Category Archives: Air Canada

Air Canada to suspend service to Yellowknife, also in Newfoundland and Labrador, 737 MAX to return on February 1

Air Canada is adjusting its route map due to COVID-19 and travel restrictions and lower travel demand.

Service to the far north in Yellowknife will be suspended on January 23 until further notice.

The airline is also suspending some service in the Atlantic Provinces. Flights between Gander and Halifax, Goose Bay and Halifax, and St. John’s and Toronto also will be suspended on  January 23.


<p><a href=”https://vimeo.com/499410177″>Air Canada to Resume Boeing 737 MAX Commercial Operations</a> from <a href=”https://vimeo.com/aircanadamedia”>Air Canada</a> on <a href=”https://vimeo.com”>Vimeo</a&gt;.</p>

In other news, Air Canada made this announcement concerning the return of the Boeing 737 MAX:

Air Canada said that following Transport Canada’s (TC) Airworthiness Directive and January 20, 2021 lifting of the existing Notice to Airmen (NOTAM) for the Boeing 737 MAX aircraft, the aircraft ungrounding by regulatory bodies worldwide, and the carrier’s own independent assessments of the aircraft and operating procedures by its specialized safety and flight operations experts, it will be resuming Boeing 737 MAX commercial operations on February 1, 2021.

“We are very confident the nearly two-year regulatory process undertaken by Transport Canada and other regulators worldwide ensures the utmost safety of the Boeing 737 MAX fleet from nose to tail, and from wing to wing.  As part of Air Canada’s multi-layered approach to reinforcing and enhancing safety, our internal experts have also worked with independent specialists to conduct assessments of the aircraft and our operating procedures,” said Captain Murray Strom, Vice President, Flight Operations at Air Canada.

“In addition to implementing all required updates and modifications to the aircraft, Air Canada has gone beyond by equipping its fleet with additional safety-enhancing features that exceed required regulatory standards. These measures are backed by our industry-leading flight operations, the extensive, comprehensive training programs our pilots and maintenance engineers regularly undergo, and our industry-renowned flight data analysis. Customers can therefore be assured that every crew member operating our fleet and the many employee teams working behind the scenes have an unwavering commitment to safety.  We look forward to welcoming you onboard,” concluded Captain Strom.

The 737 MAX will gradually return to Air Canada’s North American route network as the airline continues to optimize its narrow body fleet.

Routes operated by the Boeing 737 MAX:

Beginning Feb. 1, Air Canada’s 737 MAX will operate select flights between:

  • Toronto and: Halifax, Montreal, Ottawa, Edmonton, Winnipeg

Air Canada will continue to deploy the fleet on routes that are best suited for its range and capacity.

Transat announces receipt of final court approval for the transaction with Air Canada

Transat A.T. Inc. (Air Transat) has announced that the Superior Court of Québec has issued a final order approving the previously announced plan of arrangement with Air Canada (the “Arrangement”). The Arrangement was also approved by 91.05% of the votes cast by shareholders present in person or by proxy at the special meeting of Transat held on December 15, 2020.

The Arrangement remains subject to the applicable regulatory approvals such as the approvals under the Canada Transportation Act and the European Union Council Regulation (EC) No. 139/2004, as well as certain customary and other closing conditions.

Further information regarding the Arrangement is provided in the management proxy circular dated November 12, 2020.

Letters of Transmittal and Election Forms

Registered shareholders of Transat wishing to receive the share consideration must return the Letter of Transmittal and Election Form, attached to Transat’s management proxy circular dated November 12, 2020, to AST Trust Company (Canada), acting as the depositary, by 5:00 p.m. (Montréal time) on or before the date that is two business days prior to the date of completion of the Arrangement (the “Election Deadline”). Non-registered shareholders of Transat should carefully follow the instructions of the intermediary holding their Class A variable voting shares or Class B voting shares of Transat (together, the “Shares”) on their behalf. Transat will include notice of the Election Deadline in a press release disseminated over newswire service in Canada at the latest on the business day immediately before the Election Deadline.

Investors who purchase Shares of Transat shortly before the completion of the transaction are advised that they may not have sufficient time in order to submit a duly completed Letter of Transmittal and Election Form by the Election Deadline in respect of such Shares and should consult with their broker, trust company or other intermediary and seek advice from their professional advisers in advance of any such trade.

