The COVID-19 pandemic continues to wreak havoc on airlines around the world, however, Air Canada faces a new layer of uncertainty as Canada remains largely closed for travel, with no target date to lift restrictions.
Air Canada continues to increase costs, accumulating liquidity and resizing operations, adding up ongoing efforts to remove 79 aircraft from its fleet and network footprint.
There is no doubt that Air Canada will have to adjust its aircraft order book, as the company’s planned investments of Can$3 billion by 2021 do not lead to an operational pandemic. As uncertainty about when Canada will ease restrictions remains firmly in place, the airline already warns that it may cancel orders from Airbus A220 and Boeing.
Summary
Air Canada expects capacity to be minimized by 80% year-over-year by 3-2020, an improvement from 92% minimized by 2,2020, but still well below past overall levels.
In early 2020, Air Canada serves 220 airports; But once the pandemic was installed, the airline suspended flights to the United States for a maximum of May 2020 and limited its foreign network to five major air markets to ensure sustained connectivity to Canada, according to Air Canada’s chief advertising officer, Lucie Guillemette.
The airline has reduced its domestic network from 62 to 40 airports. The company also indefinitely suspended 30 regional routes in Canada and closed stations at 8 small airports across the country.
During the current peak summer season in the northern hemisphere, Air Canada plans to serve 91 destinations, nearly double the number presented through the airline in May 2020.
CAPA’s fleet database that in early August 2020, the Air Canada Group had 81 aircraft in service and 166 aircraft inactive.
Air Canada has known some symptoms of internal recovery, Guillemette said, namely on transcontinental routes and western Canada, but said the market uptick will be asymmetrical as “Maritimes continues to be affected by interprovincial travel restrictions, while Quebec has fallen to the west in terms of reopening our economy.”
For the week of August 3, 2020, Air Canada’s percentage of domestic seats about 44%, followed by WestJet at approximately 37%.
Air Canada CHIEF Executive Calin Rovinescu said Canada’s national environment had been influenced by Porter Airlines’ selection to “operate in recent months.” Porter suspended operations in March 2020 and plans to resume service until early October 2020.
Mr Rovinescu also noted that Transat had engaged in certain domestic activities, basically to position flights for overseas operations.
Essentially, Air Canada and WestJet are the main domestic operators, and Mr Rovinescu stated that “none of the operators have tried to use the pandemic to gain market share.”
Air Canada plans to continue to selectively rebuild its U.S. cross-border network, however, as the number of instances in the U.S. increases. And cross-border restrictions continue, the resumption of U.S. cross-border traffic. It’s uncertain, Guillemette said.
Given the number of new daily COVID instances in some U.S. states, as well as ongoing restrictions, restrictions, and cross-border notices, significant uncertainty remains about the timing of recovery in the U.S. market.
Canada’s restrictions have remained unchanged since mid-March 2020, and Air Canada’s passenger revenues have fallen 95% year-over-year in 2020.
In presenting a brief summary of the restrictions, Rovinescu stated that they included a general restriction for all foreign travelers, the closure of the Canada-U.S. border, general quarantine regulations, and barriers to interprovincial travel. All travelers entering Canada, adding Canadians, must remain quarantined for 14 days.
Describing the effect of these restrictions on Air Canada during 2Q2020, Mr. Rovinescu said: “With Canada’s federal and interprovincial restrictions, which were among the most severe in the world, we transported less than 4% of the airline’s consumers in the quarter of last year. [2Q2019] “.
Air Canada assumes that the Canada-U.S. border will reopen at 3,2020, said CHIEF Financial Officer Michael Rousseau.
There is still no certainty of when Canada will ease its restrictions and this uncertainty, along with what could be a prolonged recovery, has led Air Canada to decide to permanently eliminate 79 aircraft. The airline removed 50 of those aircraft from its fleet on 2T2020-14 Embraer 190, 30 Boeing 767 giants and six Airbus A319s.
Mr Rovinescu noted that Air Canada would retain the rest of the A319, “a little longer because most of them are detained. Array… and give us a little flexibility to compare or load more capacity and have a very, very low cost. from our point of view.”
For now, Air Canada is focusing on the return of the 767 wide-body aircraft and the Embraer 190.
Air Canada has raised approximately five billion Canadian dollars in liquidity from mid-March 2020 to increase its overall liquidity to approximately nine billion Canadian dollars by the end of 2020. At the same time, the company stripped cans of Can$1.3 billion in constant prices and capital investments. .
