The flood of delayed and cancelled flights and lost luggage that has marred the resumption of air travel will continue to recede through the rest of the year as hiring and training programs gear up, says Amos Kazzaz, Air Canada’s chief financial officer.
Mr. Kazzaz said the airport disruptions are improving and are unlikely to extend into the new year, pointing to the reduced numbers of delays, cancellations and baggage complaints in the second week of August.
“Fundamentally we see that continuing through the back half of this year,” Mr. Kazzaz told an investors conference Tuesday. “As time goes by, we certainly don’t expect to see this sort of disruption into 2023. I think it will continue to improve.”
The chaos that gripped Toronto Pearson airport and other major Canadian hubs in the late spring and summer came as Air Canada and other airlines restored about 80 per cent of their prepandemic schedules. However, staffing levels at the airlines and the companies and government departments that operate at the airports did not match the passenger volumes.
Air Canada, WestJet Airlines Ltd. and others cancelled about 10 per cent of their schedules to manage the disruptions, but their customers still faced long lines and uncertainty.
“Fundamentally, all the resources weren’t there,” Mr. Kazzaz said, describing airport operations as complex and misunderstood.
“There are so many key elements that have to operate together to make that journey from curbside into [the] air and into arrival with your bag,” he said. “You’ve got security screening, you’ve got customs screening, immigration, you have air navigation – you’ve got airports that manage the facilities, bag systems and gates, you have all the various vendors of fuel et cetera.
“All of that really needs to work together. With the shutdown of the industry and the quicker recovery, I think there were a number of areas that were behind.”
Air Canada said the number of flights delayed by more than an hour fell 48 per cent in the second week of August, compared with late June and early July. The number of cancelled flights fell 77 per cent, and the number of lost bags declined to 2019 levels.
Walter Spracklin, a Royal Bank of Canada stock analyst, said in a research note that he thinks the worst of Air Canada’s travel disruptions are behind it. “We are encouraged by [Air Canada’s] ability to work with stakeholders as well as augment its schedule to address the issues disrupting the airport system,” he said. “Taken together, these improvements should offer greater confidence to [the airline’s] customer base. Looking ahead, we hope to see capacity growth as the system gains resilience from the summer travel boom.”
Air Canada lost $386-million in the latest quarter, bringing its total losses since the beginning of 2020 to $9.8-billion.
Mr. Kazzaz did not say when the losses will end but sounded upbeat about the prospects for Canada’s largest airline. Air Canada is rebuilding its network with airline partnerships that will allow it to reach secondary markets in Europe, the Middle East and Asia, in addition to U.S. routes with its United Airlines joint venture. The pandemic spurred the airline to retire 79 planes, add narrow-body aircraft and launch a dedicated air cargo fleet that will number 12 planes by the end of 2024. The cargo shipments will allow it to diversify its revenue streams while smoothing out the seasonal spikes in passenger sales, Mr. Kazzaz said.
“We’re going to come out a smaller airline but with a lower cost structure,” he said.
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