Air Transat aircraft photo gallery:

Air Transat aircraft slide show:

Air Canada operates 4,000th all-cargo flight

Air Canada said today that with the flight of AC 7227 from Toronto to Lima it has now operated 4,000 all-cargo flights since launching into the cargo-only-flight business in March of 2020. By successfully establishing a dedicated, cargo-only operation, Air Canada Cargo is well-positioned to play a key role in carrying COVID-19 vaccine shipments for Canadians and to capture future growth opportunities in the global air cargo market.

The 4,000th flight from Toronto to Lima carried an assortment of freight from around the world including pharmaceuticals, water purifying equipment and vehicle parts. Since the start of the pandemic, Air Canada Cargo has transported a wide range of goods on its cargo-only flights, including PPE for frontline healthcare workers.

In anticipation of the requirement for air cargo capacity to ship and distribute COVID-19 vaccines in Canada and worldwide, Air Canada Cargo has been working with its freight forwarding customers specialized in handling pharmaceutical shipments. Air Canada Cargo’s role will be to provide capacity for vaccine shipments through agreements with international freight forwarders, governments or international agencies on scheduled or on-demand, cargo-only flights. As part of these supply chain preparations, Air Canada Cargo has undergone an extensive operational readiness exercise to ensure training, procedures and facilities are updated and reflect current requirements and standards for transporting pharmaceuticals, including achieving IATA’s CEIV Pharma certification in July 2020.

Recently, Air Canada successfully concluded a collective agreement amendment with its pilots, represented by the Air Canada Pilots Association to enable Air Canada to competitively operate dedicated cargo aircraft. The airline is now finalizing plans to convert several of its owned Boeing 767-300ER aircraft to freighters to fully participate in global cargo commercial opportunities.

Air Canada announces a new strategic cooperation agreement with Qatar Airways as service to Doha begins

Air Canada announced today the start of a strategic cooperation agreement with Qatar Airways allowing both airlines to expand their relationship, in conjunction with the launch of Air Canada’s non-stop service between Toronto and Doha. This new agreement will provide customers access to a multitude of connections across the Middle East, Indian subcontinent and Southeast Asia, through Qatar Airways’ Doha hub.

Air Canada operated its first nonstop flight between Toronto and Doha on December 15. This route will operate three times weekly onboard the carrier’s state-of-the-art flagship Boeing 787-9 Dreamliner aircraft with 298 seats featuring a choice of Signature, Premium Economy and Economy services.

 

Flight schedule from TorontoDoha:

Route

Flight #

Days
operating

Departure
Time

Arrival
Time

Additional
Info

YYZ-DOH

AC058

Tue, Thur, Sat

20:00

16:30
(+1 day)

Begins Dec. 15
B787-9 aircraft

DOH-YYZ

AC059

Mon, Thur, Sat

09:00

15:25

Begins Dec. 18
B787-9 aircraft

 

Air Canada becomes first Canadian airline to offer optional biometric boarding for flights departing the US to Canada

Air Canada said today it is the first Canadian airline to offer its customers the safety and convenience of a new boarding option utilizing facial biometrics.  The technology is now available for customers departing San Francisco International Airport (SFO) with plans to progressively roll it out for customers at other US airports where the airline operates.

Biometric boarding enables customers to present themselves at the boarding gate, have their photo taken which is then validated and confirmed to their passport document details and photo which are already captured via the U.S. Customs and Border Protection’s (CBP) Traveler Verification Service. In a matter of seconds, CBP’s biometric facial comparison service will automatically compare the new photo of the traveller to images that the traveller has already provided to the government, such as passport and visa photos.  Overall, the use of facial biometrics provides travelers with a secure, touchless process that streamlines air travel.

Customers who do not wish to utilize biometric boarding may simply advise the gate agent, and they will board as they always have by presenting their boarding pass and passport for manual ID check and boarding processing.

Since the beginning of the year, Air Canada has introduced numerous touchless processes throughout the customer journey, including: TouchFree Bag Check for flights departing Canadian airports, the ability to order food directly in Maple Leaf Lounges from smartphones and tablets, touchless self-entry to the Air Canada Café for when it reopens, and provisioning of all newspapers and magazines in digital format via PressReader, among other initiatives.

