Air Canada ticketing station at Pearson International Airport in Toronto. The airline reported quarterly loss Friday.Nathan Denette/The Canadian Press
Air Canada chief executive Michael Rousseau has urged the federal government to scrap hotel quarantines for international travellers and roll out a more effective postpandemic plan to get passengers back on planes.
On Friday, the country’s largest airline announced a $1.05-billion loss for the first three months of the year, more than double its $433-million loss in the same period a year ago, when the COVID-19 pandemic began to curtail travel. Mr. Rousseau, who took the top job in February, said: “The persistence of COVID-19 and its resurgence in Canada are weighing heavily on the Canadian airline industry.”
Montreal-based Air Canada’s revenues dropped 80 per cent, to $729-million, compared with the first three months of last year. The country is still dealing with a “very difficult third wave” of the pandemic that warrants travel restrictions, Mr. Rousseau said in a conference call. “There is cautious optimism, given the increasing vaccination rate, that we are nearing an inflection point in the pandemic.”
Mr. Rousseau pointed to the rise in air travel in the U.S. and Britain, which is easing international travel restrictions on May 17, and said: “It is time to develop and communicate a reopening plan for international travel, to and from Canada.” He said Air Canada is having “positive discussions” on a travel strategy with the federal government, rival airlines and the country’s airports.
In February, Ottawa introduced regulations meant to control the spread of COVID-19 related to international travel, including three-day stays in hotels for international passengers landing in Canada. On Friday, Mr. Rousseau said: “Mandatory hotel quarantine for arrivals has proven ineffective. It should be eliminated.”
Last month, the Public Health Agency of Canada said more than 2,000 international passengers tested positive for COVID-19 after arriving in Canada over the eight-week period that ended April 22.
Air Canada received a $5.9-billion support package from the federal government in April. Rival Transat AT Inc. got $700-million in government financing last month, and other Canadian airlines continue to negotiate for financial support. Mr. Rousseau pushed Ottawa to do more for the airline industry. He said the government should replace blanket restrictions on travel “with science-based testing and limited quarantine measures.”
As part of the package, Air Canada established a $1.4-billion line of credit with the federal government to fund passenger ticket refunds. The airline estimates its customers hold $2-billion in tickets. On Friday, Air Canada said, based on experience, cash refunds will be “substantially less than $2-billion as certain customers will choose to retain their travel voucher.”
When passengers do take to the air again, airlines expect vacation travellers will be the first to board planes, while demand for business seats is expected to remain well below prepandemic levels for the foreseeable future.
On Friday’s conference call, an analyst asked if Air Canada will need to reconfigure its aircraft, to accommodate more economy seats and fewer business-class passengers in premium pods. Mr. Rousseau responded: “That would be a nice problem to have.”
Air Canada has a number of aircraft currently in storage on runways in a southwestern U.S. desert, as well as 11 Airbus A330 and Boeing 777 jets that it recently converted for cargo flights. Those cargo planes could be quickly switched back for passenger use. Mr. Rousseau said planes will be brought into service as needed.
However, he said it takes far longer – up to 18 months – to change the seating arrangements on one of the airline’s existing passenger jets.
Air Canada said on Friday its net loss in the first three months of the year was $3.90 a share, a performance that was far worse than the average loss of $2.83 a share forecast by the 14 analysts who cover the company. The airline burned through $1.3-billion of cash in the quarter, or $14-million a day, and said it has $6.6-billion of liquidity.
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Andrew Willis