A recent release from Air Canada reveals that the airline has seen a first-quarter loss of over $1 billion, largely due to the ongoing COVID-19 pandemic.
The threat of coronavirus has placed many restrictions on the country, including a suspension on international flights and increased physical distancing precautions, resulting in a sudden drop in those seeking the service of airlines like Air Canada.
The release notes that, in the same quarter of 2019, Air Canada had seen a profit of $345 million. The $1.049 billion loss has amounted to about $4 per diluted share, the same shares that had seen a profit of $1.26 during the same months last year.
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“Our first quarter results reflect the severity and abruptness of the impact that the COVID-19 pandemic has had on Air Canada, which started to be felt across the global airline industry in late January with the suspension by many carriers, including Air Canada, of services to China,” said President and CEO of Air Canada, Calin Rovinescu, in the release.
“The past quarter was the first in 27 consecutive quarters that we did not report year-over-year operating revenue growth. Our solid January and February results gave us every encouragement that this performance would continue until the sudden and catastrophic impact of COVID-19’s onset in Europe and North America in early March. We are now living through the darkest period ever in the history of commercial aviation.”
Air Canada also announced that it has reduced its second quarter capacity by 85% to 90% when compared to the year before, and the third quarter is expected to be reduced by 75% from 2019.
In the wake of the coronavirus pandemic, the airline has implemented company-wide cost reductions, including the accelerated retirement of 79 older aircraft, an adoption of the Canada Emergency Wage Subsidy, and workforce reductions.
“We have developed a plan to manage through a protracted downturn, recognizing that the pandemic and its fallout will materially impact both customer demand and our liquidity in the short and medium term. Moreover, while the duration of the pandemic and its fallout remain unknown, it is our current expectation that it will take at least three years to recover to 2019 levels of revenue and capacity,” said Rovinescu in the release.
“We expect that both the overall industry and our airline will be considerably smaller for some time, which will unfortunately result in significant reductions in both fleet and employee levels. While it is not possible to predict the course of the pandemic globally or indeed the changes that will be required of the airline industry, our determination is to ensure that our company is positioned to emerge in the post-COVID-19 world as strong as possible and capitalize on the opportunities that will inevitably arise.”