THE PEAK OF BLEAK: Air Canada losses ‘staggering,’ but optimism over bailout

Air Canada CEO Calin Rovinescu

In what Air Canada’s chief executive called “the bleakest year in aviation history,” the airline has announced a staggering $1.16-billion loss in the fourth quarter of 2020. However, Calin Rovinescu said he is encouraged by the progress of “constructive talks” with the federal government about a bailout package for the aviation sector.

Rovinescu warned that “there is no assurance at this stage that we will arrive at a definitive agreement on sector support,” but he added, “I am more optimistic on this front for the first time.”

While talks on the issue have been ongoing for months without a resolution, discussions have ramped up over the last several weeks, reaching a pace that Rovinescu called a “negotiation.”

Any deal would include a resolution on passenger refunds, a plan for returning service to regional markets, and financial support for the aerospace sector, Rovinescu said.

Rovinescu also hinted at potential reforms coming to Canada’s travel restrictions this spring, saying that he expected an increased COVID-19 testing program to replace some quarantine measures by the time airlines are scheduled to resume many flights on April 30.

Meanwhile, the company released its earnings report on the heels of news that the Canadian government approved Air Canada’s $190-million purchase of Transat A.T.

In a statement Friday, WestJet Airlines Ltd. criticized the government’s approval of the deal, saying the acquisition would be harmful for consumers.

“This decision shows blatant disregard for all Canadians who believe in healthy competition,” WestJet president and CEO Ed Sims said. “When Canadians look to explore the world and reunite with family and friends once again, they will face fewer choices and higher fares.”

Transport Minister Omar Alghabra, however, said that the purchase of Transat A.T. by Air Canada would bring greater stability to Canada’s air transport market amid the devastating impact of the COVID-19 pandemic on the industry.

That included a $1.16 billion or $3.91 per diluted share fourth quarter loss for Air Canada in 2020, compared with profit of $152 million or 56 cents per diluted share in the fourth quarter of 2019.

The airline’s operating revenue dropped to $827 million in the fourth quarter, down from $4.43 billion in the same three months of 2019, as the COVID-19 pandemic has hampered air travel.

As the pandemic sapped demand for air travel, Air Canada’s passenger numbers declined 73 percent in 2020 following several years of record growth for the airline, forcing the airline, Rovinescu said, to make “many painful decisions over the past year (that) include reducing staff by more than 20,000, dismantling a global network 10 years in the making, suspending service to many communities, and aggressively cutting fixed costs.”

Rovinescu, who has been at the helm of Air Canada since April 2009, said on his last earnings call before his retirement on February 15, that he had confidence in the long-term future of the company, despite the challenges of the pandemic.

“As we move into 2021, while uncertainty remains as a result of the new variants of the virus and changing travel restrictions, the promise of new testing capabilities and vaccines is encouraging and presents some light at the end of the tunnel,” he said.

“Above all, it must be remembered that the effects of COVID-19 are transitory.”