Air Canada reported its second quarter financial results Friday 23JUL.
While noting "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,” Michael Rousseau, President and Chief Executive Officer of Air Canada added, “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.”
Operating revenues for the carrier increased 59 per cent from the same time in 2020 to $837 million.
Operating losses shrunk from $1.555 billion in the second quarter of 2020 to $1.133 billion in the same quarter in 2021.
Its EBITDA (earnings before interest, taxes, depreciation, and amortization) while still in the red, has improved to negative $656 million compared to negative EBITDA of $832 million in the same quarter of 2020.
Air Canada is burning through about $8 million every day.
The company has unrestricted liquidity of nearly $9.8 billion at June 30, 2021.
"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,” said Rousseau.
He added this indirect appeal to the government: “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.”
“Turning a Corner”
“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,” Rousseau added.
As Open Jaw reported Thursday, just prior to the release of the carrier’s second quarter results, Air Canada announced it was seeking to refinance approximately USD $5.35 billion of debt to service other debts and secure operating capital.
Reopening Routes; Increasing Capacity
In this year’s second quarter, Air Canada increased its ASM capacity by 78 per cent compared to the second quarter of 2020. The company notes that’s still a reduction of 86 per cent when compared to the second quarter of 2019.
The carrier has been steadily reopening routes and adding capacity as Ottawa has eased restrictions on travel.
On 15JUN Air Canada announced its peak summer schedule serving a total of 50 Canadian destinations from coast to coast 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 on select transcontinental routes.
Also in Q2, the company announced its international schedule for Summer 2021 and an expanded service to Hawaii for the Winter 2022 schedule.
Just this week, following the government of Canada’s announcement it would be allowing fully vaccinated Americans to enter Canada without quarantine beginning in AUG, and vaccinated international travellers the following month, Air Canada swiftly released an updated 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.
"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, adding the company expects further financial improvements in the third quarter.