Air Canada plans to expand biometric boarding options to other US airports in the near future and is currently exploring options which could be viable at Canadian airports.

Air Canada aircraft photo gallery:

Air Canada aircraft slide show:

Air Canada provides update on cargo business, will convert 767-300ERs to freighters

Air Canada is pleased to announce the appointment of Jason Berry as Vice President, Cargo effective January 1, 2021.  Mr. Berry will be based at Air Canada’s Montreal headquarters, and will report directly to Lucie Guillemette, Executive Vice President and Chief Commercial Officer.

Air Canada today also provided an update on its cargo business and the next steps in its strategic plan as the airline continues to adapt rapidly to evolving market opportunities. To date, Air Canada has operated more than 3,500 all-cargo flights globally, and the airline is now finalizing plans to convert several of its owned Boeing 767-300ER aircraft to freighters to fully participate in global cargo commercial opportunities.

The carrier has successfully concluded collective agreement amendment with its pilots represented by the Air Canada Pilots Association (ACPA), for contractual changes to enable Air Canada to competitively operate dedicated cargo aircraft in the cargo marketplace, which have now been ratified by the Air Canada pilots.

Mr. Berry comes to Air Canada from Alaska Airlines’ wholly owned subsidiary McGee Air Services, where he was President with oversight for all aspects of aviation services ground handling, aircraft grooming, airport mobility services, check-in and gate services. From 2012 until June 2019, he led Alaska Airlines’ cargo business, with direct responsibility for all aspects of cargo operations and compliance including revenue growth.  Prior to joining Alaska Airlines, he held operational positions with increasing responsibility at other air cargo handlers and operators.

Mr. Berry holds a Master of Business Administration from the University of Washington’s Michael G. Foster Schoolof Business, in addition to earning a Bachelor’s degree in Computer/Information Technology Administration and Management from Central Washington University, and an Associate’s degree in Business and Commerce from South Seattle College.

Qatar Airways and Air Canada sign codeshare agreement

Qatar Airways has announced it has finalized a codeshare agreement with Air Canada applicable for travel between Doha and Toronto. Sales have started with the first codeshare flight to operate from December 15, 2020. The agreement reinforces Qatar Airways’ long-term commitment to Canadian passengers, and to boosting Canada’s global connectivity to support the recovery of tourism and trade.

Qatar Airways’ passengers can now enjoy seamless, one-stop connections to and from Toronto via the Best Airport in the Middle East, Hamad International Airport. Air Canada passengers will benefit from being able to book travel on Qatar Airways’ flights between Toronto and Doha and onwards to more than 75 destinations in Africa, Asia and the Middle East.

Qatar Airways began flying to Canada in June 2011 with three weekly flights to Montreal that expanded to four weekly in December 2018. The airline has worked closely with the Government of Canada and its embassies around the world throughout the pandemic, temporarily operating three weekly services to Toronto in addition to charter flights to Vancouver to help bring more than 40,000 passengers home to Canada.

By the end of the IATA Winter Season, Qatar Airways plans to rebuild its network to 126 destinations including 20 in Africa, 11 in the Americas, 42 in Asia-Pacific, 38 in Europe and 15 in the Middle East. Many cities will be served with a strong schedule with daily or more frequencies.

Air Canada welcomes Hawaii’s science-based initiative eliminating quarantine for Canadians going to Hawaii

Air Canada welcomed Hawaii’s announcement that Canadians are now eligible to be exempt from the state’s mandatory 14-day quarantine on arrival in the Hawaiian Islands via a pre-travel testing process.

“We applaud Governor Ige’s announcement that Hawaii’s science-based, pre-travel testing initiative is now available for Canadians to be exempt from mandatory quarantine requirements on arrival in Hawaii, and we are very pleased Air Canada is a preferred airline in Hawaii’s Safe Travels Program.  We have long advocated for safe and science-based strategies over blanket quarantines to enable a safe and secure resumption of air travel. Air Canada’s industry-leading Air Canada CleanCare+ suite of biosafety standards and preventative measures across its operations means customers can always book and travel Air Canada with confidence,” said Timothy Liu, Managing Director, Sales Planning at Air Canada.

Additional details about Hawaii’s pre-travel testing requirements for customers will be available shortly on aircanada.com.

