Air Canada Posts $1.75B Loss In Q2 As COVID-19 Continues To Batter Demand Rovinescu to PM: “We need to start being able to earn some revenue.”
Anna Kroupina, Open Jaw
Air Canada reports a $1.75 billion loss in its second quarter report as revenues plummet 89% due to rock-bottom demand and COVID-19 travel restrictions.
"As with many other major airlines worldwide, Air Canada's second quarter results confirm the devastating and unprecedented effects of the COVID-19 pandemic and government-imposed travel and border restrictions and quarantine requirements," said Calin Rovinescu, President and Chief Executive Officer of Air Canada.
Revenues fell from $4.738 billion in the second quarter of 2019 to $527 million in Q2 this year, while inroads in the cargo market increased revenues by 52% to $269 million.
"Canada's federal and inter-provincial restrictions have been among the most severe in the world,effectively shutting down most commercial aviation in our country," Rovinescu said, adding that Air Canada carried less than 4% of the passengers it did in the same quarter in 2019.
It's facing this reality that Rovinescu called for "urgency" for the Canadian government to take steps to reopen travel and restore economic activity.
"Canada's federal and inter-provincial restrictions have been among the most severe in the world"
"Other jurisdictions globally are showing it is possible to safely and responsibly manage the complementary priorities of public health, economic recovery and job preservation and creation," he said.
With Canada’s travel restrictions virtually unchanged since MAR, airlines are imploring the federal government to either let them fly, or bail them out, Bloomberg reports.
“We need to start being able to earn some revenue. Right now it is the government that’s preventing us from doing that," Rovinescu said in a video call this month with the Canadian Chamber of Commerce.
But Prime Minister Justin Trudeau has resisted any changes that could put the health and safety of Canadians at risk.
“There’s a sense of desperation on the part of Air Canada.They’re burning through so much cash that they need to put the pressure on the government to loosen the restrictions,” John Gradek, a former AC executive and professor at McGill University’s Global Aviation Leadership Program, told Bloomberg.
If the government refuses to relax travel restrictions, airlines may pivot back to their initial request of seeking financial support.
“If we’re not going to move forward and we’re to keep the industry ostensibly operating at stage zero, then we do believe it will be reasonable to have conversations with the government about moving away from this non-sectoral approach they’ve taken,” said Mike McNaney, CEO of the National Airlines Council of Canada, which represents the largest carriers, including Air Canada and WestJet.
Looking ahead, Air Canada plans to reduce its third quarter 2020 capacity by approximately 80% from the same quarter in 2019. It says it will continue to adjust capacity as required to account for health warnings, travel restrictions, border closures globally and passenger demand.
The airline forecasts Q3 net cash burn of between $15 million and $17 million per day on average, compared with net cash burn of about $19 million per day in the previous quarter.
Rovinescu says Air Canada is "laser-focused" on business continuity and in positioning itself to emerge competitive as the pandemic recedes.
"We will now look to the future using this unprecedented challenge as an equally unprecedented opportunity to rebuild a smaller but even more nimble airline, with a simplified and younger fleet and a lower cost structure coming out of the crisis," he said.
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.