Motley Fool: With Almost No Revenue, How Long Can AC Last?

Anna Kroupina, Open Jaw


Financial reporting publication, The Motley Fool, looks at the hard facts of Air Canada’s long term viability as COVID keeps Canadians grounded. 

In its first quarter results published on 04MAY, Air Canada stated that it's currently going through "the darkest period in the history of commercial aviation." In a way, this statement sums up just how bad things really are for airlines across the globe.

The company reported more than $1 billion in losses, a stark comparison to the $345 million in profits it announced in Q1 last year.

Air Canada has strategies in place to ensure its survival, like layoffs, retiring older aircraft, restructuring and shifting its focus to cargo flights. It’s also taking measures to increase its unrestricted liquidity.

But Motley Fool says with no revenue coming in, they can only do so much to keep the company going, especially when it’s as debt-laden as Air Canada is.

One hope for Air Canada is government aid, Motley Fool says. It might not be enough to provide a strong new pair of wings, but it will likely keep the company from going bankrupt. 

It all comes down to when regular air travel will resume. The problem is that even when the pandemic is over, people may still steer clear of air travel unless it’s absolutely necessary.

It’s hard to pinpoint a time in the future, but if airlines continue to see the current, diminished-level of air travel, even the end of MAY might bring more challenges, Motley Fool concludes.

Open Jaw has witnessed Air Canada go through difficult periods in the past and with Calin Rovinescu at the helm, has avoided bankruptcy. It is difficult to imagine the Canadian government allowing the flag carrier to falter, given the need for air transportation, both domestically and internationally. 

 

Anna Kroupina

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.

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