Air Canada’s services to Hawaii from Vancouver begins on Dec. 17 with four weekly flights to Maui and three weekly flights to Honolulu. From Calgary, flights to Maui begin Dec. 18 and are planned to ramp up to multiple times a week.

Customers travelling are advised to check applicable websites including those of their final destination and the Government of Canada website to review any entry document or quarantine requirements, which may evolve and change without notice.  Albertaresidents may be eligible to participate in the joint Government of Canada and Government of Alberta pilot project to test arriving residents as part of reducing quarantine.

Air Canada records a net loss of $685 million in the third quarter, cancels 10 Boeing 737-8s (MAX 8s) and 12 Airbus A220s

Air Canada issued this financial report for the third quarter:

Total revenues of $757 million in the third quarter of 2020 declined $4.773 billion or 86 percent from the third quarter of 2019. The airline reported third quarter 2020 negative EBITDA(1) or (earnings before interest, taxes, depreciation and amortization), excluding special items, of $554 million compared to third quarter 2019 EBITDA of $1.472 billion. Air Canada reported an operating loss of $785 million in the third quarter of 2020 compared to operating income of $956 million in the third quarter of 2019. Total revenue passengers carried declined 88 per cent in the quarter compared to last year’s third quarter. Unrestricted liquidity amounted to $8.189 billion at September 30, 2020.

“Today’s results reflect COVID-19’s unprecedented impact on our industry globally and on Air Canada in what has historically been our most productive and profitable quarter. From the outset, we have made the health and safety of our customers and employees our chief concern. Our airline has been a leader in introducing progressive layers of protection, such as our comprehensive suite of biosafety measures, Air Canada CleanCare+, and we continue to explore new technologies and processes to further assure travellers and regulators. Amongst the various science-based measures we have been advocating, testing at airports is by far the most significant, as demonstrated by the McMaster HealthLabs’ study of international travellers arriving at Toronto-Pearson. It was reported to be the largest-ever study of its kind and preliminary results clearly confirm safe alternatives exist to a mandatory 14-day quarantine, which is both stifling demand and frustrating travellers who are willing to be tested,” said Calin Rovinescu, President and Chief Executive Officer of Air Canada.

“In parallel, we acted decisively to implement our COVID-19 Mitigation and Recovery Plan. Since March, we have raised almost $6 billion in additional liquidity, leveraging what was one of the industry’s strongest balance sheets as we entered the pandemic. We took the painful steps of eliminating 20,000 jobs, after having created 10,000 over the previous five years, and of reversing 10 years of profitable network expansion by reducing capacity by more than 80 per cent in the third quarter.

“At the end of June, we made the difficult decision to indefinitely suspend 30 domestic routes and close eight regional stations and our Network Planning team has identified up to a further 95 domestic, U.S. transborder and international route suspensions and nine Canadian station closures required to preserve liquidity, cut costs and reduce capital expenditures as we prepare for a smaller footprint expected to last several years. Given the public statements made by the Honourable Marc Garneau, Canada’sMinister of Transport, on November 8, 2020 regarding commencing immediate discussions with major airlines on aviation industry sector-specific support, we are deferring the additional route suspensions and station closures pending the progress of those discussions.

“According to IATA’s Chief Economist, governments have already provided more than US$160 billion of aid to airlines globally, recognizing the critical role they play in a country’s economy. Beyond sustaining tens of thousands of direct and indirect jobs, a healthy Canadian airline industry is essential for Canada‘s infrastructure on which its economic recovery from COVID-19 depends and vital to securing the country’s place in a reordered, post-pandemic world. The impact on the industry and on the economy of how we as a country handle this crisis in air transportation will be felt for years to come.

“We have also continued our discussions with the Government of Canada on a more measured, science-based approach to travel restrictions and quarantines, which remain amongst the most onerous in the world. Preliminary results from several international studies and our McMaster HealthLabs study indicate testing can provide an effective responsible alternative to facilitate the safe relaxation of quarantines.

