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MIflyer12
Topic Author
Posts: 7730
Joined: Mon Feb 18, 2013 11:58 pm

Air Canada reports 2Q20 loss of C$1.75 Billion

Fri Jul 31, 2020 11:14 am

Results for revenue decline, loss, and cash burn are roughly comparable to the US3, scaled for difference in size (2019 RPMs).

Total revenue plunged 89% to C$527 million.

Canada’s largest carrier said net loss was C$1.75 billion, or C$6.44 per share, in the quarter ended June 30, compared with a profit of C$343 million, or C$1.26 per share, a year earlier.

Air Canada had C$9.12 billion in liquidity, as of June 30. It forecast third-quarter capacity to decline by about 80%, higher than an earlier forecast of at least 75%.

The airline forecast third-quarter net cash burn of between C$15 million ($11.18 million) and C$17 million per day on average, compared with net cash burn of about C$19 million per day in the previous quarter.


https://www.reuters.com/article/us-air- ... 4W1HB?il=0
 
picarus
Posts: 332
Joined: Fri Dec 29, 2000 6:51 am

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Fri Jul 31, 2020 12:25 pm

Air Canada had C$9.12 billion in liquidity, as of June 30

And $2.5 billion of that are dollars that belong to passengers who were not given refunds when AC cancelled their flights.
 
Airlinerdude
Posts: 168
Joined: Tue Mar 30, 2010 3:07 am

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Fri Jul 31, 2020 5:54 pm

I just had a quick glance through their financials, some interesting things I found:

    ‘Advance ticket sales’ liability was sitting at $2.4bn (2.9 at Dec 31), which in large part are ticket holder’s interest free loan to AC. I’m a bit surprised this remains as high as it does. I’ve noticed AC has been very slow to update their inventory to reflect a more realistic operating environment. For example, October is currently showing operating at close to 100% of their pre-covid schedule. Given that they’re not allowing refunds, I’m surprised that this isn’t being scrutinized as a ‘bait and switch’ technique.

    QTD cargo revenue was greater than passenger revenue, at $269m and $207m respectively. While it’s not a surprise that this happened, I am surprised that cargo revenue is only up 52% compared to prior year QTD. I had the impression they were operating a pretty rigorous cargo schedule with higher yields. Nonetheless, still great to see AC take advantage of the situation and increase their cargo revenues.

    Cash burn was about $19m per day in Q2. Expected to drop to about $15m to $17m for Q3.

    Capital commitments at Dec 31 were $1.5bn for 2021. Now this number is up to $2.2bn. This is likely on the account of deferring some capital commitments to next year, and having a more concrete idea of when they’re receiving their MAX deliveries. But it does present a huge cash flow requirement next year. It will be interesting to see how this is managed going forward.
 
Thenoflyzone
Posts: 2960
Joined: Sun Jan 07, 2001 4:42 am

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Sat Aug 01, 2020 2:30 am

“Without government industry support and as travel restrictions are extended, we will look at other opportunities to further reduce costs and capital, including further route suspensions and possible cancellations of Boeing and Airbus aircraft on order, including the Airbus A220,” Air Canada Chief Executive Officer Calin Rovinescu told analysts


Interesting. Threatening to cancel A220s. Let's see if that's going to hit home with Trudeau.
us Air Traffic Controllers have a good record, we haven't left one up there yet !!
 
9252fly
Posts: 1000
Joined: Thu Sep 22, 2005 7:19 am

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Sat Aug 01, 2020 3:32 am

Thenoflyzone wrote:
“Without government industry support and as travel restrictions are extended, we will look at other opportunities to further reduce costs and capital, including further route suspensions and possible cancellations of Boeing and Airbus aircraft on order, including the Airbus A220,” Air Canada Chief Executive Officer Calin Rovinescu told analysts


Interesting. Threatening to cancel A220s. Let's see if that's going to hit home with Trudeau.


