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Air Canada Reports Second Quarter Net Loss of $1.2 Billion on 59 Percent Revenue Increase to $837 M

Air Canada has reported a second quarter 2021 net loss of $1.2 billion or ($ 3.31) per diluted share on a 59 percent year-over-year increase in revenue to $837 million. The carrier ended the quarter with approximately $9.8 billion in unrestricted liquidity.

Air Canada Reports Second Quarter 2021 Financial Results - Courtesy Air Canada

On Friday (July 23, 2021), Air Canada reported their financial results for the second quarter for the period ending June 30, 2021. The airline reported a net loss of $1.17 billion or ($3.31) per diluted share on a 59 percent revenue increase versus Q2 2020 to $837 million. Air Canada’s second quarter net cash burn totaled $745 million, or an average of about $8.0 million daily. At June 30, 2021, the carrier had approximately $9.8 billion in unrestricted liquidity.

In Friday’s announcement, Air Canada’s President and Chief Executive Officer, Michael Rousseau, said,

“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. Our employees, as they always have, focused on taking care of our customers while carrying them safely to their destinations, and continued to ensure the prudent management of our company. I thank them for their ongoing care, creativity and hard work in this very challenging and complex environment.

“We are pleased to see vaccination rates increasing and more recent science-based easing of travel restrictions in Canada. The elimination of the quarantine period for fully vaccinated returning Canadians and the removal of other travel restrictions announced in June led to a significant increase in bookings. We expect this trend to further increase following the July 19th announcement communicating positive changes to come for Canadian travel restrictions. 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. However, as we have historically done, we will continue to manage both our cost structure and the balance sheet very conservatively.

“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. We ended the quarter with close to $9.8 billion in unrestricted liquidity. 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. 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.

“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.”

During the second quarter, Air Canada increased their available seat mile (ASM) capacity by 78 percent versus Q2 2020, a reduction of 86 percent compared to the second quarter of 2019. On June 15, 2021 the airline announced their peak summer schedule with 50 Canadian destinations. Air Canada also announced their summer 2021 international schedule, including inaugural service between Montreal and Cairo which launched on June 18, 2021. For winter 2021/22, the airline will also offer expanded service to Hawaii. On July 19, 2021, Air Canada also announced their summer transborder schedule with up to 220 daily flights between Canada and the U.S. on 55 routes to 34 destinations.

On April 12, 2021, Air Canada entered into a series of debt and equity financing agreements with the government of Canada, facilitating access to up to $5.9 billion through the Large Employer Emergency Financing Facility (LEEFF) program. The package also included an equity investment for gross proceeds of $500 million for Air Canada shares.

On April 15, 2021, Air Canada repaid US $400 million of 7.750% Senior Unsecured Notes upon maturity. On July 19, 2021, the carrier announced the launch of the syndication of a new senior secured loan B expected to mature in 2028, as well as the completion of the syndication of a new senior secured revolving credit facility expected to mature in 2025. Air Canada intends to complete financing transactions with gross proceeds of approximately US $5.35 billion to be used to refinance the company’s 4.75% senior secured notes due 2023 and 9.0% second lien notes due 2024. The proceeds from the revolving credit facility will fund working capital and be used for other corporate purposes.

Air Canada is Canada’s largest domestic and international airline. 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.’ Additionally, Air Canada has committed to a net zero emissions goal from all global operations by 2050.

Source: Air Canada


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