Air Canada earnings: Recovery ‘strong and well underway’ despite Omicron

Alicja Siekierska

Fri, February 18, 2022

Air Canada’s (AC.TO) chief executive officer says the recovery from the COVID-19 pandemic remains “strong and well underway,” as more people book travel for 2022 and despite the impact of the Omicron variant.

CEO Michael Rousseau told analysts on a conference call Friday morning that while the Omicron variant and subsequent travel restrictions had a “dampening effect” on the company’s business, there are many encouraging signs of the “underlying strength” of the COVID-19 recovery.

Rousseau said advance ticket sales have increased by nearly $400 million in the quarter ending Dec. 31, hitting 65 per cent of pre-pandemic levels. Revenue passenger miles – a common metric used in the airline industry measuring distance travelled by customers – increased 295 per cent in the quarter compared to 2020. Bookings with Air Canada Vacations have surpassed pre-pandemic levels. The airline has also recalled and hired more than 3,900 full-time employees.

“As we move into 2022, expectations are that COVID will recede,” Rousseau said on Friday.

“For this reason, and with the government recently announcing the beginning of a phased easing of travel restrictions, we are confident the recovery of our business will continue throughout the balance of the year and beyond.”

The company’s stock was up more than 3 per cent as of 10:55 p.m. on Friday, trading at $25.47.

The outbreak of the Omicron variant saw a return of travel restrictions in many regions around the world, forcing airlines including Air Canada to cut capacity as demand waned. Air Canada cancelled 2,755 flights in the month of January alone, representing 12 per cent of its total scheduled flights.

But with travel restrictions now being eased, travel demand is returning. Air Canada’s chief commercial officer Lucie Guillemette said the airline has seen strong demand across all geographies except Asia-Pacific.

“From a low point in early January, we are now observing a steady increase in new bookings as well as a far more stable rate of cancellations,” Guillemette said.

“Therefore we have projected a stronger than anticipated spring and summer, and we are optimistic about demand trends going forward.”

Guillemette also said the airline sees significant opportunities to further expand in the United States, and is considering adding “various new routes to cement our position as the carrier of choice between Canada and the U.S.”

The increase in demand comes as Air Canada reported operating revenue of $2.73 billion in the fourth quarter, more than three times what it brought in during the same period in 2020.

The airline reported a fourth quarter net loss of $493 million, or $1.38 per diluted share, compared to a net loss last year of $1.16 billion, or $3.91 per diluted share.

The results exceeded analysts expectations. Analysts polled by financial data firm Refinitiv expected Air Canada to record revenue of $2.43 billion and a $539 million loss.

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