OTTAWA — The Royal Canadian Navy will need to wait an extra two years for the delivery of new support ships, the federal government said Thursday, meaning Canada will need to rely on a civilian ship and the goodwill of allies to resupply its naval fleet for the foreseeable future.
The first of two new support ships being built by Seaspan Shipyards in Vancouver will not be delivered until at least 2025 — two years later than the most recent estimate.
The new delivery schedule, if it sticks, is now six years later than originally anticipated.
By that time, the navy will have been without a permanent supply ship for a full decade.
The second vessel will face a similar delay, and now is not expected until 2027.
Navy officials have previously stressed the importance of having purpose-built support ships for overseas operations given the limitations of relying on allies and the civilian vessel’s inability to operate in war zones.
Even then, the new schedule is no certainty. Delays and cost overruns have plagued much of Canada’s decade-long, multibillion-dollar effort to replace its aging navy and coast guard fleets.
In providing the update on Thursday, officials also could not guarantee Canada will end up with both support ships.
They say the project’s budget, originally set at $2.3 billion but later updated to $4.1 billion, is now under review.
Seaspan has already started work on the second joint support ship, as the vessels are known in military circles, and Defence Department procurement chief Troy Crosby said the government’s stated goal remains the purchase of two such ships.
However, Crosby added, “it’s something that we’re assessing now and will provide an update once we have a better understanding of exactly the cost impact.”
It also wasn’t immediately clear what effect the new delay will have on the other shipbuilding projects that Seaspan is working on, which includes a new polar icebreaker to replace the coast guard’s flagship by 2030.
Canada has been without a permanent supply ship since 2015, when the navy was forced to retire its existing two vessels earlier than expected after one caught on fire while at sea and excessive corrosion was discovered on the other.
The government initially relied on allies to fill the gap before agreeing to lease a converted civilian container ship from Quebec-based Chantier Davie. That deal was at the heart of the failed prosecution of retired vice-admiral Mark Norman.
The military’s former second-in-command was accused of leaking cabinet secrets about the leasing agreement with Davie, but the breach-of-trust charge against him was stayed in 2019 when Crown prosecutors concluded that they had no reasonable chance of securing a conviction. Earlier this month, the Crown also dropped its related case against a federal public servant. Both men had maintained their innocence.
While the initial five-year lease agreement between Ottawa and Davie for the MV Asterix was launched in January 2018 and due to expire next year, officials said the government is now negotiating an extension.
Documents obtained by The Canadian Press in 2020 showed the navy expects to continue relying on the Asterix and allies to help resupply Canada’s fleets at sea even after the two joint support ships are built.
Canada originally planned to buy three new navy support ships when it launched the project more than a decade ago, but cost overruns saw the order cut down to two.
Navy officials continued to indicate that two support ships were not enough to meet the maritime force’s long-term needs, as the government’s policy requires the military be able to operate two fleets at sea at the same time.
The fear is that the navy will be hamstrung whenever one of the two so-called joint support ships is out of commission, either for repairs or for some other reason.
Asked whether the government was looking to purchase the Asterix outright from Davie, as some observers have previously suggested, the senior official responsible for military procurement at Public Service and Procurement Canada said no.
“Discussions and negotiations at the moment are just truly and only about extending the contract as we know it now,” said Simon Page, the department’s assistant deputy minister.
Royal Canadian Navy commander Vice-Admiral Angus Topshee said the force will continue to rely on the Asterix and allies for assistance resupplying at sea, but he acknowledged both stopgaps have drawbacks and limitations.
Those include the fact the Asterix is not designed for “high-threat environments,” Topshee said. It also means the navy cannot currently meet the government’s requirement that it be able to operate two fleets at sea at the same time.
“Can we manage? Yes,” Topshee said.
“Is it ideal? No, that’s why we’re building the two joint support ships.”
The new delay is the latest blow to the federal government’s effort to replace the aging fleets of both the navy and Canadian Coast Guard — an effort that has already dragged on for more than a decade and is now projected to cost around $100 billion.
While officials blamed a combination of factors, including the COVID-19 pandemic and supply-chain problems, many of the issues predate both and have been pinned on both the government and shipyards.
This report by The Canadian Press was first published June 30, 2022.
Demands for government intervention in Air Canada labour talks could negatively affect airline competition in Canada, the CEO of travel company Transat AT Inc. said.
“The extension of such an extraordinary intervention to Air Canada would be an undeniable competitive advantage to the detriment of other Canadian airlines,” Annick Guérard told analysts on an earnings conference call on Thursday.
“The time and urgency is now. It is time to restore healthy competition in Canada,” she added.
Air Canada has asked the federal government to be ready to intervene and request arbitration as early as this weekend to avoid disruptions.
Comments on the potential Air Canada pilot strike or lock out came as Transat reported third-quarter financial results.
Guérard recalled Transat’s labour negotiations with its flight attendants earlier this year, which the company said it handled without asking for government intervention.
The airline’s 2,100 flight attendants voted 99 per cent in favour of a strike mandate and twice rejected tentative deals before approving a new collective agreement in late February.
As the collective agreement for Air Transat pilots ends in June next year, Guérard anticipates similar pressure to increase overall wages as seen in Air Canada’s negotiations, but reckons it will come out “as a win, win, win deal.”
“The pilots are preparing on their side, we are preparing on our side and we’re confident that we’re going to come up with a reasonable deal,” she told analysts when asked about the upcoming negotiations.
The parent company of Air Transat reported it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31. The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
It attributed reduced revenues to lower airline unit revenues, competition, industry-wide overcapacity and economic uncertainty.
Air Transat is also among the airlines facing challenges related to the recall of Pratt & Whitney turbofan jet engines for inspection and repair.
The recall has so far grounded six aircraft, Guérard said on the call.
“We have agreed to financial compensation for grounded aircraft during the 2023-2024 period,” she said. “Alongside this financial compensation, Pratt & Whitney will provide us with two additional spare engines, which we intend to monetize through a sell and lease back transaction.”
Looking ahead, the CEO said she expects consumer demand to remain somewhat uncertain amid high interest rates.
“We are currently seeing ongoing pricing pressure extending into the winter season,” she added. Air Transat is not planning on adding additional aircraft next year but anticipates stability.
“(2025) for us will be much more stable than 2024 in terms of fleet movements and operation, and this will definitely have a positive effect on cost and customer satisfaction as well,” the CEO told analysts.
“We are more and more moving away from all the disruption that we had to go through early in 2024,” she added.
This report by The Canadian Press was first published Sept. 12, 2024.
