Air Canada Reports Third Quarter 2020 Results
Air Canada has reported that total revenues of $757 million in the third quarter of 2020 declined $4.773 billion or 86% from the third quarter of 2019.
The airline reported third quarter 2020 negative EBITDA or (earnings before interest, taxes, depreciation and amortization), excluding special items, of $554 million compared to third quarter 2019 EBITDA of $1.472 billion.
Air Canada reported an operating loss of $785 million in the third quarter of 2020 compared to operating income of $956 million in the third quarter of 2019.
Total revenue passengers carried declined 88 per cent in the quarter compared to last year’s third quarter. Unrestricted liquidity amounted to $8.189 billion at Sept. 30, 2020.
Calin Rovinescu, president and Chief Executive Officer of Air Canada, said: “Today’s results reflect COVID-19’s unprecedented impact on our industry globally and on Air Canada in what has historically been our most productive and profitable quarter. From the outset, we have made the health and safety of our customers and employees our chief concern.”
Rovinescu continued: “Our airline has been a leader in introducing progressive layers of protection, such as our comprehensive suite of biosafety measures, Air Canada CleanCare+, and we continue to explore new technologies and processes to further assure travellers and regulators. Amongst the various science-based measures we have been advocating, testing at airports is by far the most significant, as demonstrated by the McMaster HealthLabs’ study of international travellers arriving at Toronto-Pearson. It was reported to be the largest-ever study of its kind and preliminary results clearly confirm safe alternatives exist to a mandatory 14-day quarantine, which is both stifling demand and frustrating travellers who are willing to be tested.”
Rovinescu said that: “In parallel, we acted decisively to implement our COVID-19 Mitigation and Recovery Plan. Since March, we have raised almost $6 billion in additional liquidity, leveraging what was one of the industry’s strongest balance sheets as we entered the pandemic. We took the painful steps of eliminating 20,000 jobs, after having created 10,000 over the previous five years, and of reversing 10 years of profitable network expansion by reducing capacity by more than 80% in the third quarter.”
Air Canada Responds To Garneau Statement
Air Canada’s president and CEO continued: “At the end of June, we made the difficult decision to indefinitely suspend 30 domestic routes and close eight regional stations and our Network Planning team has identified up to a further 95 domestic, U.S. transborder and international route suspensions and nine Canadian station closures required to preserve liquidity, cut costs and reduce capital expenditures as we prepare for a smaller footprint expected to last several years.”
However, Rovinescu continued: “Given the public statements made by the Honourable Marc Garneau, Canada’s Minister of Transport, on Nov. 8, 2020 regarding commencing immediate discussions with major airlines on aviation industry sector-specific support, we are deferring the additional route suspensions and station closures pending the progress of those discussions.”
He said that: “According to IATA’s Chief Economist, governments have already provided more than US$160 billion of aid to airlines globally, recognizing the critical role they play in a country’s economy. Beyond sustaining tens of thousands of direct and indirect jobs, a healthy Canadian airline industry is essential for Canada’s infrastructure on which its economic recovery from COVID-19 depends and vital to securing the country’s place in a reordered, post-pandemic world. The impact on the industry and on the economy of how we as a country handle this crisis in air transportation will be felt for years to come.”
Said Rovinescu: “We have also continued our discussions with the Government of Canada on a more measured, science-based approach to travel restrictions and quarantines, which remain amongst the most onerous in the world. Preliminary results from several international studies and our McMaster HealthLabs study indicate testing can provide an effective responsible alternative to facilitate the safe relaxation of quarantines.”
Air Canada’s boss explained that: “We have taken several measures to carefully rationalize our existing fleet: We are accelerating the retirement of 79 mainline and Rouge aircraft. We are deferring delivery of new Boeing 737-8 and Airbus A220 aircraft scheduled for delivery in 2021 and 2022 and cancelling 10 Boeing 737-8s and 12 Airbus A220s, representing about 40% of the remaining scheduled deliveries. Despite modifications made to our orders, these two aircraft remain the core of our narrow-body fleet and enable us to efficiently serve transcontinental domestic and transborder routes through improved economics and range, while providing an excellent customer experience. Through this fleet restructuring and other capital reduction initiatives, we have successfully lowered total projected capital expenditures by about $3.0 billion over the 2020 to 2023 period compared to our total projected capital expenditures at the end of 2019.”
Steps Taken To Mitigate
Rovinescu also explained that: “In addition to the mitigation steps we have taken, Air Canada is also preparing for the post-COVID recovery. Along with other ongoing initiatives, this month we launched the new Aeroplan, expected to be one of the best travel loyalty programs available. Our simplified and restructured aircraft fleet will be highly fuel efficient and well-configured for our key routes. And he also pointed out that: “Our proposed acquisition of Transat A.T. Inc. will enable us to better compete with global competitors in a drastically altered global airline market. Our nimble Cargo team has pivoted to dedicated all-cargo flights during the pandemic and Cargo will become an increasingly important segment of our business going forward.”
Rovinescu concluded: “Most importantly, our culture remains strong – we have employees who remain highly motivated and intensely focused on safely transporting our customers and I thank them for their commitment and hard work.”