Air Canada CEO issues optimistic note, despite tough outlook for aviation industry

Air Canada’s top AC-T executive struck an optimistic note for the months ahead in a speech to shareholders on Monday, even as war in Ukraine and soaring fuel prices cloud the outlook for the industry .

Michael Rousseau, chief executive of Air Canada, said Canada’s largest airline plans to operate at 90% of pre-pandemic capacity this summer, restore routes cut during the pandemic and fly to 33 destinations international.

Mr. Rousseau, speaking at the company’s webcast annual meeting of shareholders, pointed to increased revenue, reduced expenses and $10.4 billion in cash and other liquid assets.

“It is clear that the recovery is accelerating,” he said.

Operating revenue reached $2.7 billion in the fourth quarter of 2021, a threefold increase from the same period of 2020. The airline’s overall expenses for 2021 fell by $160 million, even though fuel costs have increased by 20%.

Yet Air Canada lost $3.6 billion in 2021 and $4.6 billion in 2020 as the pandemic halted most air travel. For comparison, its profit was $1.4 billion in 2019.

Russia’s invasion of Ukraine has dampened demand for air travel, particularly in Europe, and pushed jet fuel prices to levels not seen since 2008, according to a report by Naveo, a British consultancy. . Fuel prices, which are typically among an airline’s top two expenses, have doubled in the past year and increased by around 33% in the past month. That means airlines, including Air Canada, that don’t have a fuel coverage program face a sudden increase in costs, Naveo said in its report.

Mr Rousseau did not provide details on the impact of rising fuel costs, but said 79 older planes have been retired and more fuel-efficient planes are being added, including the announcement the last week of 26 Airbus A321 Neo models.

“Cost control is always a top priority, but with rising fuel prices it takes on even more importance,” he said.

Markets are awaiting Air Canada’s investor presentation on March 30 for details on the company’s longer-term outlook.

Walter Spracklin, a stock analyst at Royal Bank of Canada, said he expects the tone of Wednesday’s event to be positive as the airline slowly emerges from two years of travel restrictions. The key, Mr Spracklin said in a note to clients, will be how management views the sustainability of leisure travel demand once initial pent-up demand is satisfied, as well as the prospects for a recovery in business travel. .

“It’s important given that international and business travel were drivers of profitability before the pandemic,” Spracklin said.

Your time is valuable. Receive the Top Business Headlines newsletter in your inbox morning or evening. register today.