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Air Canada lost $4.6-billion in 2020 due to the “catastrophic” impact of the COVID-19 pandemic.
Canada’s largest airline said its full-year revenue fell by $13.3-billion to $5.9-billion, compared with 2019, as passenger volume dropped by 73 per cent.
“With today’s release of 2020 fourth quarter and full year results, we close the book on the bleakest year in the history of commercial aviation, after having reported several years of record results and record growth at Air Canada,” said Calin Rovinescu, chief executive officer of Air Canada.
”While undeniably grim, results such as these are being reported the world over by our industry due to the impact of COVID-19 and government travel restrictions, quarantines and advisories,” Mr. Rovinescu said on a conference call with analysts on Friday morning.
Mr. Rovinescu will retire on Feb. 15, replaced by Michael Rousseau, chief financial officer.
The airline burned through an average of $13-million a day and debt increased by $2-billion to $7-billion, Air Canada said in financial results released on Friday morning. The carrier had $8-billion in liquidity as of Dec. 31.
For the fourth quarter, Air Canada posted a loss of $1.2-billion, or $3.91 per share, compared to a profit of $152-million (56 cents) in the same period in 2019.
Air Canada has laid off more than 20,000 people, retired dozens of planes and suspended several routes and airport operations to save money amid the pandemic that has prompted governments to close borders and warn people not to travel.
Air Canada said it will reduce its passenger capacity in the first quarter of 2021 by 85 per cent, compared with 2019. This is steeper reduction than it forecast in January.
Walter Spracklin, a Royal Bank of Canada stock analyst, said Air Canada’s quarterly results and first-quarter outlook missed his expectations across a range of categories – profit, costs, cash burn and seat capacity.
“On a positive note, the company sounded optimistic, for the first time, regarding sector-specific government support,” Mr. Spracklin said in a note to clients.
In a statement accompanying the earnings, Mr. Rovinescu said he is encouraged by the “constructive nature” of bailout talks with the federal government. “While there is no assurance at this stage that we will arrive at a definitive agreement on sector support, I am more optimistic on this front for the first time,” he said.
On the airline’s $180-million bid to take over smaller rival Transat AT Inc., the government on Thursday approved the deal with some conditions designed to protect jobs and foster some competition. Air Canada made no comment on the government’s announcement in the earnings release. The airline reiterated Feb. 15 is the date on which it can walk away from the deal if it has not received approvals from regulators in Canada and the European Commission.
A spokeswoman for the EC said in an e-mail on Friday morning the antitrust investigation there remains on hold awaiting more information from the companies. “The clock is still stopped,” Maria Tsoni said.
A decision from Europe is expected in the first half of 2021, Transat said in a statement. The airline said it will talk with Air Canada about an extension of the Feb. 15 deadline.
WestJet Airlines Ltd. responded to the deal’s Canadian approval with a statement that declared Canada is “closed to competition.” The Calgary-based airline lobbied against the combination of its two rivals, arguing it would restrict choice and grant a monopoly to Air Canada in some markets.
“This decision shows blatant disregard for all Canadians who believe in healthy competition,” said Ed Sims, WestJet’s CEO, said in a statement on Friday morning. “When Canadians look to explore the world and reunite with family and friends once again, they will face fewer choices and higher fares.”
Mr. Sims pointed to a report by Canada’s Competition Commissioner issued in March that found the Air Canada-Transat takeover would drive up airfares, limit customer choices and decrease service where networks overlap.
In issuing the approval, Transport Minister Omar Alghabra said Air Canada’s takeover of Transat would bring greater stability to the aviation sector amid the pandemic, and the conditions the government applied will support international competition, routes and jobs.
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2021-02-12 11:43:09Z
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