During 2Q2020, Air Canada earned CAD 202 million to cover a portion of workers’ wages. The program is being redesigned and extended until December 2020 and Air Canada wishes to participate, according to the assembly’s eligibility requirements. But even with this assistance, Air Canada has reduced its 20% due to layoffs, layoffs, voluntary departures and early retirements.
At the moment, Air Canada estimates that Can$3 billion in capital investments will be in 2021. In a recent report, Helane Becker, CEO of Cowen-Co, said $3 billion in capital investments would be “the biggest investment Air Canada has ever made in a year, and it’s how the company emerges from a pandemic.”
The airline’s leading monetary director, Mr. Rousseau, said the estimate of C$3 billion is a very conservative figure, based on the number of aircraft “we’re going to take, the 737 [MAX] delivery schedule has not yet been finalized.”
As Air Canada continues its talks with Boeing, Rousseau explained that the amount would be distributed over a longer period, “and that the capital [CAD] of $3 billion will fall next year.”
Mr. Rovinescu warned that “… Without the help of the government industry and as travel restrictions are extended, we will explore other opportunities to further reduce prices and capital, adding new road suspensions and imaginable cancellations of Boeing and Airbus aircraft on request, adding the Airbus A220, the former Bombardier C Series manufactured in Mirabel, Quebec.”
The CAPA fleet database, which in early August 2020, Air Canada’s order book included 37 A220-300, 24,737-8 MAX aircraft and 23,787 wide-body aircraft.
The CEO of Air Canada has tried to urge the Government of Canada to adopt another technique for managing to and from home and within the country of departure, and the airline has spoken in recent weeks to verify and convince the government to adopt a Science. A technique based on boundary assessment.
“Canada wants a guilty way to co-exist with COVID-19 until there is a vaccine,” Rovinescu said. He added that the airline had partnered with personal testing corporations and had made government-specific clinical proposals to ease some of those restrictions.
Air Canada is taking the necessary steps to succeed over the COVID-19 pandemic and the uncertainty that Canada’s restrictions create for any resumption of demand.
The airline continues its efforts to urge the government to take another technique so that the airline industry can be seriously restarted, however, for now, prestige continues. And, as many examples suggest, the biggest obstacle to success is the real restriction on growth, the distrust of passengers in the face of flight.
The COVID-19 pandemic continues to wreak havoc on airlines around the world, however, Air Canada faces a new layer of uncertainty as Canada remains largely closed for travel, with no target date to lift restrictions.
Air Canada continues costs, accumulating liquidity and resizing operations, adding up ongoing efforts to remove 79 aircraft from its fleet and network footprint.
There is no doubt that Air Canada will have to adjust its aircraft order book, as the company’s planned investments of Can$3 billion by 2021 do not lead to a pandemic operation. As uncertainty about when Canada will ease restrictions remains firmly in place, the airline already warns that it may cancel orders from Airbus A220 and Boeing.
Summary
Air Canada expects capacity to be minimized by 80% year-over-year by 3-2020, an improvement from 92% minimized by 2,2020, but still well below past overall levels.
In early 2020, Air Canada serves 220 airports; But once the pandemic was installed, the airline suspended flights to the United States for a maximum of May 2020 and limited its foreign network to five major air markets to ensure sustained connectivity to Canada, according to Air Canada’s chief advertising officer, Lucie Guillemette.
The airline has reduced its domestic network from 62 to 40 airports. The company also indefinitely suspended 30 regional routes in Canada and closed stations at 8 small airports across the country.
During the peak summer season in the northern hemisphere, Air Canada plans to serve 91 destinations, nearly double the number presented through the airline in May 2020.
CAPA’s fleet database that in early August 2020, the Air Canada Group had 81 aircraft in service and 166 aircraft inactive.
Air Canada Group and in fleet in early August 2020
Source: CAPA Fleet database.
Air Canada has known some symptoms of internal recovery, Guillemette said, namely on transcontinental routes and western Canada, but said the market uptick will be asymmetrical as “Maritimes continues to be affected by interprovincial travel restrictions, while Quebec has fallen to the west in terms of reopening our economy.”
For the week of August 3, 2020, Air Canada’s percentage of domestic seats about 44%, followed by WestJet at approximately 37%.
Air Canada CEO Calin Rovinescu said Canada’s home environment had been influenced by Porter Airlines’ selection to “operate in recent months.” Porter suspended operations in March 2020 and plans to resume service until early October 2020.
Proportion of Canadian domestic seats (consistent percentage) consistent with the airline for the week of August 3, 2020
Source: CAPA – Aviation Center and OAG.
Mr Rovinescu also noted that Transat had been involved in certain domestic activities, mainly to position flights for overseas operations.
