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Air Canada Implements Additional Capacity and Workforce Reductions

MONTREAL, January 13, 2021 – Air Canada announced today it is adjusting its network under its COVID-19 Mitigation and Recovery Plan by further reducing first quarter system capacity by an additional 25 per cent. As a result of these system-wide changes, there will be a workforce reduction of approximately 1700 employees, in addition to the over 200 impacted employees at its Express carriers. The airline is working with its unions on mitigation programs.

“Since the implementation by the Federal and Provincial Governments of these increased travel restrictions and other measures, in addition to the existing quarantine requirements, we have seen an immediate impact to our close-in bookings and have made the difficult but necessary decision to further adjust our schedule and rationalize our transborder, Caribbean and domestic routes to better reflect expected demand and to reduce cash burn. We regret the impact these difficult decisions will have on our employees who have worked very hard during the pandemic looking after our customers, as well as on the affected communities,” said Lucie Guillemette, Executive Vice President and Chief Commercial Officer at Air Canada.

“While this is not the news we were hoping to announce this early into the year, we are nonetheless encouraged that Health Canada has already approved two vaccines and that the Government of Canada expects the vast majority of eligible Canadians to be vaccinated by September. We look forward to seeing our business start to return to normal and to bringing back some of our more than 20,000 employees currently on furlough and layoff,” concluded Ms. Guillemette.

Air Canada will be reducing approximately 25 per cent of its planned capacity for the balance of the first quarter of 2021. With this reduction, capacity in the first quarter of 2021 will be about 20 per cent of what Air Canada operated in the first quarter of 2019.

Air Canada will continue to evaluate and adjust its route network as required in response to the trajectory of the pandemic, government-imposed travel restrictions and quarantines, and to market and regulatory conditions.

Affected customers on all routes will be contacted by Air Canada and offered options, including refunds for eligible customers and alternative routings where available.

Air Canada has access to funding already — it just wants better rates, expert says

While Rovinescu said he was “cautiously optimistic” about a trial by pharmaceutical giant Pfizer that found a COVID-19 vaccine had been 90 per cent effective, he noted it’s not an instant cure for the industry’s problems. “When does demand return?” Rovinescu asked.

As stock markets around the world soared on news that a COVID-19 vaccine is getting closer, outgoing Air Canada CEO Calin Rovinescu said air travel won’t return to pre-pandemic levels until as late as 2025.

The note of caution — which Rovinescu has sounded before — came after the airline reported a third-quarter loss of $685 million Monday, and said flight capacity will be down 75 per cent in the fourth quarter compared to a year ago.

“It’s going to be three to five years in terms of getting back to 2019 levels,” said Rovinescu, in his second-last earnings call before he hands over the reins to deputy CEO Michael Rousseau next February.

Air Canada’s shares shot up $4.53 to $20.35 in Monday trading, a gain of more than 28 per cent on the day, following stock market trends around the world, as pharmacy giant Pfizer announced a COVID-19 vaccine trial had been 90 per cent effective.

The hefty quarterly loss comes as the federal government gets ready to offer a COVID-19 aid package to the airline industry, something Air Canada — as well as other airlines including WestJet and Porter — had been seeking. But at least one industry watcher says an air industry relief package risks undercutting other government pandemic programs, including the Large Employer Emergency Financing Facility.

Air Canada posts $1.7B quarterly loss as COVID-19 walloped travel demand

Air Canada is reporting a $1.75 billion loss in its latest quarter as revenues plummeted 89 per cent as a result of the grounding of most flights due to the COVID-19 pandemic.

The Montreal-based airline says it lost $6.44 per diluted share, compared with net income equalling $1.26 per share or $343 million a year earlier.

Revenues for the three months ended June 30 were $527 million, down from $4.74 billion in the second quarter of 2019. Passenger revenues fell to $207 million while cargo revenues increased 52 per cent to $269 million.

Air Canada was expected to lose $1 billion or $3.96 per share on $436.3 million of revenues, according to financial markets data firm Refinitiv.

The country’s largest airline says it has access to $9.12 billion of cash after raising $5.5 billion in new equity, debt and aircraft financings since March.

It cut spending in large part by reducing management and front-line workers to save $1.3 billion, permanently retiring 79 aircraft representing more than 30 per cent of its overall fleet, suspending some domestic routes and cutting its network capacity by 92 per cent.

“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,” stated CEO Calin Rovinescu.

Air Canada’s (TSX:AC) Latest Move Proves Warren Buffett Right

Watch for the Warning Signs Stock Market Prices Trends 3d Illustration

In May, Warren Buffett held an online shareholders’ meeting, where he revealed that he had sold his entire position in airline stocks. It was a rare move for Buffett. Known for holding the course and buying the dip, he did the exact opposite this time — selling right along with everyone else. The move prompted a lot of speculation, with the general tone being that Buffett had lost his touch.

