Catastrophic impact of COVID-19 leads to $4.6 billion net loss in 2020 for Air Canada

Catastrophic impact of COVID-19 leads to $4.6 billion net loss in 2020 for Air Canada

MONTREAL — Air Canada has recorded a net loss of $4.647 billion for 2020, in the wake of the pandemic that has devastated airlines around the world.

This time last year Air Canada posted net income of $1.476 billion for 2019.

The net cash burn rate for 2020 is staggering: $4.672 billion, or approximately $13 million per day, on average.

“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, President and CEO of Air Canada.

“The catastrophic impact of COVID-19 and government-imposed travel restrictions and quarantines has been felt across our entire network, deeply affecting all of our stakeholders. It has resulted in a 73% decline in passengers carried at Air Canada during the year and an operating loss of nearly $3.8 billion,” he added.

Total revenues of $5.833 billion in 2020 declined $13.298 billion or 70% from 2019. Air Canada also reported an operating loss of $3.776 billion in 2020 compared to operating income of $1.650 billion in 2019. Capacity in 2020 was reduced by 67% in 2020 compared to 2019.

“Yet, 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.



On Nov. 8, 2020 then-Transport Minister Marc Garneau announced a financial package for Canada’s airlines, one that would be contingent on refunds, which for agents could trigger mass commission recalls.

Since that time there have been no further details about a bailout.

However discussions between the airlines and the federal government are ongoing, and are reason for optimism, says Rovinescu.

“As we move into 2021, 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,” he says. “As our success raising significant liquidity throughout 2020 indicates, investors and financial markets share our optimistic long-term outlook for our airline. I am also 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.”

Air Canada’s cost-saving measures as it works to survive the pandemic include reducing staff by more than 20,000, dismantling a global network 10 years in the making, suspending service to many communities and aggressively cutting fixed costs.

The company has also bolstered its liquidity position through several debt and equity financings.  totalling $6.780 billion, to allow for additional operational flexibility and to support the implementation of its COVID-19 Mitigation and Recovery Plan. Air Canada’s fleet has been streamlined, accelerating the permanent removal of older, less efficient aircraft. New aircraft orders have been restructured to give the airline a more fuel-efficient and greener fleet “that is right-sized for the post-COVID-19 recovery period.”

Air Canada also completed customer-oriented initiatives, such as rolling out its new reservation system and delivering on a much-improved Aeroplan loyalty program, he added.

Rovinescu is retiring as Air Canada’s President and CEO effective Feb. 15, at which point Michael Rousseau, currently Air Canada’s Deputy Chief Executive and Chief Financial Officer, will take the reins. “I have absolute confidence in Mike and the entire leadership team – and know that as a result of our strong culture and discipline, Air Canada has the strength, agility, and resources to overcome the current crisis and to keep adapting to remain a global leader in the post-pandemic world,” said Rovinescu.

Yesterday Air Canada received word from the federal government that its proposed acquisition of Transat had been approved. The deal is still awaiting approval from the European Commission.

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