“We have taken several measures to carefully rationalize our existing fleet: We are accelerating the retirement of 79 mainline and Rouge aircraft. We are deferring delivery of new Boeing 737-8 and Airbus A220 aircraft scheduled for delivery in 2021 and 2022 and cancelling 10 Boeing 737-8s and 12 Airbus A220s, representing about 40 percent of the remaining scheduled deliveries. Despite modifications made to our orders, these two aircraft remain the core of our narrowbody fleet and enable us to efficiently serve transcontinental domestic and transborder routes through improved economics and range, while providing an excellent customer experience. Through this fleet restructuring and other capital reduction initiatives, we have successfully lowered total projected capital expenditures by about $3.0 billion over the 2020 to 2023 period compared to our total projected capital expenditures at the end of 2019.

“In addition to the mitigation steps we have taken, Air Canada is also preparing for the post-COVID recovery. Along with other ongoing initiatives, this month we launched the new Aeroplan, expected to be one of the best travel loyalty programs available. Our simplified and restructured aircraft fleet will be highly fuel efficient and well-configured for our key routes. Our proposed acquisition of Transat A.T. Inc. will enable us to better compete with global competitors in a drastically altered global airline market. Our nimble Cargo team has pivoted to dedicated all-cargo flights during the pandemic and Cargo will become an increasingly important segment of our business going forward. Most importantly, our culture remains strong – we have employees who remain highly motivated and intensely focused on safely transporting our customers and I thank them for their commitment and hard work,” concluded Mr. Rovinescu.

Air Canada has taken or will be taking the following measures as part of its COVID-19 Mitigation and Recovery Plan:

Customer Service and Safety

  • Air Canada makes safety its first consideration in all that it does and has been continually updating its health and safety policies and procedures for travellers and employees in all workplaces, airports, and onboard aircraft to account for new information about COVID-19 as it becomes available. This includes a requirement for customers to wear a protective face covering, as well as enhanced protective personal equipment for airport agents and crews, the reinforcement of safe practices such as frequent hand-washing and collaborating with the Canadian federal government to screen passengers to help determine fitness for flying.
  • To underscore its commitment to customer and employee safety, Air Canada introduced Air Canada CleanCare+. This program is designed to reduce the risk of exposure to COVID-19 through such measures as enhanced aircraft grooming, mandatory preflight customer temperature checks in addition to required health questionnaires and providing all customers with care kits for hand cleaning and hygiene.
  • Air Canada has undertaken several medical collaborations to continue advancing biosafety across its business, including with Cleveland Clinic Canada in Toronto, a renowned global healthcare leader, to provide additional science-based evidence in our ongoing COVID-19 response; with Ottawa-based Spartan Bioscience to explore rapid COVID-19 testing in an aviation environment; and since last year with Toronto-based BlueDot, a company that monitors infectious diseases globally in real time to give us accurate, relevant information to make business and safety decisions quickly.
  • Air Canada has been partnering with McMaster HealthLabs and the Greater Toronto Airports Authority in a study of international travellers arriving at Toronto Pearson International Airport. Preliminary results indicate that testing can provide an effective, responsible alternative to facilitate the safe relaxation of quarantines.
  • Air Canada recently announced that it was finalizing an initial order of Abbott’s ID NOW COVID-19 rapid response tests as part of its ongoing evaluation of COVID-19 testing technology and protocols, one of the first private sector companies to do so.
  • Air Canada also recently announced plans to explore the application of COVID-19 contact tracing technology in its workplace using the Bluetooth enabled TraceSCAN app and wearable technology developed by Canadian-based Facedrive Inc.
  • To meet the demand for the global transport of goods, including personal protective equipment during the pandemic, Air Canada operated more than 3,000 all-cargo international flights since March 22, 2020, and plans to operate up to 100 all-cargo flights per week in the fourth quarter of 2020 using a combination of Boeing 787 and Boeing 777 aircraft as well as four converted Boeing 777 and three converted Airbus 330 aircraft where it has doubled available cargo space by removing seats from the passenger cabin.
  • Air Canada announced special benefits and accommodations for Aeroplan and Altitude members in light of COVID-19. These include pausing mileage expiration, grandfathering mileage-earned status, waiving certain change and redeposit fees, and launching new promotions so that members can earn additional Aeroplan Miles without leaving home.

