MIAMI – Air Canada (AC) reported total revenues of US$5,8bn in 2020 in its Annual Results report today, a drop of 70% from the prior year. Canada’s flag-carrier also reported an operating loss of US$3.776bn in 2020. Both declines have been blamed on COVID-19 and travel restrictions.
“[Today], we close the book on the bleakest year in the history of commercial aviation…” said Calin Rovinescu, President and CEO of Air Canada. “The catastrophic impact of COVID-19 and government-imposed travel restrictions and quarantines has been felt across our entire network, deeply affecting all of our stakeholders.”
The Montreal-based airline was forced to cut more than 20,000 positions, suspend services to many communities, and “aggressively” eliminate fixed costs last year. The airline also retired several older aircraft, including its last Airbus A319, Airbus A320 and Boeing 767, in order to focus on greener, fuel-efficient aircraft.
Canada’s travel restrictions include a ban on all foreign nationals entering Canada and mandatory quarantines for Canadian citizens returning home from trips abroad or to other provinces. These restrictions have led to a 73% decline in passengers carried by AC.
A Sense of Optimism for Air Canada
Rovinescu is optimistic about the future of AC and the aviation industry as a whole, despite the report. He is “encouraged” by the willingness of the Government of Canada to discuss sector-specific financial support with him.
“The promise of new testing capabilities and vaccines is encouraging, and presents some light at the end of the tunnel.”
COVID-19 testing will be critical for the airline’s recovery in the coming months. Recently, the airline teamed up with McMaster HealthLabs and the Greater Toronto Airports authority to study international arrivals at Toronto Pearson Airport. Preliminary results have shown that effective testing may reduce the need for mandatory quarantines.
Rovinescu has another reason to sound optimistic. The Canadian government has approved AC’s curtailed purchase of Transat A.T. Inc., including rival Air Transat (TS), citing the impact of COVID-19 as a factor in the long-awaited decision.
COVID-19 and New CEO
Air Canada is one of the first private sector companies to invest in Abbott’s ID NOW COVID-19 rapid response tests. These tests can identify cases in 13 minutes or less, allowing for quicker and safer access to public locations. The airline will also collaborate with Shopper’s Drug Marts to provide fliers with the opportunity to take a pre-departure PCR test, to ensure compliance with international travel requirements.
There is still uncertainty on the airline’s horizon, and it’s not all related to COVID-19. On Monday, February 15, Michael Rousseau will be stepping into Rovinescu’s role as CEO. The new CEO will face devastating losses, near empty airports, and a complicated relationship with the Canadian government.
Prime Minister Justin Trudeau and the Canadian government have yet to formally announce a financial aid package for airlines. This, as the government has tightened travel restrictions even further, going so far as to tell Canadian citizens not to go anywhere. Rousseau will have to both manage cash-preservation in the short term, as well as prepare the airline for an increase in travel demand once restrictions are relaxed.
Featured image: Despite a rough 2020, Air Canada is optimistic about the future of air travel. Simon Gloyn-Cox @YVR.Photography