Air Canada operating income declined 80.4 percent year over year to $ 729 million in the first quarter. This is due to strict travel restrictions that include a required hotel stay for quarantine when returning from international travel. These policies urge the airline’s executives to loosen the government.
During the quarter, Air Canada continued to operate “a limited schedule of necessary travel and shipping of essential cargo” due to the restrictions, according to President and CEO Michael Rousseau. The capacity fell in the first quarter compared to the previous year by 82 percent. While the planned capacity for the second quarter is about twice as high as Air Canada’s last year, in the first few months of the pandemic it will only be around 16 percent of the airline’s capacity in the second quarter of 2019.
With Canada grappling with another wave of Covid-19 infections but a large section of the population could be vaccinated by the end of summer, Rousseau said the government must now “communicate and implement” its plan to reopen.
“Starting with the replacement of blanket restrictions with scientifically sound tests and, if necessary, limited quarantine measures, Canada can reopen and safely relax travel restrictions when introducing vaccination programs,” said Rousseau. “We have seen elsewhere, especially in the [United
States]that travel will recover greatly as Covid-19 wears off and restrictions are lifted and we anticipate this can be repeated in Canada. “
Much like the US airlines’ big predictions, Air Canada also expects corporate demand to recover after the summer, based on conversations with its large corporate customers. “We see some [small and
medium enterprise] Demand in the current environment, but we expect corporate demand to return in September after Labor Day, “said Air Canada EVP and Chief Commercial Officer Lucie Guillemette.
Air Canada’s daily cash usage was approximately Canadian $ 14 million for the quarter. In a research report, Cowen analyst Helane Becker stated that the airline was unlikely to return to profitability until 2023 “based on current trends”.
The airline signed an aid package with the Canadian government in the first quarter that provides access to Canadian liquidity of up to $ 5.9 billion and “provides the resources needed to rebuild and compete in the world when needed.” the pandemic are needed, “according to Rousseau.
The package came with a requirement that Air Canada will refund all tickets to passengers with travel plans changed by Covid-19. While Air Canada has refunded more than $ 1.2 billion Canadian dollars to passengers with refundable tickets since March 2020, the adoption of refunds with the new policy has been “much slower than expected” even when the airline contacted passengers and travel agents to communicate the new policy said EVP and CFO Amos Kazzaz.
Air Canada recorded a net loss of $ 1.3 billion in the first quarter compared to a net loss of $ 1.04 billion in the first quarter of 2020.
Air Canada Q4 earnings