Capacity and Route Network

  • Air Canada reduced second and third quarter 2020 ASM capacity by 92.0 percent and 81.7 percent, respectively, compared to the same quarters in 2019, and plans to reduce fourth quarter 2020 capacity by approximately 75 per cent compared to the fourth quarter of 2019. The airline will continue to dynamically adjust capacity and take other measures as required to adjust for demand, including as a result of health warnings, travel restrictions, quarantines, border closures and passenger demand.
  • On June 30, 2020, Air Canada suspended service indefinitely on 30 domestic regional routes and closed eight stations at regional airports in Canada.

Financing and Liquidity

  • In March 2020, Air Canada drew down its US$600 million and $200 million revolving credit facilities for aggregate net proceeds of $1.027 billion.
  • In June 2020, Air Canada concluded an underwritten marketed public offering of 35,420,000 voting shares of Air Canada at a price of $16.25 per share for aggregate proceeds of $576 million, and a concurrent marketed private placement of convertible senior unsecured notes due 2025 for aggregate proceeds of US$748 million ($1.011 billion).
  • In June 2020, Air Canada completed a private offering of $840 million aggregate principal amount of 9.00 per cent Second Lien Secured Notes due 2024, which were sold at 98 per cent of par.
  • In June 2020, Air Canada completed a private offering of one tranche of Class C Enhanced Equipment Trust Certificates (EETCs) with a combined aggregate face amount of approximately US$316 million ($426 million), which were sold at 95.002 per cent of par.
  • In September 2020, Air Canada concluded a private offering of two tranches of EETCs, the proceeds of which were used to purchase equipment notes issued by Air Canada and secured by three Boeing 787-9 aircraft, three Boeing 777-300ER aircraft, one Boeing 777-200LR and nine Airbus A321-200 aircraft. The two tranches of certificates have a combined aggregate face amount of US$553 million ($740 million) and a weighted average interest rate of 5.73 per cent. Air Canada used the proceeds from this financing together with cash on hand to repay in full the US$600 million ($803 million) 364-day term loan originally put in place in April 2020 and discussed in Air Canada’s second quarter 2020 MD&A.
  • In September 2020, Air Canada concluded a committed secured facility totaling $788 million to finance the purchase of the first 18 Airbus A220 aircraft. As aircraft are financed under this new Canadian dollar facility, the bridge financing of $788 million put in place in April 2020 (and discussed in Air Canada’s second quarter 2020 MD&A) will be repaid concurrently. At September 30, 2020, nine Airbus A220 aircraft were financed under this facility with the corresponding bridge financing repaid.
  • In early October 2020, Air Canada announced that it had completed sale and leaseback transactions for nine Boeing 737-8 aircraft for total proceeds of US$365 million ($485 million). The nine aircraft were delivered to Air Canada in the past three years.
  • Air Canada’s unencumbered asset pool (excluding the value of Aeroplan, Air Canada Vacations and Air Canada Cargo) amounted to approximately $1.8 billion following the closing of the transactions discussed above. As part of Air Canada’s ongoing efforts to maintain adequate liquidity levels, additional financing arrangements continue to be assessed.
  • Air Canada suspended share purchases under its Normal Course Issuer Bid in early March 2020 and did not renew its issuer bid upon its expiry in the second quarter of 2020.

Cost Reduction and Capital Reduction and Deferral Program

  • Air Canada initiated a company-wide cost reduction and capital reduction and deferral program for 2020, which has now reached approximately $1.5 billion, increased from an initial target of $500 million. On a capacity reduction of 81.7 per cent, third quarter 2020 operating expenses decreased $3.032 billion or 66 per cent from the same quarter in 2019, reflecting the significant progress made on both managing variable costs and reducing fixed expenses. Air Canada continues to seek additional opportunities for cost reduction and cash preservation.
  • Air Canada announced a workforce reduction of approximately 20,000 employees, representing more than 50 per cent of its workforce. This was achieved through layoffs, terminations of employment, voluntary separations, early retirements and special leaves.
  • Air Canada adopted the Canada Emergency Wage Subsidy (CEWS) for most of its workforce effective March 15, 2020. In July 2020, the program was redesigned and extended until December 2020. In September 2020, the Government of Canadaannounced a further extension of the program to June 2021. Air Canada intends to continue its participation in the CEWS program for active employees, subject to meeting the eligibility requirements.
  • Air Canada is permanently retiring 79 older aircraft from its fleet – consisting of Boeing 767-300, Airbus A319 and Embraer 190 aircraft. Their retirement will simplify the airline’s overall fleet, reduce its cost structure, and lower its carbon footprint.
  • Air Canada concluded an amendment to the purchase agreement for Airbus A220-300 aircraft which became effective in early November 2020. As a result, Air Canada has deferred 18 aircraft deliveries over 2021 and 2022 and will not be purchasing the last 12 Airbus A220 aircraft. Air Canada expects to take delivery of five Airbus A220 aircraft in the fourth quarter of 2020.
  • In early November 2020, Air Canada also amended its agreement with Boeing to cancel 10 Boeing 737-8 aircraft deliveries from its firm order of 50 aircraft and to defer its remaining 16 aircraft deliveries over the late 2021 to 2023 period.
  • Through this fleet restructuring and other capital reduction initiatives, Air Canada successfully lowered its planned capital expenditures by approximately $3.0 billion for the 2020 to 2023 period compared to its projected capital expenditures at the end of 2019.