Essentially, Air Canada and WestJet are the main domestic operators, and Mr Rovinescu stated that “none of the operators have tried to use the pandemic to gain market share.”
Air Canada plans to continue to selectively rebuild its U.S. cross-border network, however, as the number of instances in the U.S. increases. And cross-border restrictions continue, the resumption of U.S. cross-border traffic. It’s uncertain, Guillemette said.
Given the number of new daily COVID cases in some U.S. states, as well as ongoing restrictions (cross-border restrictions and notices), significant uncertainty remains about the timing of recovery in the U.S. market.
Canada’s restrictions have remained unchanged since mid-March 2020, and Air Canada’s passenger revenues have fallen 95% year-over-year in 2020.
In presenting a brief summary of the restrictions, Mr. Rovinescu stated that they included a comprehensive restriction for all foreign travelers, the closure of the Canada-U.S. border, general quarantine regulations, and barriers to interprovincial travel. All travelers entering Canada, adding Canadians, must remain quarantined for 14 days.
Describing the effect of these restrictions on Air Canada during the second quarter of 2020, Rovinescu said: “With Canada’s federal and interprovincial restrictions, which were among the most severe in the world, we transport less than 4% of the airline’s consumers. at the time of last year’s quarter. [2Q2019] “.
Air Canada assumes that the Canada-U.S. border will reopen at 3,2020, said CHIEF Financial Officer Michael Rousseau.
There is still no certainty of when Canada will ease its restrictions and this uncertainty, along with what could be a prolonged recovery, has led Air Canada to decide to permanently eliminate 79 aircraft. The airline removed 50 of those aircraft from its fleet on 2T2020-14 Embraer 190, 30 Boeing 767 giants and six Airbus A319s.
Mr Rovinescu noted that Air Canada would hold on to the remainder of the A319s, “a little bit longer because most of them are owned…and they give us a little bit of flexibility to gauge up or add more capacity and they’re very, very low cost from our perspective”.
For now, Air Canada is focusing on the return of the 767 wide-body aircraft and the Embraer 190.
Air Canada has raised approximately CAD 5 billion in liquidity from mid-March 2020 to increase its overall liquidity to approximately CAD 9 billion by the end of 2020. At the same time, the company stripped Canada $1.3 billion in constant prices and capital investments. .
During 2Q2020, Air Canada earned C$202 million to cover a portion of workers’ wages. The program is being redesigned and extended until December 2020 and Air Canada wishes to participate, according to the assembly’s eligibility requirements. But even with this assistance, Air Canada has reduced its total by up to 20 percent due to layoffs, layoffs, voluntary departures and early retirements.
At the moment, Air Canada estimates that Can$3 billion in capital expenditures will be in 2021. In a recent report, Helane Becker, CEO of Cowen-Co, said $3 billion in capital expenditures would be “the biggest investment Air Canada has ever made in a year, and it’s like the company emerges from a pandemic.”
The airline’s CFO Mr Rousseau has stated that the CAD3 billion estimate is a very conservative number, and based on the number of aircraft “we’re going to take in, though the delivery schedule for the 737 [MAX] is not yet finalised”.
As Air Canada continues its talks with Boeing, Rousseau explained that the amount would be distributed over a longer period, “and that the capital [CAD] of $3 billion will fall next year.”
Mr. Rovinescu warned that “… Without the help of the government industry and as travel restrictions are extended, we will explore other opportunities to reduce prices and capital, adding new road suspensions and imaginable cancellations of Boeing and Airbus aircraft in order, adding the Airbus A220, the former Bombardier C Series manufactured in Mirabel, Quebec.”
The CAPA fleet database, which in early August 2020, Air Canada’s order book included 37 A220-300 aircraft, 24,737-8 MAX aircraft, and 23,787 wide-body aircraft.
The CEO of Air Canada has tried to urge the Government of Canada to adopt another technique for managing to and from home and within the country of departure, and the airline has spoken in recent weeks to verify and convince the government to adopt a Science. A technique based on boundary assessment.
“Canada wants a guilty way to co-exist with COVID-19 until there is a vaccine,” Rovinescu said. He added that the airline had partnered with personal testing corporations and had made government-specific clinical proposals to ease some of those restrictions.
Air Canada is taking the necessary steps to succeed over the COVID-19 pandemic and the uncertainty that Canada’s restrictions create for any resumption of demand.
The airline continues its efforts to urge the government to take another technique so that the airline industry can be seriously restarted, however, for now, prestige continues. And, as many examples suggest, the biggest obstacle to success is the real restriction on growth, the distrust of passengers in the face of flight.