Despite Omicron’s dampening effect on travel recovery in the New Year, Air Canada’s assessment of its Q1 2022 results, issued on 26APR, was both positive and determined.
Michael Rousseau, President and Chief Executive Officer of Air Canada, noted in a statement released by the airline that “substantial year-over-year improvement in Air Canada's first quarter results is clear evidence that a recovery is underway.”
- Q1 2022 - $2.573 billion in operating revenues grew more than 3 times Air Canada’s operating revenues in the first quarter of 2021.
- Half the operating loss. The airline posted a first quarter operating loss of over half a billion dollars - but that’s a huge improvement over the previous year, which saw an operating loss of double that amount - $1.049 billion - in the first quarter of 2021.
- In another sign of recovery, Air Canada revealed that advance ticket sales grew about $1.2 billion in the first quarter of 2022 from year end 2021.
"The year began with weakness brought on by the Omicron variant and travel restrictions,” acknowledged Rousseau.
“However, we quickly rebounded in March with passenger volumes exceeding the strong December levels and passenger ticket sales in March 2022 over 90 per cent of March 2019 levels, a leading indicator to much stronger 2022 second and third quarter results,” he added.
Rousseau went on to describe Air Canada’s recovery strategy that included “key long-term projects to increase and diversify revenue and lower costs.”
He cited the very successful expansion of Air Canada Cargo. Its quarterly revenue increased by almost half to $398 million from the first quarter of last year. The company is planning further expansion with the addition of two new Boeing 767-300 freighters to be delivered this year.
WATCH THIS EXCLUSIVE OPEN JAW VIDEO: Lucie Guillemette, Air Canada's Executive VP and CCO, speaks with Open Jaw’s Nina Slawek about pax aircraft conversions to cargo at the start of the pandemic and the growth of the company’s cargo business.
Another revenue success for Air Canada has been the expansion of loyalty program Aeroplan.
“Aeroplan air redemption bookings in the quarter exceeded those of the same quarter in 2019 by 19 per cent. The relaunched program saw the highest new member acquisitions and redemptions in a quarter, and generated third-party gross billings exceeding first quarter 2019 levels by 21 per cent," said Mr. Rousseau.
“Adapting for the post-pandemic world”
Air Canada devoted two large paragraphs in its release to government travel restrictions, and by implication, their role in reining in what might otherwise be faster recovery.
It particularly noted the rule changes announced by Ottawa on 17MAR - late in Q1 - that allowed fully vaccinated pax to skip pre-entry COVID testing as of 01APR. While that rule change took effect on the first day of the second quarter, the entire industry had been calling for pre-entry testing to be dropped as an impediment to recovery.
“Given pent-up travel demand, the demonstrated loyalty of our customers, and the expected further removal of travel-related government restrictions, Air Canada anticipates its recovery will gain momentum through the balance of 2022 and beyond," said Rousseau.
The CEO also acknowledged growing competition in Canada’s airline industry, which is seeing a number of new airlines launching, as well as big changes, like the announcement 02MAR that WestJet had an agreement to buy Sunwing.
In his comments, Rousseau said, “We are responding to the evolving competitive landscape through our Rise Higher strategy to elevate all aspects of our business, particularly as it relates to the customer experience.”
Looking Ahead
While Air Canada contracted its schedule, suspending flights to certain Caribbean destinations from 24JAN to 30APR in the face of Omicron, in FEB, it announced upcoming schedule expansions:
- Expansion of Air Canada’s North American network for Summer 2022 that includes the launch of new service on four transborder and three domestic routes, as well as the restoration of 41 North American routes.
“Air Canada plans to operate to 51 Canadian and 46 U.S airports this summer and offer customers the largest network and most travel options of any Canadian carrier,” the airline’s Q1 results release said.
- Expanded Summer 2022 international schedule with 34 routes relaunching across the Atlantic and Pacific.
In Q2, Air Canada announced with its Q1 quarterly results that it plans to increase capacity 4 times over capacity in the same quarter in 2021.
That would bring the airline’s capacity to nearly 3/4 of its pre-pandemic capacity in the same, second quarter of 2019.
