An Air Canada ticketing station at Toronto Pearson International Airport, on April 8, 2020.Nathan Denette/The Canadian Press
Air Canada AC-T topped expectations as it bled less cash in its latest quarter, a sign the airline’s underlying recovery remains on course despite the blow to holiday travel caused by the Omicron variant.
However, a loss of nearly $500-million prompted the carrier’s CEO to call for lighter travel restrictions, three days after the federal government announced it would lower key barriers to cross-border traffic.
“More needs to be done,” said chief executive Michael Rousseau, who wants to see an end to all predeparture COVID-19 testing rules.
“If bars and large public events can reopen at full capacity, and some provinces such as Quebec and Ontario can put an end to the vaccination passport, there is no reason to single out travel.”
On Tuesday, the Health Minister Jean-Yves Duclos said Canada would lift its blanket travel advisory and the requirement for predeparture COVID-19 molecular testing as of Feb. 28 – though potentially cheaper and easier-to-access rapid antigen tests will be mandatory. Unvaccinated children under 12 also no longer need to self-isolate upon return to the country.
The advisory against travel abroad took effect in mid-December in response to the Omicron variant, which reversed airlines’ upward trajectory across the globe.
“We were seeing strong growth before Omicron hit. Then it was almost a very quiet period for a month, month and a half, with a lot of cancellations,” Mr. Rousseau told analysts Friday. “But over the last month or so, we have started seeing strong growth, strong momentum in bookings.”
The country’s largest airline cancelled 36 per cent of its January flights, based on the number scheduled in mid-October. By Jan. 28 it had nixed nearly half of its February flights, according to flight data firm Cirium. As of late last month, more than 43,300 trips had been scrapped in the first two months of 2022.
Corporate travel – a key market that yields high profit margins for carriers – also continues to lag as many companies hold off on return-to-work policies, though hints of growth are emerging.
“We do see – very slow – but we do see progress week over week,” said chief commercial officer Lucie Guillemette. ”We’re just anxious to see the trend take a bit of a sharper turn here.”
Fourth-quarter adjusted earnings were “modest” but positive for the first time in seven quarters, Mr. Rousseau noted. The company reduced its net loss by 60 per cent year over year. Passenger revenue climbed by $1.6-billion to more than four times the year-earlier period as flight volume soared in October and November relative to 2020.
Cargo revenues also helped offset Air Canada’s losses, jumping 163 per cent to $490-million compared with the same period a year earlier.
As e-commerce sales and demand for delivery services continues to surge, the airline in December launched its first Boeing 767 dedicated freighter, with three more expected to hit the skies this year.
Mr. Rousseau said robust advance ticket sales, which grew almost $400-million in the quarter, give the company confidence that passengers will return and that Omicron has deferred, not cancelled, travel.
Jet fuel prices marked one threat to profit margins. The expense rose more than threefold compared with the end of 2020 owing to more trips, as well as a 67-per-cent increase in the price of jet fuel, chief financial officer Amos Kazzaz said.
Despite pricier hydrocarbons and expected interest-rate hikes, the rollback of travel restrictions in Canada and across the globe bodes well for Air Canada.
“The overall Canadian airline and travel sector will truly turn the corner this year, bolstered by rapidly strengthening demand for air travel,” Robert Kokonis, president of consulting firm AirTrav Inc., said in an e-mail.
On Friday Air Canada reported a fourth-quarter net loss of $493-million or $1.38 a diluted share, compared with a net loss of $1.16-billion or $3.91 a diluted share in the year-earlier period.
The Montreal-based company’s operating revenues for the quarter ended Dec. 31 were $2.73-billion, more than triple the $827-million recorded in the same period of 2020.
Analysts polled by financial data firm Refinitiv expected Air Canada to record revenue of $2.43-billion and a $539-million loss.
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