Air Canada carried more than 9.1 million passengers in the second quarter of 2022, nearly 8 million more than the same time last year. (Reuters)
Air Canada reported a surge in travel demand in its latest quarter, but the airline still posted a net loss of $386 million as it continues to grapple with “operational volatility” in the post-pandemic period.
While the Montreal-based airline says it expects operations to improve in the coming weeks, executives issued an apology to customers on Tuesday, saying the challenges seen in the second quarter were “not at all business as usual for us or anyone else who participates”.
“We did not achieve an acceptable level of operational stability, and for that we apologize to our affected customers and employees,” Air Canada Chief Operating Officer Craig Landry said on a conference call with analysts.
“However, I can assure everyone that our highest priority across the company has been, and remains, working with everyone on the journey to remove any remaining volatility and return our operations to pre-pandemic levels of stability.”
Growth in travel demand during the post-pandemic recovery has strained the global air transport system and led to difficulties for Air Canada and chaos at some of the country’s busiest airports. The summer surge has pushed Air Canada and Toronto’s Pearson Airport to the very top of global flight delay lists, with Canada’s largest airline frequently reaching No. 1 for the percentage of delayed trips — up to two-thirds of scheduled flights on some days — in June and July.
The struggles come as the airline’s total sales in the quarter hit $3.98 billion, a nearly five-fold increase from the same period last year. Air Canada says it carried almost as many passengers – 70 per cent – in the three-month period ending June 30 as it did in all of 2021. It carried more than 9.1 million customers in the quarter, nearly 8 million more than in the same period of 2021.
“In Canada, we’ve come back from a nearly two-year suspension of air travel to capacity levels near 80 percent as of 2019,” CEO Michael Russo said on the conference call.
The story continues
“We prepared well in advance of 2022 for a surge in travel demand … but despite all the planning, the increased traffic has created difficulties for all participants in the air transport system.”
Air Canada entered the peak summer travel period at nearly 90 percent of its pre-pandemic staffing levels, but Landry pointed to system-wide challenges that “have begun to show various signs of unprecedented instability.”
“These effects are mainly due to challenges in resourcing and can be seen in airport security checks, Canada-US border customs processing, air traffic control, maintenance providers, equipment, supply chain, catering of aircraft and refueling partners, just to name a few,” he said, adding that a series of mechanical breakdowns in airport baggage handling systems at key hubs had also contributed to the ongoing problems.
“This type of supply chain volatility has a direct impact on our operations. It creates flight delays, flight cancellations and increased cases of missed connections and mishandled bags.”
The airline cut more than 15 percent of its scheduled flights in July and August to improve operational stability. So far, Russo says operational metrics are improving.
“Baggage is getting better, on-time performance is getting better, cancellations are going down and it’s a collective effort of everyone working together … to make sure we can provide a consistent level of service to our customers,” he said.
“We are encouraged by the progress made over the past few weeks and look forward to continued improvement in the coming weeks.”
RBC Capital Markets analyst Walter Spracklin said in a note to clients on Tuesday that the results show that the road to recovery from the COVID-19 pandemic will include “twists and turns” but that it is “heading in the right direction.”
“The near-total shutdown the company suffered during the pandemic and the speed of the subsequent restart put the entire air transport infrastructure, not just Air Canada, to the test,” Spracklin wrote.
“While the ensuing disruption is not surprising, we were encouraged by management’s commentary on the call, which suggested the worst was behind us.”
Air Canada reported a second-quarter loss of $386 million, or $1.60 per share, compared with a net loss of $1.165 billion last year, or $3.31 per share. However, the loss did not live up to expectations. Analysts had expected a loss of 83 cents per share, according to financial data firm Refinitiv.
Shares of the airline were up roughly 1% as of 12:15 a.m. ET, trading at $17.55 a share.
With files from The Canadian Press
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
Download the Yahoo Finance app, available for Apple and Android.
Add Comment