It would seem AC is looking for help, suggesting further route suspensions and aircraft cancellations will certainly get attention in YOW. The government seems to be remaining firm on the travel restrictions, so the only alternative would be to provide financial support, in what form remains to be seen. I don't know how the AC Privatization Act may come into play and if that is a bargaining chip for the government to play. Additional route suspensions may be inevitable, hopefully with a resumption when the sector returns to its previous state.

The threat of aircraft cancellations is interesting. A few months ago AC came to a final arrangement with Boeing regarding their order for the B78M. With 24 delivered and 26 remaining, with roughly half the backlog built and in storage, I don't see how AC will be able to cancel the remaining undelivered aircraft unless they refuse to make the final payments, that could get ugly! In the last couple of days AC took delivery of another A223 which now makes 8 in service. They could do what DL is doing and not bother to pick up newly completed aircraft, they have apparently 5 aircraft awaiting delivery. In DL case, it's likely cash conservation that's driving their delaying tactic, which would be what AC may need to do. AC stated a few months ago that they had the financing in place for this year's A223 deliveries.

Over the next few years both the B78M and A223 will be critical elements in AC recovery, so I hope there is a resolution.
 
FlyingElvii
Posts: 771
Joined: Wed Dec 27, 2017 10:53 pm

Air Canada CEO Demands Government Ease Travel Restrictions with “Tremendous Urgency”

Sat Aug 01, 2020 4:57 am

Revenue down 95% at Air Canada, Laid off 20,000 of 38,000 employees.
He calls the interprovincial travel restrictions a violation of Canadian Rights and Freedoms.


https://www.huffingtonpost.ca/entry/air ... e9b09ba3ce
 
FlyingElvii
Posts: 771
Joined: Wed Dec 27, 2017 10:53 pm

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Sat Aug 01, 2020 5:00 am

https://www.huffingtonpost.ca/entry/air ... e9b09ba3ce

Air Canada CEO Demands Feds Loosen Travel Restrictions Amid $1.75 Billion Loss
 
MIflyer12
Topic Author
Posts: 7730
Joined: Mon Feb 18, 2013 11:58 pm

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Sat Aug 01, 2020 10:38 am

9252fly wrote:
The threat of aircraft cancellations is interesting. A few months ago AC came to a final arrangement with Boeing regarding their order for the B78M. With 24 delivered and 26 remaining, with roughly half the backlog built and in storage, I don't see how AC will be able to cancel the remaining undelivered aircraft unless they refuse to make the final payments, that could get ugly! In the last couple of days AC took delivery of another A223 which now makes 8 in service.


AC doesn't talk about new aircraft commitments beyond this year in its annual report. Do you know the delivery schedules? Are (were?) there enough A220 deliveries planned even to make a significant difference in CapEx?
 
MIflyer12
Topic Author
Posts: 7730
Joined: Mon Feb 18, 2013 11:58 pm

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Sat Aug 01, 2020 10:39 am

FlyingElvii wrote:
https://www.huffingtonpost.ca/entry/air-canada-loss-travel-restrictions_ca_5f24ab0dc5b656e9b09ba3ce

Air Canada CEO Demands Feds Loosen Travel Restrictions Amid $1.75 Billion Loss


AC and Ryanair need to be slapped down - hard. Air carriers don't get to make public health decisions for a nation.
 
ElPistolero
Posts: 2004
Joined: Thu Feb 23, 2012 12:44 am

Re: Air Canada CEO Demands Government Ease Travel Restrictions with “Tremendous Urgency”

Sat Aug 01, 2020 1:05 pm

FlyingElvii wrote:
Revenue down 95% at Air Canada, Laid off 20,000 of 38,000 employees.
He calls the interprovincial travel restrictions a violation of Canadian Rights and Freedoms.


https://www.huffingtonpost.ca/entry/air ... e9b09ba3ce


Government action/inaction is an easy target here, but it’s far from clear that it’s the actual problem.

