Despite posting its biggest annual loss in 19 years, Air Canada’s outgoing CEO is optimistic that financial aid from the federal government will be coming soon to help the airline further weather the ongoing COVID-19 pandemic.
Calin Rovinescu, President and Chief Executive Officer of Air Canada, said Friday he is “very encouraged by the constructive nature of discussions that we have had with the Government of Canada on sector-specific financial support over the last several weeks.
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.”
Calling 2020 the “bleakest year in the history of commercial aviation,” Rovinescu revealed that after years of record results and growth, the airline suffered an annual loss of $3.776 billion last year compared to operating income of $1.650 billion in 2019.
“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,” said Rovinescu.
The airline reported that total revenues of $5.833 billion in 2020 declined $13.298 billion or 70 per cent from 2019. The airline reported 2020 negative EBITDA (excluding special items) or (earnings before interest, taxes, depreciation and amortization) of $2.043 billion compared to 2019 EBITDA of $3.636 billion. Unrestricted liquidity amounted to $8.013 billion as of December 31, 2020.
The airline stated that the catastrophic impact of COVID-19 and government-imposed travel restrictions and quarantines resulted in a 73 per cent decline in passengers carried during the year
“Despite a year-long onslaught of bad news, uncertainty and challenges posed by constantly changing requirements, our employees valiantly served our remaining customers professionally and transported them safely to their destinations, operated hundreds of repatriation flights and our Cargo team transported essential Personal Protective Equipment to Canada and around the world. I commend them for their courage as well as for their tireless efforts in these exceptionally trying circumstances to position our company well for when we emerge from the pandemic,” said Rovinescu who is set to retire on 15FEB. His successor is Michael Rousseau, who currently serves as the company’s Deputy Chief Executive and Chief Financial Officer.
In the past year, Air Canada has reduced staff by 20,000 and suspended service to many communities as a way to cut costs due to the reduced demand for travel during the pandemic.
Air Canada reduced ASM capacity by 67 per cent in 2020 compared to 2019 and plans to reduce first quarter 2021 capacity approximately 85 per cent compared to the first quarter of 2019 (which also represents a reduction of approximately 83 per cent compared to the first quarter of 2020). The airline stated that it will continue to adjust capacity and take other measures as required to adjust for demand that result from health warnings, travel restrictions, quarantines, border closures or market and regulatory conditions.
Canada’s Minister of Transport, Omar Alghabra, announced Thursday that the federal government approved Air Canada’s purchase of Transat A.T. Inc., subject to terms and conditions.
“Given the devastating impact of the COVID-19 pandemic on the air industry, the proposed purchase of Transat A.T. by Air Canada will bring greater stability to Canada’s air transport market. It will be accompanied by strict conditions which will support future international competition, connectivity and protect jobs. We are confident these measures will be beneficial to travellers and the industry as a whole,” Alghabra said in a media release.
The Government of Canada says it considered a broad range of factors in making its decision, such as level of service, wider social and economic implications, the financial health of the air transportation sector, and competition.