Source: Air Canada

Air Canada today reported financial results for the second quarter 2021.

  • Operating revenues of $837 million, an increase of $310 million or 59 per cent from the second quarter of 2020.
  • Negative EBITDA (1) (earnings before interest, taxes, depreciation, and amortization), excluding special items, of $656 million compared to negative EBITDA (excluding special items) of $832 million in the same quarter of 2020.
  • Operating loss of $1.133 billion compared to an operating loss of $1.555 billion in the second quarter of 2020.
  • Net cash burn (1) of $745 million, or about $8 million per day, on average.
  • Unrestricted liquidity of nearly $9.8 billion at June 30, 2021.

“The COVID-19 pandemic continued to weigh on Air Canada and the Canadian airline industry in the second quarter, with its impact on travel reflected in our results. Our employees, as they always have, focused on taking care of our customers while carrying them safely to their destinations, and continued to ensure the prudent management of our company. I thank them for their ongoing care, creativity and hard work in this very challenging and complex environment,” said Michael Rousseau, President and Chief Executive Officer of Air Canada.

“We are pleased to see vaccination rates increasing and more recent science-based easing of travel restrictions in Canada. The elimination of the quarantine period for fully vaccinated returning Canadians and the removal of other travel restrictions announced in June led to a significant increase in bookings. We expect this trend to further increase following the July 19th announcement communicating positive changes to come for Canadian travel restrictions. Our employees and other stakeholders should be encouraged by the positive industry trends and the strong improvement in the outlook we see for our airline. However, as we have historically done, we will continue to manage both our cost structure and the balance sheet very conservatively.

“Our cash burn in the second quarter of about $8 million on average per day was better than earlier projections of $13–$15 million. We attribute this to increased bookings and our continuing effective cost controls. We ended the quarter with close to $9.8 billion in unrestricted liquidity. We have seen in countries where reopening is further along than in Canada that the easing of travel restrictions not only facilitates travel but also drives additional demand for air travel and provides a potent stimulus to overall economic activity. Our current booking trend seems to be evidence of this, and recent science-based easing of travel restrictions not only allows customers to travel but further adds to their confidence to make travel plans. Taking all these factors into account, we can optimistically say that we are turning a corner and expect to soon see correlated financial improvements as evidenced by our cash burn guidance of $3–$5 million per day for the third quarter.

“We are excited and ready to welcome back our valued customers in greater numbers and to introduce them to the many improvements we have made to enhance their journey.  I remain fully confident that Air Canada will rebuild stronger and rise higher than ever before,” concluded Mr. Rousseau.

Second Quarter Updates

Capacity and Route Network

In the second quarter of 2021, Air Canada increased its ASM capacity by 78 per cent compared to the second quarter of 2020 (a reduction of 86 per cent when compared to the second quarter of 2019).

On June 14, 2021, Air Canada and Air Canada Cargo announced an initial list of planned routes for the Boeing 767-300ER freighters scheduled to enter service later in 2021. Since March 2020, Air Canada has operated more than 10,000 all-cargo flights using its wide-body passenger aircraft including certain temporarily modified Boeing 777 and Airbus A330 aircraft, which have additional available cargo space due to the removal of seats from the passenger cabin.

On June 15, 2021, Air Canada announced its peak summer schedule serving a total of 50 Canadian destinations from coast to coast. The schedule was developed to advance Canada’s economic recovery and to support the country’s tourism and hospitality businesses during the important summer period. It includes three new routes, the re-establishment of select regional routes, and wide-body aircraft featuring Air Canada Signature Class and Premium Economy Class on select transcontinental routes. In the second quarter of 2021, Air Canada also announced its international schedule for Summer 2021 and an expanded service to Hawaii for the Winter 2022 schedule, and, on June 18, 2021, operated its inaugural Montreal–Cairo flight.

On July 19, 2021, Air Canada announced its summer transborder schedule, including 55 routes and 34 destinations in the U.S., with up to 220 daily flights between the U.S. and Canada. The new schedule coincides with the easing of Canadian travel restrictions between the two countries as of August 9, 2021, 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 U.S. to enter Canada for non-essential travel, and other measures.