Air Canada Reports More Than $1 Billion Q1 Loss As It Faces "Darkest Period Ever"
Anna Kroupina, Open Jaw
Air Canada has recorded a net loss of $1.049 billion in the first quarter of 2020 compared to a net income of $345 million in the same quarter of 2019.
Calin Rovinescu, President and Chief Executive Officer of Air Canada, said the airline is "living through the darkest period ever in the history of commercial aviation" as governments around the world imposed travel restrictions due to the COVID-19 pandemic.
"Our first quarter results reflect the severity and abruptness of the impact that the COVID-19 pandemic has had on Air Canada, which started to be felt across the global airline industry in late January with the suspension by many carriers, including Air Canada, of services to China," said Rovinescu in a press release.
I also want to acknowledge the pandemic's effects upon all of our other stakeholders,
particularly those in the travel trade community.
Be assured that we are resolutely committed to bringing our airline successfully through this crisis."
"The impact was exacerbated during the month of March with mandated social distancing, unprecedented government-imposed travel restrictions in Canada and around the world and the shutting down of economies.
"As significant as the financial damage has been, our prime concern remains the health and safety of our customers and our employees, whom I thank for their unwavering dedication under impossible conditions.I also want to acknowledge the pandemic's effects upon all of our other stakeholders, particularly those in the travel trade community. Be assured that we are resolutely committed to bringing our airline successfully through this crisis."
According to Rovinescu, this past quarter was the first in 27 consecutive quarters that AC did not report year-over-year operating revenue growth.
"Our solid January and February results gave us every encouragement that this performance would continue until the sudden and catastrophic impact of COVID-19's onset in Europe and North America in early March," he said.
Air Canada said revenue fell by $712-million to $3.7-billion in the first three months of 2020, compared with a year earlier. The operating loss was $433-million, compared with a profit of $127-million in the first quarter of 2019. Passenger revenue miles fell by 17%.
Outlook For Q2 And Beyond
Air Canada has reduced its second quarter capacity by 85% to 90% when compared with the same quarter last year, while its third quarter capacity is expected to be reduced by approximately 75% compared with a year earlier.
"The airline will continue to dynamically adjust capacity and take other measures as required to account for health warnings, travel restrictions, border closures globally and passenger demand," it said in a press release.
Air Canada said it is taking steps to ensure it has enough cash to survive the pandemic, including drawing a $1-billion credit, an $820-million loan secured by aircraft and spare engines, and bridge financing worth $780-million.
In addition to cost savings associated with the capacity and workforce reductions, and other mitigation programs, Air Canada says it has initiated a company-wide cost reduction and capital reduction and deferral program.
It is also accelerating the retirement of 79 older aircraft, a move it says will simplify its fleet, reduce costs and lower its carbon footprint.
Anna Kroupina Journalist
Anna is OJ's newest member and she joins the team as a writer/reporter. She co-writes the daily news and covers events. Although she's new to the industry, pursuing a career path in travel/tourism has been a goal since her first family road trip to the Florida Keys sparked a desire to discover the world and this exhilarating, fast-paced industry.