Air Canada Reports First Quarter Net Loss of $1.3 Billion on Revenue Decline of 80 Percent to $729 M
Air Canada has reported a first quarter 2021 net loss of $1.3 billion or ($3.90) per diluted share on an 80 percent year-over-year decline in revenue to $729 million. At March 31, 2021, the company had total unrestricted liquidity of approximately $6.6 billion.
On Friday (May 7, 2021), Air Canada reported their first quarter 2021 financial results for the period ending March 31, 2021. The carrier reported a first quarter net loss of $1.3 billion or ($3.90) per diluted share compared to a loss of $1.05 billion or ($4.00) per diluted shared during the first quarter of 2020. Air Canada’s first quarter revenue declined 80 percent year-over-year to $729 million, compared to $3.0 billion in Q1 2020. During the quarter, the airline experienced a net cash burn of $1.27 billion or an average of $14 million per day. Air Canada closed the first quarter with unrestricted liquidity of approximately $6.6 billion.
In Friday’s announcement, Air Canada’s President and Chief Executive Officer, Michael Rousseau, said,
“During the quarter, Air Canada's cash burn rate progressively improved, albeit moderately given the ongoing impact of the pandemic on advance ticket sales. Air Canada had almost $6.6 billion in liquidity at the quarter's end and we subsequently finalized a financial package with the Government of Canada (primarily comprised of repayable loans) to provide access of up to $5.9 billion more in liquidity. Beyond serving as a layer of insurance, this makes available, if required, the resources necessary to rebuild and compete in the post-pandemic world.
“We continue to pursue other revenue opportunities. Air Canada Cargo has now completed more than 7,500 all-cargo flights since March of last year. We are building our transformed Aeroplan program, establishing a well-received partnership with Starbucks in Canada. We also maintained our focus on customers and employees, becoming the first carrier in Canada to be awarded APEX's Diamond Status for our COVID-19 Air Canada CleanCare+ biosafety program and we were named one of Montreal's Top Employers for the eighth time and one of Canada's Best Diversity Employers for the sixth consecutive year. Continuing on our commitment to sustainability, we now aim to achieve net-zero emissions by 2050. To reach this, we have set absolute midterm GHG net reduction targets by 2030 in our air and ground operations compared to our 2019 baseline, and have committed to investing $50 Million in Sustainable Aviation Fuel, and carbon reductions and removals.
“With these and other measures, Air Canada is poised to emerge strongly from the pandemic. It is now essential that governments communicate and implement a reopening plan for our country; recognizing that a healthy aviation sector is vital to Canada's economic recovery. Starting with replacing blanket restrictions with science-based testing and limited quarantine measures where appropriate, Canada can reopen and safely ease travel restrictions as vaccination programs roll out. We have seen elsewhere, notably in the U.S., that travel rebounds sharply as COVID-19 recedes and restrictions are lifted, and we fully expect this can be replicated in Canada.”
As a result of the ongoing pandemic, during the first quarter Air Canada reduced available seat mile (ASM) capacity by 82 percent compared to the first quarter of 2020, or 84 percent compared to Q1 2019. The carrier plans on doubling ASM capacity for the second quarter compared to Q2 2020. However, when compared to Q2 2019, second quarter 2021 ASM capacity is expected to decrease by 84 percent.
On March 1st, 2021, Air Canada consolidated their regional flying with Jazz Aviation LP and through an amended capacity purchase agreement (CPA), retroactive to January 1st, 2021, Jazz has become the sole operator under the Air Canada Express banner. Air Canada has transferred Embraer E175 operations to Jazz and expects to realize $400 million in cost reductions over the 15-year term of the amended CPA.
Since March 2020, Air Canada has operated over 7,500 all-cargo flights using widebody passenger aircraft including temporarily modified Boeing 777s and Airbus A330s to accommodate cargo in the passenger cabin. During the first quarter, the airline operated 2,362 all-cargo flights.
On April 12, 2021, Air Canada entered into a series of equity and finance agreements with the Government of Canada, allowing the company to access up to $5.9 billion in liquidity via the Large Employer Emergency Financing Facility (LEEFF) program. In March 2021, the carrier concluded a committed secured credit facility totaling US $475 million to finance the purchase of the next 15 Airbus A220s, scheduled for delivery through 2022. Air Canada also extended their US $600 million and $200 million revolving credit facilities by one year during the quarter to April 2024 and December 2023, respectively. As previously mentioned, at March 31, 2021, Air Canada had total unrestricted liquidity of approximately $6.6 billion.
Air Canada is Canada’s largest domestic and international airline, serving over 51 million guests in 2019. The Canadian flag carrier is a founding member of the Star Alliance and the only international network carrier in North America to receive a Four-Star ranking from Skytrax. For the last two years Air Canada was also named Global Traveler’s ‘Best Airline in North America.’
Source: Air Canada