Air Canada reports loss of $1 billion
With the Canada-U.S. border closed and travel restrictions in place all over the world (plus, you know, the infectious disease that's putting everyone off the idea of travel right now), it's not shocking that airlines are suffering more catastrophic losses than they've ever seen.
Air Canada's financial report for the first quarter of 2020 — in which the carrier's CEO calls this "the darkest period ever in the history of commercial aviation" — cites a staggering loss of $1.05 billion, marking the first time in 27 consecutive quarters that it has not seen year-over-year revenue growth. Its stocks have also fallen dramatically since the onset of the pandemic.
For comparison, the company had a profit of $345 million during the same time last year.
Air Canada reports a C$1.05bn net loss in 1Q20, a reversal from a C$345mn net profit a year ago.— Edward Russell (@e_russell) May 4, 2020
Traffic fell nearly 18% on a 9.6% capacity cut. https://t.co/Qp3aaRhHyj
It has taken some measures to cut costs and increase liquidity in recent weeks, like suspending 90 per cent of its operations due to decreased demand, and laying off thousands of employees that it eventually rehired when it ended up qualifying for federal assistance through the Canada Emergency Wage Subsidy (CEWS).
(Through the program, the Canadian government covers 75 per cent of employees' salaries so that companies who have lost at least 30 per cent of their revenue as a result of COVID-19 can continue operating. Though it was designed to benefit small independent businesses, giants like Air Canada are indeed eligible.)
But, these steps did not make much of a dent in what has been a devastating year for the travel and tourism industry worldwide.
Though Air Canada does expect to have many more customers back in the air by Christmas, it also anticipates that travel will be significantly down for the remainder of 2020, and that it will be feeling the effects of the pandemic for at least three years. There will also likely be massive layoffs in the near future as "the overall industry and our airline will be considerably smaller for some time."
With airlines somewhat notorious for overcharging out the wazoo for every little thing, it seems that Canadians aren't feeling too sympathetic for our national carrier at the moment.
Don’t think many Canadians feel all that sorry for @AirCanada. After years and years of price gouging Canadians...maybe it’s time for new airlines to rise up take over Canadian air space.— Manny (@Manny1235813) May 4, 2020
Some brought up the fact that the company has been particularly difficult to deal with during the health crisis, noting that it refused to offer refunds and that its customer service reps have been virtually unreachable.
Suprised Air Canada even lost money. You know how much people never got there flights reimbursed for not being able to travel due to COVID19. So how did Air Canada lose money if they took people money and dont have to fly them— B-Rich (@nb_rich) May 4, 2020
Still, even if airlines are jerks with an oligopoly on the industry, it's never good to see a Canadian company struggle with such a devastating blow — and in the economic fallout from the pandemic, Air Canada surely won't be the only one.
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