Air Canada reported its second quarter results on Friday (July 31), posting a loss of $1.7-billion as the COVID-19 pandemic continues to force Canada’s flagship carrier to ground planes, slash its workforce and reduce passenger capacity.
In a release, Calin Rovinescu, president and Chief Executive Officer of Air Canada, said the latest results “confirm the devastating and unprecedented effects” of the coronavirus crisis and the federal travel and border restrictions and quarantine requirements that come with it.
“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, which, together with otherwise fragile demand, resulted in Air Canada carrying less than four per cent of the passengers carried during last year's second quarter,” stated Rovinescu.
To that end, Rovinescu added that he was “extremely proud of the outstanding efforts our team is making, doing everything possible to successfully navigate this crisis, leveraging our strong balance sheet and the many other assets we developed or acquired over the last decade."
Air Canada’s revenue fell by 89 per cent to $527-million in the three months ending June 30th, compared to $4.7-billion in the year-ago period.
The airline lost $1.7-billion, or $6.44 a share, compared with a profit of $343-million ($1.26) in 2019’s second quarter.
Air Canada will burn through $15-million to $17-million in cash every day in the third quarter, eroding its liquidity that totalled $9-billion on June 30th.
The carrier also revealed on Friday that seat capacity will be reduced by 80 per cent, compared to last year.
Since mid-March, Air Canada has raised $5.5 billion in new equity, debt and aircraft financings in the capital markets, providing the company with more than $9 billion in liquidity as of June 30th to help weather the COVID-19 crisis, noted Rovinescu.
Additionally, the carrier has cut spending by slashing its major management and front-line workforce, as well as retiring 79 aircraft (representing more than 30 per cent of its combined mainline and Air Canada Rouge fleet).
The airline has also suspended domestic routes and announced station closures, reducing its network seat capacity by 92 per cent in the quarter.
“These were some of the painful but necessary steps we have taken to stabilize our airline and preserve cash in these uncertain times,” stated Rovinescu. “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.”
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