Air Canada trims Q2 loss as spring travel boom sends revenue soaring

On Tuesday, Air Canada reported a second-quarter loss of $386 million compared with a loss of $1.17 billion a year earlier, when extensive travel restrictions were still in place. Revenue totalled $3.98 billion, compared with $837 million during the same time last year, a 375 per cent leap.

The Montreal-based carrier said its loss for the three months ended June 30 totalled $1.60 per diluted share, compared with a loss of $3.31 per diluted share in the second quarter of 2021.

The outcome fell 94 per cent below analysts’ expectations of 83 cents per diluted share in losses, according to financial data firm Refinitiv.

Air Canada says its second-quarter cost per available seat mile decreased to 20.8 cents from 49.3 cents a year earlier, while its adjusted cost per available seat mile was 13.1 cents, compared with 41.5 cents in the second quarter of 2022.

With bookings riding high, Air Canada posted a nearly fivefold revenue increase in its latest quarter, but continued to suffer net losses in the hundreds of millions due to a “very challenging” three months, said CEO Michael Rousseau.

Rousseau’s comments come after months of global industry turbulence as airlines, airports and governments struggled to cope with a massive travel resurgence that unleashed scenes of chaos in terminals worldwide and hit Air Canada’s bottom line as it paid to accommodate delayed passengers.

The summer travel season was almost back in full swing, the airline said. Advance ticket sales in the second quarter hit 94 per cent of 2019 levels and remain strong, with no knock-on effects of an economic slowdown, chief financial officer Lucie Guillemette told analysts on a conference call Tuesday.

Customer volume shot up to 9.1 million passengers in the quarter ended June 30, reaching 71 per cent of levels from the same period in 2019. Passenger revenue topped 80 per cent of 2019 levels, partly because higher fuel costs were passed on to passengers; the airline spent 45 per cent more on jet fuel for the quarter despite a flight schedule 20 per cent smaller than three years prior.

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Staff numbers closed out the quarter at 90 per cent of the pre-pandemic payroll, Air Canada reported, saying it has “doubled down” on hiring and training since last autumn. The airline boasted 21,300 full-time workers as of September 2021, and finished June with 29,500.

“But despite all the planning, the increased traffic has created difficulties for all participants in the air transport system, a situation that we’re seeing around the globe,” Rousseau said.

He said “we deeply regret” the disruptions passengers have endured, while chief operations officer Craig Landry offered an apology for the lack of “operational stability.”

But Landry also pointed the finger at various industry players for the cascade of cancellations and other hiccups, citing staff shortages in areas ranging from security and customs screening to food.

Mechanical failures in airport baggage systems also played a role in the constant luggage mishaps that have plagued passengers in recent months, he added.

As travellers flocked back to the tarmac _ and faced nerve-fraying delays _ the cost of covering their hotel stays, food vouchers and late luggage deliveries contributed to a heftier per-customer cost that surged past Air Canada’s forecasts.

“There was a lot more money paid to either re-accommodate passengers or to look after them,” said Robert Kokonis, president of Toronto-based consultancy AirTrav Inc.

“Anybody that touches Pearson, Montreal, to a lesser degree Vancouver, it’s a disaster.”

The difficult summer ramp-up pushed Air Canada and Toronto’s Pearson airport to the very top of global flight delay lists, with Canada’s largest airline frequently reaching No. 1 for percentage of delayed trips _ up to two-thirds of scheduled flights on some days _ in June and the beginning of July.

However, its performance has improved markedly in the past four weeks after the company scaled back its ambitious rebound plans and slashed more than 15 per cent of its scheduled flights in July and August, affecting hundreds of thousands of customers.

While leisure travel has come roaring back, corporate trips have been slower to return, climbing from 40 per cent of pre-pandemic volumes in March to more than 60 per cent by the end of June, Guillemette said.

Demand in both areas fell off sharply in March 2020 after COVID-19 border restrictions brought the aviation world to a screeching halt.

Until July 5 of last year, fully vaccinated Canadians had to quarantine for at least eight days upon arrival, and until April 2022 had to present a negative COVID-19 test in order to enter the country.

Fully vaccinated Americans could not cross the border for non-essential reasons until Aug. 9, 2021, a measure that was lifted for citizens of other countries four weeks later.