Air Canada cuts second-quarter loss as spring travel boom boosts revenue

On Tuesday, Air Canada announced a loss of $386 million in the second quarter, compared to a loss of $1.17 billion a year earlier, while significant travel restrictions were still in place. Revenues totaled $3.98 billion, compared to $837 million in the same period last year, a jump of 375%.

The Montreal-based carrier said its loss for the three months ended June 30 was $1.60 per diluted share, compared to a loss of $3.31 per diluted share in the second quarter of 2021.

The result fell 94% below analysts’ expectations of 83 cents per diluted share in losses, according to financial data firm Refinitiv.

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Air Canada says its cost per available seat mile in the second quarter fell to 20.8 cents from 49.3 cents a year earlier, while its adjusted cost per available seat mile was 13.1 cents from 41. .5 cents in the second quarter of 2022.

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With bookings up, Air Canada posted a nearly five-fold increase in revenue in its most recent quarter, but continued to suffer net losses in the hundreds of millions due to a “very difficult” three months. said CEO Michael Rousseau.

Rousseau’s comments come after months of global industry turbulence as airlines, airports and governments struggled to cope with a massive resurgence in travel that has sparked scenes of chaos in terminals around the world and affected Air Canada’s bottom line as it paid to accommodate delayed passengers.

The summer travel season had almost returned to full swing, the airline said. Advance ticket sales in the second quarter reached 94% of 2019 levels and remain strong, with no ripple effect from an economic slowdown, chief financial officer Lucie Guillemette told analysts on a conference call on Tuesday. .

Customer volume climbed to 9.1 million passengers in the quarter ended June 30, reaching 71% of the same period levels in 2019. Passenger revenue exceeded 80% of 2019 levels, in part because rising fuel costs were passed on to passengers; the airline spent 45% more on jet fuel for the quarter despite a flight schedule 20% smaller than three years ago.

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Workforce ended the quarter at 90% of pre-pandemic payroll, Air Canada reported, saying it had “doubled” in hiring and training since last fall. The airline had 21,300 full-time workers in September 2021 and ended June with 29,500.

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“But despite all the planning, the increase in traffic has created challenges for all participants in the air transport system, a situation we see all over the world,” Rousseau said.

He said “we deeply regret” the disruption to passengers, while chief operating officer Craig Landry apologized for the lack of “operational stability”.

But Landry also pointed the finger at various industry players for the cascade of cancellations and other setbacks, citing staff shortages in areas ranging from security and customs screening to food.

Mechanical failures in airport baggage systems have also played a role in the constant baggage incidents that have plagued passengers in recent months, he added.

As travelers flocked to the tarmac _ and faced nerve-wracking delays _ the cost of covering their hotel stays, food vouchers and late luggage deliveries contributed to a cost per customer higher which exceeded Air Canada’s forecast.

“There was a lot more money being paid to relocate passengers or to care for them,” said Robert Kokonis, president of Toronto-based consulting firm AirTrav Inc.

“Anyone who touches Pearson, Montreal, to a lesser extent Vancouver, it’s a disaster.”

The tough summer ramp-up propelled Air Canada and Toronto’s Pearson Airport to the top of the world’s lists of delayed flights, with Canada’s largest airline frequently hitting the No. 1 spot for percentage of delayed trips _ up to two-thirds of scheduled flights on certain days _ in June and early July.

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However, its performance has improved markedly in the past four weeks after the airline scaled back its ambitious rebound plans and cut more than 15% of its scheduled flights in July and August, affecting hundreds of thousands of customers.

While leisure travel has come back strong, business travel has been slower to return, falling from 40% of pre-pandemic volumes in March to more than 60% at the end of June, Guillemette said.

Demand in both regions fell sharply in March 2020 after COVID-19 border restrictions brought the aviation world to a screeching halt.

Until July 5 last year, fully vaccinated Canadians had to quarantine for at least eight days upon arrival, and until April 2022 had to present a negative COVID-19 test to enter the country.

Fully vaccinated Americans could not cross the border for non-essential reasons until Aug. 9, 2021, a measure that was lifted for citizens of other countries four weeks later.

© 2022 The Canadian Press