Third Quarter Summary

Air Canada recorded a net loss of $685 million or $2.31 per diluted share compared to net income of $636 million or $2.35 per diluted share in the third quarter of 2019.

At September 30, 2020, net debt of $4.973 billion increased $2.132 billion from December 31, 2019, reflecting the impact of net cash used for operating and investing activities in the first nine months of 2020. The unfavourable impact of a weaker Canadian dollar, at September 30, 2020 compared to December 31, 2019, increased foreign currency denominated debt (mainly U.S. dollars) by $141 million.

In the third quarter of 2020, net cash flows used in operating activities of $286 million deteriorated by $1.120 billion from the same quarter in 2019 on lower operating results, reflecting the impact of the COVID-19 pandemic.

In the third quarter of 2020, net cash used in financing activities amounted to $332 million, an improvement of $33 million from the third quarter of 2019. Net proceeds from debt financings amounted to $1.101 billion. Reduction of long-term debt and lease liabilities of $1.433 billion in the third quarter of 2020 included lump-sum repayments of $1.177 billion.

In the third quarter of 2020, net cash flows used in investing activities of $644 million reflected an increase of $554 million from the third quarter of 2019, mainly due to movements between cash and short and long-term investments.

In the third quarter of 2020, net cash burn(1) of $818 million (or approximately $9 million per day, on average) was significantly better than management’s net cash burn expectations of between $1.35 billion and $1.6 billion (or between $15 million and $17 million per day, on average). This was due to a number of factors, including the deferral of certain capital expenditures, higher cash receipts related to the CEWS program, and additional working capital benefits resulting from both a deferral of supplier payments into future periods and from income and sales tax recoveries which had been forecast to occur in later periods.

Outlook and Major Assumptions

As indicated above, Air Canada plans to reduce its fourth quarter 2020 capacity by approximately 75 per cent from the same quarter in 2019. The airline will continue to dynamically adjust capacity and take other measures as required to account for health warnings, travel restrictions, quarantines, border closures globally and passenger demand.

Air Canada projects net cash burn of between $1.1 billion and $1.3 billion (or between $12 million and $14 million per day, on average) in the fourth quarter of 2020. This net cash burn projection includes $4 million per day in capital expenditures and $5 million per day in lease and debt service costs. When compared to the third quarter of 2020, the higher projected net cash burn in the fourth quarter of 2020 is due to a number of factors, including an increase in end-of-lease payments due to more aircraft being returned to lessors, stabilization of supplier payment deferrals affecting working capital, lower cash receipts related to the CEWS program, and a higher level of capital expenditures, in part due to additional scheduled Airbus A220 aircraft deliveries.

As discussed above, the Honourable Marc Garneau made public statements on November 8, 2020 related to aviation industry sector-specific support. Air Canada will provide an update when Government of Canada support arrangements have been finalized.

(1) Non-GAAP Measures

Below is a description of certain non-GAAP financial measures used by Air Canada to provide readers with additional information on its financial and operating performance. Such measures are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for, or superior to, GAAP results. Readers are advised to review the section entitled Non-GAAP Financial Measures in Air Canada’s Third Quarter 2020 MD&A for a further discussion and a reconciliation of non-GAAP measures to Canadian GAAP.