Now, however, it’s beginning to look like Buffett was right. After selling his airline stocks, Buffett hinted that air travel would could be down for two or three years to come. Shortly afterward, Air Canada released a Q1 earnings report saying almost the same thing: that revenue could take three full years to climb back to 2019 levels. Citing the possibility of prolonged lower passenger levels, the airline cautioned investors to brace for some bad years.

Now, we’re beginning to see the financial effects.

Just recently, Air Canada made a move that was in keeping with Buffett’s thesis for selling airline stocks — a move whose effects won’t disappear even when revenue levels do recover. This action by the company could keep its shares down even in a year of record profitability. And it won’t be easy to reverse.

Air Canada is issuing new shares

In May, Air Canada announced it was raising $575.6 million by selling 35.4 million shares at $16.25 a piece. Later, the value of the issuance increased when the airline added $1 billion worth of convertible bonds. Convertible bonds can be easily converted to stock, making this effectively equivalent to an equity issue.

What all this means is that Air Canada now has millions more shares outstanding than it did before. As a result, each share has a smaller claim on earnings, and that claim could get smaller still if bondholders exercise their conversion rights.

Air Canada is ripping seats out of 3 of its largest jets to turn them into cargo planes.

Air Canada Boeing 777-300ER Cargo — **See inside the new Boeing 777 temp**orary conversions.

Air Canada, like many global airlines, decided to make the shift to cargo-only flights once the demand for passenger travel dried up.

Without a dedicated cargo fleet, the Canadian flag carrier began flying its passenger jets with underbellies full of freight and empty passenger cabins above, until the potential of the underused cabins was realized.

Air Canada to provide protective gowns, eyewear to flight crew amid COVID-19 pandemic

Flight attendants wearing protective equipment serve snacks to Canadians repatriated from China and en route to CFB Trenton for quarantine on Feb. 7. Air Canada said Friday it would provide gowns and eyewear to flight crews to protect them from coronavirus. (Edward Wang via Reuters)

Air Canada said Friday it would provide gowns and eyewear to flight crews to protect them from coronavirus.

The company said in a memo sent to staff and seen by CBC News that it secured a supply of plastic safety eyeglasses on Friday, and will provide workers with protective gowns to wear over their uniforms starting Sunday.

Coronavirus: Air Canada extends flight suspensions to Hong Kong, Beijing and Shanghai until April

Air Canada is extending its cancellation of flights to Hong Kong, Beijing and Shanghai until April in the wake of the Covid-19 outbreak.

The Canadian flag carrier will extend the suspension of its daily non-stop Toronto-Hong Kong flights until April 30 due to “reduced market demand”.

The airline previously announced that it would suspend flights on its Toronto-Hong Kong route between March 1 to March 27.

Air Canada normally operates 14 weekly flights to Hong Kong, with seven from Toronto and another seven from Vancouver.

Air Canada Shows Off Its Brand New Airbus A220

Air Canada revealed its brand new Airbus A220-300 in Montreal yesterday, Wednesday 15 January 2020. The gleaming new aircraft, the first of 45 the airline has on order, is due to start flying today. Lucky passengers on AC317 between Montreal and Calgary this morning will be the first to ride the new plane.

The airline is also set to rapidly deploy the A220 onto new international routes, jetting between Montreal and Seattle and Toronto to San Jose.

The first A220 for Air Canada rolls out of the painting hangar

The first Canadian-made A220-300 aircraft destined to a Canadian airline – Air Canada – received its colours during activity in Mirabel

Air Canada’s first Airbus A220 was unveiled this week when it rolled out of the painting hangar at the A220 final assembly line in Mirabel.

In December, Air Canada will become the first Canadian airline to take delivery of this Canadian-designed and developed aircraft when it receives the first of its 45 A220s on order. The A220 features an innovative cabin design, as well as significantly lower emissions and a reduced noise footprint.

Air Canada will use gender-neutral terms instead of saying ‘ladies and gentlemen’ on flights

Air Canada aircraft landing at London Heathrow International Airport.

(CNN) — Passengers on board Air Canada won’t hear flight attendants say “ladies and gentlemen” any more. Soon they will hear gender-neutral terms.During onboard announcements, the term “everybody” will replace the terms “ladies and gentlemen,” according to CNN news partner CTV.”We will be amending our onboard announcements to modernize them and remove specific references to gender,” a media spokesperson for the company told CTV. “We work hard to make sure all employees feel like valued members of the Air Canada family, while ensuring our customers are comfortable and respected when they choose to travel with us.”