Air Canada lost $386 million in the second quarter, but ticket sales soared as travelers took to the skies more than two years after the pandemic.
For the three months ending June 30, operating income increased nearly fivefold to $3.98 billion as Air Canada flew more than 9.1 million people, up eight million from the same quarter in 2021.
The rush to fly again has overwhelmed airports, airlines and government agencies, leading to long lines and flight delays or cancellations at several airports. Air Canada reduced its schedule to June, July and August, as she and other companies face staffing shortages.
“The industry around the world is facing unprecedented conditions as it emerges from pandemic-related restrictions,” said Michael Rousseau, CEO of Air Canada. “The situation is particularly challenging in Canada, where we have gone from a nearly two-year air travel shutdown to rebuilding our capacity to close to 80 percent of 2019 levels in just a few months.”
Despite strong demand, Air Canada’s results highlight the continuing toll the pandemic and travel shutdowns are taking on the airline industry.
Air Canada lost $1.60 per share, compared to the same quarter in 2021, when it lost $1.17 billion, or $3.31 per share.
Walter Spracklin, an analyst at the Royal Bank of Canada, said Air Canada’s results were “mixed” but noted the airline has not changed its guidance for 2022 and is headed in the right direction. Earnings before taxes and margins were lower due to higher fuel prices and operating costs.
Air Canada said it entered the summer at 90 per cent of its 2019 staffing level to operate 80 per cent of its pre-pandemic schedule, but still found its flights and passengers faced long delays, especially at the Toronto airport. Pearson.
“We are working closely with our service providers and governments to continue to address the issues facing aviation in Canada and around the world,” said Mr. Rousseau. “We recognize the inconvenience and disruption some of our customers have experienced and deeply regret it. This is not business as usual for us.”
Air Canada executives on a conference call with analysts on Tuesday spent much of their time explaining the disruptions customers faced, apologizing and describing the problems as temporary.
Craig Landry, Air Canada’s chief operating officer, said the airline flew 84,600 flights in the second quarter, compared with 20,600 in the same period a year earlier.
“We’ve never seen demand increase at such a high rate in such a short period of time … after being almost at a standstill for almost two years,” Landry said. “The same can be said for the many players that are part of the air transportation system.”
Staff shortages and a lack of preparation were seen at many of the companies and agencies serving travelers, Air Canada said. These include security and customs officers, air traffic control, catering and baggage delivery. Landry said the airline realizes it is at the center of customer frustration when delays are due to any of those factors.
“This type of instability has a direct impact on our operations,” Landry said.
The airline’s workforce has 29,500 people, up from 16,500 in the same quarter of 2021.
Air Canada said airport delays have been more pronounced in Canada, particularly Toronto Pearson and Montreal, because COVID-19 restrictions were in place here longer than in most countries. This led to further pent-up demand that was unleashed as rules were relaxed.
On April 1, the government removed the requirement that travelers show a negative COVID-19 test. As of June 20, domestic travelers no longer need to be vaccinated, although foreign nationals entering Canada do.
Air Canada’s net loss since the beginning of 2020 totals $9.8 billion in a crushing period for the aviation industry. The airline’s net debt was $7 billion in the last quarter and it had $10.5 billion in cash, investments and available credit.
In 2021, Air Canada borrowed $1.4 billion from a government program to provide refunds to customers whose flights were canceled during the pandemic. The government invested $500 million in the airline at $23.18 per share. Air Canada shares traded at $17.60 on Tuesday, up 1%.
The pandemic prompted governments to close borders, ban some flights and warn people to stay home to limit the spread of the deadly virus. COVID-19 has killed nearly 43,000 people in Canada and 6.3 million people worldwide, according to the World Health Organization.
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