Air Canada posted a loss of $685 million (or $2.31 per share) for its third quarter, compared with a profit of $636 million in 2019.
The updated numbers, announced on Monday (Nov. 9), represents Air Canada’s third straight quarterly loss as the COVID-19 pandemic continues to batter the global aviation industry.
Operating revenues also dropped by 86 per cent to $757 million in Q3, the airline reported.
Total revenue passengers carried declined 88 per cent in the quarter compared to last year's third quarter.
"Today's results reflect COVID-19's unprecedented impact on our industry globally and on Air Canada in what has historically been our most productive and profitable quarter," said Calin Rovinescu, President and Chief Executive Officer of Air Canada, in a statement.
Air Canada’s Q3 net cash burn slowed to $9-million per day on average (compared to about $19-million per day in Q2).
The airline projects net cash burn of between $12-million and $14-million per day on average for the current quarter.
It also plans to cut Q4 capacity by roughly 75 per cent compared to last year.
At Sept. 30, 2020, Air Canada’s net debt of $4.973 billion increased $2.132 billion from Dec. 31, 2019, reflecting the impact of net cash used for operating and investing activities in the first nine months of 2020.
Rovinescu said that Canada's quarantine measure is "both stifling demand and frustrating travellers who are willing to be tested."
Air Canada recently announced that it was finalizing an initial order of Abbott's ID NOW COVID-19 rapid response tests as part of its ongoing evaluation of COVID-19 testing technology and protocols, one of the first private sector companies to do so.
As part of its COVID-19 Mitigation and Recovery Plan, Air Canada has raised almost $6 billion in additional liquidity since March, "leveraging what was one of the industry's strongest balance sheets as we entered the pandemic," said Rovinescu.
"We took the painful steps of eliminating 20,000 jobs, after having created 10,000 over the previous five years, and of reversing 10 years of profitable network expansion by reducing capacity by more than 80 per cent in the third quarter," he said.
In June, Air Canada indefinitely suspended 30 domestic routes and closed eight regional stations.
The airline has now identified up to a further 95 domestic, U.S. transborder and international route suspensions and nine Canadian station closures required to preserve liquidity, cut costs and reduce capital expenditures, said Rovinescu.
On Sunday (Nov. 8), Marc Garneau, Canada's Minister of Transport, announced that if airlines want federal support, they must give refunds to customers for cancelled travel.
Garneau noted that discussions with Canada’s airlines will begin this week.
“We are deferring the additional route suspensions and station closures pending the progress of those discussions,” said Rovinescu.
Air Canada has also continued discussions with the Government of Canada on a “more measured, science-based approach to travel restrictions and quarantines, which remain amongst the most onerous in the world,” said Rovinescu.
Rovinescu noted how Air Canada is “accelerating the retirement” of 79 mainline and Rouge aircraft.
It is also deferring delivery of new Boeing 737-8 and Airbus A220 aircraft scheduled for delivery in 2021 and 2022 and cancelling 10 Boeing 737-8s and 12 Airbus A220s, representing about 40 per cent of the remaining scheduled deliveries.
“Despite modifications made to our orders, these two aircraft remain the core of our narrowbody fleet and enable us to efficiently serve transcontinental domestic and transborder routes through improved economics and range, while providing an excellent customer experience,” he said.
The Transat deal
Rovinescu also touched on Air Canada’s proposed acquisition of Transat A.T. Inc., a purchase that is currently being analyzed by EU antitrust regulators.
“[The deal] will enable us to better compete with global competitors in a drastically altered global airline market,” said Rovinescu.
The European Commission (EC) said on Nov. 7 that it is delaying its decision to approve the transaction until Jan. 8, 2021 (the deadline was originally Dec. 11, 2020).
The EC, which oversees competition policy in the 27-member European Union, is studying the deal to determine if it will hinder competition, increase prices and lead to fewer choices for consumers.
The value of the deal is now approximately $190 million (CAD), down from C$720 million previously.
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