Provinces are responsible for healthcare provision; they need to act accordingly. Are they violating Canadian Rights and Freedoms? Probably. Will that stand up in court? Depends - if the notwithstanding clause can be invoked here, it’s a good punch line, but it carries no weight.

Government funding? On some level, I think we all know that AC’s future isn’t actually at risk. In a worst case, the Government will take over. The question, then is, what strings should be attached to government aid to make a bailout worthwhile for taxpayers - and would be better for taxpayers than just taking majority control/full ownership. I haven’t a clue. Somebody else might.

But even these are relatively minor issues in the grand scheme of things. To my knowledge, there aren’t many provincial restrictions in the key population centres - Ontario, Quebec, BC, Alberta. Yes, the maritimes and northern territories are placing restrictions, but the former is hardly a major population base, and AC doesn’t serve the latter.

That nobody is flying suggests that the bigger, undervalued problem is that Canadians aren’t comfortable getting into planes - especially now that AC/WS are back to filling every seat. If this is a reflection of Canadian risk aversion going forward, then it spells real trouble for CAN carriers.

Which, I suspect, is why AC is attributing this downturn to everything but pax sentiment. The moment this becomes about low demand, rather than suppressed demand, those stock prices are off to the roller coasters in la ronde.
 
EdmFlyBoi
Posts: 2
Joined: Fri Jul 31, 2020 5:58 pm

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Sat Aug 01, 2020 1:21 pm

MIflyer12 wrote:
9252fly wrote:
The threat of aircraft cancellations is interesting. A few months ago AC came to a final arrangement with Boeing regarding their order for the B78M. With 24 delivered and 26 remaining, with roughly half the backlog built and in storage, I don't see how AC will be able to cancel the remaining undelivered aircraft unless they refuse to make the final payments, that could get ugly! In the last couple of days AC took delivery of another A223 which now makes 8 in service.


AC doesn't talk about new aircraft commitments beyond this year in its annual report. Do you know the delivery schedules? Are (were?) there enough A220 deliveries planned even to make a significant difference in CapEx?


End of 2019 Guidance was 18 A220's and 30 Maxes by YE 2020 and 34 and 50 by YE 2021. Obviously Max deliveries are unclear but I believe there are 14 built and stored that have not been delivered.

All the to be delivered narrow bodies are to be owned based on 2019 guidance so there will be opportunities for sale and lease back to reduce capex if deferrals and cancellations don't occur. AC also owns a large percentage of the 787 and 777 fleet with 31 of 37 787's and 14 of 25 777's owned at the end of 2019. There may be similar sale and leaseback opportunities there. Unfortunately, a large number of the parked aircraft (767's and A32x's) are leased which, if they are not flying, is an ongoing expenditure for AC. The very old A32x fleet that was supposed to be retired as the new narrow bodies came in may have shorter lease terms making removal of them from service increasingly more likely.

Very challenging times for fleet planners.
 
ShamrockBoi330
Posts: 342
Joined: Fri Sep 21, 2018 3:28 am

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Sat Aug 01, 2020 2:40 pm

MIflyer12 wrote:
FlyingElvii wrote:
https://www.huffingtonpost.ca/entry/air-canada-loss-travel-restrictions_ca_5f24ab0dc5b656e9b09ba3ce

Air Canada CEO Demands Feds Loosen Travel Restrictions Amid $1.75 Billion Loss


AC and Ryanair need to be slapped down - hard. Air carriers don't get to make public health decisions for a nation.


I could not agree more with statement.

The numbers of flights, domestic and international, with covid onboard is not acceptable. And coming from International hotspots too, US, Mexico and UK to name three. More needs to be done by airlines coming into Canada to prevent carrying Covid.

https://www.canada.ca/en/public-health/ ... rings.html

What are the Airlines current responsibilities or repercussions? they need to be held accountable if they are pushing so hard for normal flight resumption for bringing in Covid carriers.

