Air Canada is to reduce its fleet by 79 aircraft as it seeks to cap costs and improve its financial position, the airline announced on May 4. This follows on a net loss of $1.049 billion in Q1, down from a 345 million profit last year. It is the first lossmaking quarter after 27 profitable quarters.
The operating loss for the first three months was $433 million, down from a 127 million profit. Revenues were $3.722 billion, down from 4.434 billion. In the press release, Air Canada highlighted the only positive factor in the results, which is a $71 million EBITDA which was still down from 583 million last year.
Air Canada ended the quarter with a negative free cash flow of $-393 million, down from $579 million. Net debts amount to $4.170 billion, up from 3.658 billion.
To improve its cash position, the company has drawn down a combined $800 million as credit facilities for aggregate net proceeds of $1.027 billion. It also secured a $600 million loan secured against aircraft and spares, with net proceeds of $829 million.
In total, Air Canada had $6.523 billion in liquidity by the end of March.
Air Canada and Rouge will retire a combined 30 Boeing 737-300ERs.
(Air Canada Rouge)
To reduce costs, Air Canada has realized an additional $500 million savings by cutting expenditures, deferring Capex, bringing total savings to $1.050 billion. The share purchase program has been terminated.
Part of the cost reduction-plan is resizing the fleet by retiring older aircraft. At Air Canada, this included its 5 Boeing 767-300ERs, 13 Airbus A319s, and 14 Embraer E190s, while subsidiary Air Canada Rouge will retire its 25 767-300ERs and 22 A319s.
Air Canada is also refinancing 18 of its Airbus A220s by securing a $788 million bridge loan which will be replaced by new long-term arrangements later in the year.
Looking ahead to Q2, Air Canada expects capacity to remain down by -85 to -90 percent and Q3 likely by -75 percent. As was to be expected, the airline has suspended its FY20 guidance.
Active as journalist since 1987, starting with regional newspaper Zwolse Courant. Grand Prix reporter in 1997 at Dutch monthly Formule 1, general reporter Lelystad/Flevoland at De Stentor/Dagblad Flevoland, from 2002 until June 2021 radio/tv reporter/presentor with Omroep Flevoland.
Since mid-2016 freelance aviation journalist, since June 2021 fully dedicated to aviation. Reporter/editor AirInsight since December 2018. Contributor to Airliner World, Piloot & Vliegtuig. Twitter: @rschuur_aero.