Air Canada is anticipating a recovery in demand in the coming months as travel restrictions are eased and leisure passengers look to get away after being grounded by COVID-19. Although overall bookings remain below pre-pandemic levels, customer interest began to increase in June with the elimination of quarantines for fully vaccinated returning Canadians and the removal of other travel restrictions.
“We can now optimistically say that we are turning a corner, and we expect to soon see correlated financial improvements,” CEO Michael Rousseau said Friday. “Indications are that the worst effects of the COVID-19 pandemic may now be behind us. Based on what we are seeing in other markets that are further along in reopening than Canada, we anticipate travel will resume at a quickening pace.”
Rousseau said bookings are steadily increasing for domestic, transborder and Atlantic markets as well as to sun destinations for the coming winter. In some weeks of June future bookings were ahead of the same period in 2019.
“We expect the most recent announcements of the Government of Canada relaxing existing measures will further help strengthen the interest of our customers in flying again,” he said.
Current demand is largely for leisure and visiting friends and family, but Air Canada expects to see a progressive return of corporate demand in October and November, added COO Lucie Guillemette.
That could be aided by the ability of Canadian passengers relying on COVID tests taken in Canada for trips of less than 72 hours.
“We are encouraged by some of the commentary from our peers in the United States with regards to overall business travel recovery,” she told analysts.
The Montreal-based company says it lost $1.17 billion compared with a loss of $1.75 billion a year earlier. Revenues during the three months ended June 30 surged 58.8 per cent to $837 million from $527 million in the second quarter of 2020.
The country’s largest airline increased its seat capacity by 78% compared to the same time last year and was down 86% from the second quarter of 2019. It plans to increase available seat miles in the third quarter so capacity will be 65% below the same period in 2019.
“The third-quarter outlook pointed to healthy demand recovery and a significant improvement in daily cash burn,” Walter Spracklin of RBC Dominion Securities wrote in a report.
Air Canada says it has refunded about $1 billion for non-refundable tickets and expects to pay an additional $200 million in the third quarter, which will be covered by the federal government’s $1.4 billion refund credit facility.
The airline says it has recalled about 2,900 employees in June and July as it restores service this summer to destinations, particularly in Canada and the US.
On July 19, Air Canada announced its summer transborder schedule, including 55 routes and 34 destinations in the US, with up to 220 daily flights between the US and Canada. The new schedule coincides with the easing of Canadian travel restrictions between the two countries as of Aug. 9, including the removal of hotel quarantine requirements for all travellers, relaxed testing requirements for Canadians travelling to the US for less than 72 hours, and allowing fully vaccinated citizens and permanent residents of the US to enter Canada for non-essential travel, and other measures.