Also read another article that 10 taxi and limo drivers at YYZ have died of Covid.
 
777luver
Posts: 3
Joined: Fri Jun 26, 2020 2:44 am

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Sat Aug 01, 2020 4:03 pm

MIflyer12 wrote:
FlyingElvii wrote:
https://www.huffingtonpost.ca/entry/air-canada-loss-travel-restrictions_ca_5f24ab0dc5b656e9b09ba3ce

Air Canada CEO Demands Feds Loosen Travel Restrictions Amid $1.75 Billion Loss


AC and Ryanair need to be slapped down - hard. Air carriers don't get to make public health decisions for a nation.


He’s not demanding.....he’s simply pushing for reopening, they can’t get gov’t aid so what are they supposed to do? Sit and bleed cash and do nothing and go bankrupt by the end of the year? It seems the airlines can’t do any right, right now. Middle seats being sold again? Angry people. No refunds? Angry people. Route cuts? Angry people. If the govt gave federal help then the airlines wouldn’t have to resort to such measures to try to slow the cash bleed going on. A lot of the airlines worldwide have been able to do a lot better because they have gotten lots of federal and govt help. Ditto for Canada, the govt has refused to help out and then turns around and plays the “we’re disappointed in you cutting routes” game, absolutely unacceptable. Almost every other sector has received help. A lot of the biggest airlines in the world have received help, it’s disgusting that Canadian airlines have not received help....period.
 
ElPistolero
Posts: 2004
Joined: Thu Feb 23, 2012 12:44 am

Re: Air Canada reports 2Q20 loss of C$1.75 Billion

Sat Aug 01, 2020 5:23 pm

777luver wrote:
He’s not demanding.....he’s simply pushing for reopening, they can’t get gov’t aid so what are they supposed to do? Sit and bleed cash and do nothing and go bankrupt by the end of the year? It seems the airlines can’t do any right, right now. Middle seats being sold again? Angry people. No refunds? Angry people. Route cuts? Angry people. If the govt gave federal help then the airlines wouldn’t have to resort to such measures to try to slow the cash bleed going on. A lot of the airlines worldwide have been able to do a lot better because they have gotten lots of federal and govt help. Ditto for Canada, the govt has refused to help out and then turns around and plays the “we’re disappointed in you cutting routes” game, absolutely unacceptable. Almost every other sector has received help. A lot of the biggest airlines in the world have received help, it’s disgusting that Canadian airlines have not received help....period.


“Disgusting”? Lol.

AC got $2.5 billion in government aid by virtue of the government choosing not to force AC to comply with APRs and its own tariffs. It’s taxpayer money, albeit without the government serving as a financial middleman. A lot of the biggest airlines in the world that have received financial help have been forced to refund tickets as well.

There are also any number of government programs that AC can apply for. Those programs are designed to be measures of last resort - they’re not meant to benefit companies. AC made a calculated (and in my mind, correct) decision to raise funds in the market. They don’t actually need to use government measures of last resort.

On the issue of paying refunds and filling middle seats, AC is perfectly entitled to do as it wishes within the leeway granted by the government. That said, if it’s alienating customers or putting them off as a result, that is a problem of their own making, not the government’s. AC has to figure out how to serve the market given current market sentiment. If they want to pack passengers in or turn customer payments into interest free loans, then they need to own the consequences.

As an aside, while it’s true that the government has been handing out money everywhere, Canada and Canadians owe AC nothing. The government doesn’t need to step in, not least because there isn’t any actual need to step in yet. In the unlikely event that AC actually reaches a point where it might fail, the government will probably step in. But it’s approach will be dictated by what’s in the taxpayers’ interests, not AC shareholders. There will be strings attached. Lots of thick, uncuttable strings. Things like nationalization may well be on the cards. Not convinced that will go down well with a lot of AC folk around here either.

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