  • EBITDA (earnings before interest, taxes, depreciation and amortization) is commonly used in the airline industry and is used by Air Canada as a means to view operating results before interest, taxes, depreciation and amortization as these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and other assets. Air Canadaexcludes special items from EBITDA as these items may distort the analysis of certain business trends and render comparative analysis to other airlines less meaningful. Readers are advised to review the section entitled Non-GAAP Financial Measures in Air Canada’s Third Quarter 2020 MD&A for a further discussion and a reconciliation of this measure to Canadian GAAP.
  • Net cash burn is commonly used in the airline industry and is used by Air Canada as a measure of cash used to maintain operations, support capital expenditures, and settle normal debt repayments, all before the net impact of new financing proceeds. Net cash burn is defined as net cash flows from operating, financing, and investing activities, and excludes proceeds from new financings, and lump sum debt maturities made where the Corporation has refinanced or replaced the amount. Net cash burn also excludes movements between cash and short and long-term investments. Readers are advised to review the section entitled Non-GAAP Financial Measures in Air Canada’s Third Quarter 2020 MD&A for a further discussion of this measure, and to review the section entitled “Consolidated Cash Flow Movements” in Air Canada’s Third Quarter 2020 MD&A for a reconciliation of this measure to Canadian GAAP.

Air Canada aircraft photo gallery:

 

Air Canada continues to combat illegal wildlife trade as it receives new certification by IATA

Air Canada has announced that it has successfully attained the International Air Transport Association (IATA) Illegal Wildlife Trade (IWT) certification. Introduced last year by IATA, the IWT certification incorporates the 11 commitments of the United for Wildlife (UFW) Buckingham Palace Declaration for airlines engaged in fighting the trade in illegal wildlife.

As a global carrier, Air Canada can play a meaningful role in helping to prevent the devastating impact of the illegal wildlife trade. The airline recently signed the Buckingham Palace Declaration and despite the disruptions of 2020, Air Canada Cargo has developed and introduced controls and procedures to reduce the likelihood of transporting illegal wildlife and illegal wildlife products.

“We are proud to be the first airline in North America to achieve this industry standard by taking concrete steps in the fight against illegal wildlife trafficking, as part of a global effort to help conserve wildlife and biodiversity,” said Calin Rovinescu, President and Chief Executive Officer of Air Canada. “Air Canada remains committed to operating its business in a sustainable, responsible and ethical way, and is dedicated to the prevention of wildlife trafficking and raising awareness on the issue and its consequences. We look forward to working with key stakeholders and conservation organizations to further combat illegal wildlife trafficking.”

It is estimated that the international illegal wildlife trade is worth between $7 and $23 billion, and this evil trade affects more than 7,000 species every year.

The commitments in the Buckingham Palace Declaration include:

  • Adopting a zero-tolerance policy regarding illegal wildlife trade.
  • Improving the industry’s ability to share information about illegal activities.
  • Encouraging as many members of the transport sector as possible to sign on.

All these measures are designed to make it harder for poachers and others to ship their illegal products to markets where they can be sold for profit. Wildlife conservation and biodiversity preservation are not the only areas impacted by the illegal wildlife trade. The trafficking of wildlife by-passes health checks at borders and presents a threat of disease transmission to both animals and humans.

“There’s a connection between how wildlife is treated, how it can spread zoonotic disease, and how we’ve ended up with the potential for pandemics in the world,” said Teresa Ehman, Senior Director of Environmental Affairs at Air Canada.

The IWT module was developed with support from the USAID Reducing Opportunities for Unlawful Transport of Endangered Species (ROUTES) Partnership and is a component of the IATA Environmental Assessment (IEnvA), which includes a two-stage certification process, both achieved by Air Canada. IEnvA is a program developed specifically for the aviation sector and demonstrates equivalency to the ISO 14001: 2015 environmental management systems standard.

Animal safety and welfare have always been at the heart of Air Canada’s environmental concerns. In 2018, Air Canada Cargo became the first airline to achieve the IATA CEIV Live Animals certification, meeting the highest standards in the transport of live animals. Air Canada also has a policy not to carry any shipment of lion, leopard, elephant, rhinoceros and water buffalo trophies worldwide as freight, or non-human primates intended for laboratory research and/or experimental purposes, well beyond its commitment to protect endangered wildlife in accordance with the Convention on International Trade in Endangered Species (CITES) of Wild Fauna and Flora.