Air Canada reported on Friday a second quarter net loss of $1.752 billion or $(6.44) per diluted share compared to a net income of $343 million or $1.26 per diluted share during the same period last year.
Today (July 31, 2020), Air Canada reported a second quarter operating loss of $1.555 billion and net loss of $1.752 billion or $(6.44) per diluted share on an 80 percent year-over-year revenue decline to $527 million. During the quarter, passenger traffic declined 96 percent versus the second quarter of 2019, while cargo revenue increased 52 percent to $269 million. The carrier’s Q2 capacity was reduced by 92 percent versus last year and the company expects to cut capacity in the third quarter by 80 percent compared to Q3 2019. As of June 30, 2020, Air Canada’s net debt increased $1.723 billion from December 31, 2019 to $4.564 billion, largely attributable to net cash used for operating and investing activities during the first half of the year. A weaker Canadian dollar resulted in an increase of foreign currency dominated debt (mainly U.S. dollars) by $350 million. In Friday’s announcement, Air Canada’s President and Chief Executive Officer, Calin Rovinescu, said in part,
"As with many other major airlines worldwide, Air Canada's second quarter results confirm the devastating and unprecedented effects of the COVID-19 pandemic and government-imposed travel and border restrictions and quarantine requirements. Canada's federal and inter-provincial restrictions have been among the most severe in the world, effectively shutting down most commercial aviation in our country, which, together with otherwise fragile demand, resulted in Air Canada carrying less than four per cent of the passengers carried during last year's second quarter. In the face of such an impossible operating environment, I am extremely proud of the outstanding efforts our team is making, doing everything possible to successfully navigate this crisis, leveraging our strong balance sheet and the many other assets we developed or acquired over the last decade.
"Since mid-March, we have raised $5.5 billion in new equity, debt and aircraft financings in the capital markets, providing us with over $9 billion in liquidity as of June 30th to help weather the COVID-19 crisis. In addition, we have taken decisive action to cut spending and preserve liquidity - including a major management and front-line workforce reduction, a $1.3 billion reduction of our fixed costs and capital investments, the permanent retirement of 79 aircraft (representing more than 30 per cent of our combined mainline and Air Canada Rouge fleet), the indefinite suspension of certain domestic routes and station closures, and a reduction in our network seat capacity of 92 per cent in the quarter. These were some of the painful but necessary steps we have taken to stabilize our airline and preserve cash in these uncertain times. We will now look to the future using this unprecedented challenge as an equally unprecedented opportunity to rebuild a smaller but even more nimble airline, with a simplified and younger fleet and a lower cost structure coming out of the crisis…”
During the second quarter, Air Canada reduced operating expenses by 64 percent to $2.462 billion compared to Q2 2019, and as of June 30, 2020, the carrier had unrestricted liquidity of $9.12 billion. Since the beginning of the crisis, the company reduced their workforce by over 50 percent or approximately 20,000 employees through layoffs, terminations, voluntary separations, early retirements and special leaves. Air Canada is also retiring 79 older aircraft from their fleet including Boeing 767s, Airbus A319s and Embraer 190s. For the third quarter, the company projects a total net cash burn of between $1.35 and $1.6 billion or $17 million/day, down from approximately $19 million/day during the second quarter. The projected Q3 net cash burn projection includes $4 million in CAPEX and $5 million per day in lease and debt service costs.
Source: Air Canada