Robust advanced tickets sales and the return to a small positive EBITDA for the first time in seven quarters give Air Canada reason for optimism that it is heading in the right direction for recovery. The airline said the same in November but Omicron delayed this. On the back of previous remarks, the carrier is now more careful in its predictions when to return to profit. Air Canada ends “extremely challenging” year with a 3.6 billion loss.
Air Canada referred to 2021 as “extremely challenging” and reported a $3.602 billion full-year loss on February 18, compared to $-4.647 billion in 2020. The operating loss was $3.049 billion versus $-3.776 billion. EBITDA excluding special items was $-1.464 billion versus $-2.043 billion. Total revenues ended at $6.400 billion, up from $5.833 billion.
Despite the impact of Omicron on bookings and cancelations, Air Canada reduced its Q4 loss to $494 million versus $-1.161 billion in 2020. The operating loss was still $503 million, but here comes a first bright signal with a positive EBITDA of $22 million compared to $-728 million in the same quarter last year. Free cash flow was also a positive $55 million. Total revenues more than tripled to $2.731 billion.
Over the year, the airline reactivated its network and served domestic 118 airports/stations compared to seventy in the first quarter. The number of daily flights increased from 245 in January to 665 in December. Capacity as Available Seat Miles (ASM) was up 134.3 percent in Q4 to fourteen million, but for the full year was down 11.5 percent to 33.4 million as the first six months of border closures and quarantine measures were felt.
Cargo revenues almost 1.5 billion
Cargo, again, played a major role in the carrier’s results. Revenues increased to $1.495 billion from $920 million in 2020 as the airline more than doubled the number of cargo-only flights to 10.217, up from 4.235. The first converted Boeing 767 entered service in December, with three more to follow later this year and another four in 2023. Air Canada wants to expand its footprint on the market for perishable goods and pharmaceuticals and is investing $16 million in cold chain facilities at Toronto Pearson airport.
While the first quarter will still see the effects of Omicron, Air Canada has high expectations of the second quarter and summer period. Domestic capacity should be close to 2019 levels. Last autumn, the carrier announced the return of various international routes to South America. Europe, Africa, the Middle East, India are set to follow this summer. As the government has announced the relaxation of travel and testing restrictions from February 28, this should generate more traffic into Canada.
Air Canada ended the year with $10.4 billion in unrestricted liquidity, thanks in part to gross proceeds of $7.1 billion from financing transactions. In April, it benefitted from $5.9 billion in government-backed financing agreements but since November cut this lifeline without needing to tap into the $3.9 billion secured and unsecured credit facilities. Total liabilities stand at $30.6 billion, net debt at $7.1 billion.
Last nine MAX expected before the summer
The fleet counted 175 aircraft on December 31. This will grow to 189 as Air Canada takes delivery of the last nine Boeing MAX 8s before the summer, bringing the fleet to forty with ten purchase options remaining. Six Airbus A220-300s will also be delivered. The carrier has 45 firm orders and thirty options for the type that will replace older types. Two A320s and three A319s are to be phased out this year.
Air Canada is hopeful that it will get a single 787-9 that is scheduled for this year but says it has no guarantees. Two more will join in 2023. Seven 777-300ERs and four A330-300s will leave the cargo fleet and rejoin the passenger fleet again, with their services partly replaced by three additional 767-300BCFs. The fleet of Air Canada Rouge is static at 39 Airbus A320ceo-family aircraft, while Air Canada Express will reduce its fleet by nine to 114 aircraft this year as it phases out the last De Havilland Canada Dash 8-300s.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
In 2022, he has gone full-time freelance. Richard has been contributing to AirInsight since December 2018. He is also writing for Airliner World and Aviation News and until July 1 2023 in a part-time role with Dutch website and magazine Luchtvaartnieuws. Twitter: @rschuur_aero.