Skip to main content

Staff stand by at a nearly empty check-in area for Air Canada international flights at Vancouver International Airport on March 13, 2020.

DARRYL DYCK/The Globe and Mail

Air Canada has cut seat capacity by 50 per cent as Canada’s largest airline eliminates routes and parks planes amid government warnings against international travel to fight the global COVID-19 pandemic.

Air Canada offered its first look at the financial impact of the global plunge in demand for travel, calling for government aid hours before Prime Minister Justin Trudeau announced new measures to prevent the entry of new cases of the deadly virus.

Travellers who are not Canadians or permanent residents will be barred from entering Canada, with the exception of U.S. citizens, diplomats and air crews, Mr. Trudeau said in Ottawa. Inbound international flights as of March 18 will be restricted to four airports, Montreal, Toronto, Calgary and Vancouver, to allow better illness screening of passengers. And airlines must not board any passenger to Canada with COVID-19 symptoms, Mr. Trudeau said.

Story continues below advertisement

Governments around the world are telling people to avoid international travel and large groups, and stay home to slow the pandemic. Domestic carriers including Air Canada and WestJet Airlines and their global rivals are parking planes, suspending routes and cutting costs as they seek government assistance to enable them to weather the plunge in demand for travel.

Calgary-based WestJet Airlines, Canada’s second-biggest carrier, has idled 60 per cent of international capacity and at least 40 per cent of domestic routes, and warned of job losses in an “unprecedented” and quickly changing environment.

Air Canada has suspended at least 18 transatlantic routes, including flights to Madrid, Rome and London, on top of several Asian destinations, two in South America and four domestic flights.

“Air Canada, along with the rest of the global airline industry, is facing a severe drop in traffic and a corresponding decline in revenue as a result of COVID-19 outbreak and travel restrictions imposed in many countries around the world, including Canada and the United States,” Air Canada said.

Air Canada said on Monday it is withdrawing its financial guidance for 2020 and 2021, but is confident it has the cash to survive a steep drop in demand for air travel that is threatening the survival of the world’s air carriers. As of March 31, the carrier had $7.1-billion in cash, cash equivalents and short- and long-term investments, as well as a $200-million credit facility it will draw on next week.

To preserve cash, Air Canada said it is targeting $500-million in cost reductions and capital spending deferrals. It has suspended its share repurchase program and is using its US$600-million credit facility as it tries to raise more money with several parties over the coming weeks.

Air Canada’s share price fell by 28 per cent in trading on the Toronto Stock Exchange on Monday, for a drop of about 58 per cent since mid-February.

Story continues below advertisement

The world’s largest airlines have banded together to call on governments to help offset soaring losses owing to the new coronavirus outbreak.

Calin Rovinescu, chief executive of Air Canada, said Canadian airlines should receive government financial aid in the form of tax cuts and breaks on landing fees and other charges until the travel industry stabilizes.

"The crisis facing our industry is worsening as countries around the world adopt increasingly severe measures, national lockdowns and travel restrictions. We understand that the governments of the United States and many European countries such as Germany, France, Italy, Norway and others have approved or are considering assistance for their airline industries in one form or another,” Mr. Rovinescu said.

“Under these circumstances, we believe that the Canadian airline industry should also see similar assistance, whether through forbearance of taxes, landing fees and other charges that form part of the aviation burden in Canada or otherwise until the industry stabilizes.”

In a joint open letter, the oneworld, SkyTeam and Star Alliance members, which include nearly 60 airlines, urged governments and regulators “to evaluate all possible means to assist the airline industry during this unprecedented period.”

In a blunt assessment released Monday, the Centre for Aviation, an industry analyst, said that by the end of May, 2020, "most airlines in the world will be bankrupt.” It added that “co-ordinated government and industry action is needed now if catastrophe is to be avoided.”

Story continues below advertisement

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies