's largest airline expand in key destinations of Latin American and Asia. The recovery of Air Canada, which emerged from 18 months of bankruptcy protection in September, has been a long time coming. The company was hit hard after the Sept. 11, 2001 terrorist attacks forced it to take some planes out of service as demand for seats plunged. Last month, however, the company posted its first fourth-quarter profit since 1999 and said it planned to expand its overseas routes, while increasing market share at home after the demise of rival, Jetsgo Corp. "Our decision to modernize our fleet with the 777 and 787 Dreamliner will move Air Canada into a clear leadership position among North American international carriers with the world's two newest and most efficient twin-engine, long-haul airplanes," ACE chairman and president Robert Milton said in a release. Under terms of the agreement, the company placed firm orders for 18 Boeing 777s, with purchase rights for another 18 more. It also placed orders for 14 Boeing 787 Dreamliners, plus options and purchase rights for another 46 more airplanes. The list price for the transaction doesn't reflect the discount usually given to airline customers for placing large orders. Air Canada had said in February it would choose between either Boeing and rival Airbus SAS to replace its aging fleet. Boeing shares rose $1.40 or 2.4 per cent to $59.28 (U.S.) in New York. ACE Aviation class B shares fell 52 cents or 1.5 per cent to $35.25 (Canadian) in Toronto trading. The plan announced today will create "one of the world's youngest and most simplified airline fleets," Air Canada said. The companies expect to finalize the agreement by mid-year. Delivery of some of the planes could begin next year with three Boeing 777s. The first of the planes will operate between Vancouver and Tokyo. "Our analysis of these aircraft pointed to overwhelmingly attractive economics," Mr. Milton said. He estimates the fuel burn and maintenance cost savings on the 787 will be almost a third less than the ones they will replace.