Air Canada said Friday it will buy a fleet of planes from Canada's Bombardier and Brazil's Embraer as the struggling airline focuses on the North American market.

Canada's number one airline and the world's number eleven, which filed for protection from its creditors earlier this year and is in the midst of a court-overseen restructuring, said in a release that it has signed a memorandum of understanding to buy 45 regional jets, with an option to buy up to 45 more from Bombardier, the world's top maker of regional jets.

The list price of the 45 aircraft on firm order would be about USD$1.3 billion, while the total value of the order if Air Canada's options are exercised would be USD$2.7 billion.

A definitive agreement will be signed in early 2004, Bombardier said in a release.

Air Canada said it would start taking delivery of the aircraft in the third quarter of next year if it can finalize its business plan, Bombardier said.

The agreement calls for firm orders of 15 Bombardier CRJ200 50-seat aircraft, and 30 Bombardier CRJ700 Series 705 aircraft with a dual-class cabin configuration of nine business class and 65 economy seats.

The deal also includes the right to execute re-confirmable orders for 15 Bombardier CRJ200 and 30 Bombardier CRJ700 Series 705 aircraft.

Air Canada also plans to buy 45 regional jets from Bombardier rival aircraft maker Embraer for USD$1.35 billion.

Empresa Brasileira de Aeronautica, as Embraer is formally known, said the deal included an option to sell another 45 jets to the Canadian carrier. If the option is exercised, the value of the deal would rise to USD$2.7 billion, Embraer said.

(Reuters)