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  • Joe Breitfeller

Air Canada Reports Full Year 2020 Net Loss of $4.6 Billion on 70 Percent Revenue Decline to $5.8 B

For the full year 2020, Air Canada reported a negative EBITDA of $2.04 billion compared to a positive EBITDA of $3.6 billion for FY 2019. The carrier’s 2020 operating loss was $3.8 billion, and net loss was $4.6 billion, on a 70 percent decline in revenue to $5.8 billion.

Air Canada Boeing 787-9 Dreamliner - Courtesy Air Canada

On Friday (February 12, 2021), Air Canada reported their fourth quarter and full year 2020 financial results. For the fourth quarter, the carrier reported a net loss of $1.2 billion or ($3.91) per diluted share compared to a net income of $152 million or $0.56 per diluted share for Q4 2019. For the full year 2020, Air Canada reported a net loss of $4.6 billion or ($16.47) per share, compared to a FY 2019 net income of $1.5 billion or $5.44 per diluted share. The airline’s 2020 revenue declined $13.3 billion or 70 percent year-over-year to $5.8 billion. As of December 31, 2020, Air Canada had $8.0 billion in unrestricted liquidity. In Friday’s announcement, Air Canada’s President and Chief Executive Officer, Calin Rovinescu, said,

“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. 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 per cent decline in passengers carried at Air Canada during the year and an operating loss of nearly $3.8 billion. 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.

"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. 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.

“Given these circumstances, we have made many painful decisions over the past year. These include reducing staff by more than 20,000, dismantling a global network ten years in the making, suspending service to many communities and aggressively cutting fixed costs. At the same time, we have bolstered our liquidity position through several debt and equity financings to allow for additional operational flexibility and to support the implementation of our COVID-19 Mitigation and Recovery Plan. We rationalized our fleet, accelerating the permanent removal of older, less efficient aircraft, and restructured new aircraft orders so that we will have a more fuel-efficient and greener fleet that is right-sized for the post-COVID-19 recovery period. In addition, we completed essential customer-oriented initiatives, such as rolling out our new reservation system and delivering on a much-improved Aeroplan loyalty program that will be amongst the industry leaders. Our Cargo team delivered stellar results in 2020 and showed that we can build a strong, dedicated cargo fleet going forward.

“As we announced last Fall, I will be retiring as President and Chief Executive Officer effective February 15th and Michael Rousseau, our Deputy Chief Executive and Chief Financial Officer, who has worked very closely with me for the last 12 years, will assume the role. 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. I am extremely grateful to our customers for their trust and confidence, our employees and partners for their unwavering dedication and loyalty to our airline, and to our Board of Directors for their full support throughout my tenure.”

During 2020, Air Canada reduced their available seat mile (ASM) capacity year-over-year by 67 percent due to the impact of the global COVID-19 pandemic, and for Q1 2021 will reduce capacity by approximately 85 percent versus Q1 2019.

Air Canada bolstered liquidity in 2020 through a series of financing transactions totaling approximately $6.8 billion and completed companywide cost and capital reductions of $1.7 billion. The company reported a 45 percent or $7.9 billion decrease in annual operating expenses, largely attributable to reduced capacity, variable cost management and a reduction in fixed expenses. Air Canada also cut 50 percent of their workforce or approximately 20,000 employees in 2020 through layoffs, terminations, voluntary separations, early retirements and special leaves. In January 2021, Air Canada announced a further job cuts impacting an additional 1,700 employees. For the fourth quarter 2020, Air Canada’s net cash burn was $1.4 billion or approximately $15 million per day.

Air Canada is permanently retiring 79 aircraft from their fleet including Boeing 767s, Airbus A319s and Embraer E190s. In early November, the airline amended their purchase agreement for Airbus A220-300 aircraft, deferring 18 deliveries over 2021 and 2022, and reducing their original order for 45 of the aircraft by at least 12. Air Canada also amended their purchase agreement with Boeing, canceling 10 of 50 Boeing 737-8 MAX aircraft on order and deferring the delivery of their remaining 16 aircraft over the period from late 2021 through 2023. As a result of the amended agreements, Air Canada will reduce 2020-2023 CAPEX by approximately $3.0 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, who also named the carrier ‘2019 Best Airline in North America.’

Source: Air Canada

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