Yahoo Finance Air Canada narrows loss to $508 million in quarter that saw demand surge
Air Canada (AC.TO) reported a narrower loss in the third quarter of the year as it more than doubled the number of passengers it flew through a busy but chaotic summer travel season.
The Montreal-based airline reported a net loss of $508 million in the three-month period ending Sept. 30, or $1.42 per diluted share, less than the $640 million loss, or $1.79 per diluted share, that it reported during the same quarter last year. Operating revenue was $5.322 billion in the third quarter, more than double the $2.1 billion earned last year.
While Air Canada posted a loss in the quarter, its operating income was $644 million, the first time it has hit positive territory since the COVID-19 pandemic began.
"These results are linked to the return of travel, which remains on a progressive recovery as we predicted it would be this quarter," chief executive Michael Rousseau said on a conference call with analysts on Friday.
"Our key operational metrics, including flight completion and baggage handling, are now back to pre-pandemic levels. Air Canada is emerging from a pandemic stronger, more resilient, and more adaptable. We are certainly well-positioned to capitalize on the ongoing recovery."
Rousseau says Air Canada flew 11.5 million passengers in the third quarter this year, more than double the number of passengers it flew over the same period last year, and nearly 90 per cent of all the customers it flew in the whole of 2021.
The results come as travel demand surges in Canada, particularly for leisure and sun destinations. Air Canada says leisure and sun destination demand has surpassed 2019 levels. With demand on the rise, the company says it plans to increase capacity in the fourth quarter to 85 per cent of what it was flying in 2019.
But the resurgence in travel demand, combined with labour shortages and processing issues, resulted in a wave of cancellations and delays and brought chaos to Canada's busiest airports. Air Canada apologized to customers earlier in August for the operational instability seen in the post-pandemic ramp-up.
The airline says operations have since improved.
"After a difficult June and July, we saw significant operational improvement throughout August and September, with the operation today now on par with pre-pandemic levels," Rousseau said in a statement released alongside earnings.
"Still, we know many customers experienced disruptions travelling this summer, and we sincerely regret any inconveniences that have occurred."
One area that is still lagging in the post-pandemic recovery is business travel, although Air Canada's chief commercial officer Lucie Guillemette says the company has seen steady month-over-month improvements when it comes to corporate travel.
"Will we ever return to 2019 levels for pure corporate (travel) the way we knew it? We'll have to wait to see," Guillemette said.
"But there's no doubt that we are seeing a new type of business traffic here, with customers combining a business trip with leisure. There are definitely new segments that are emerging post-pandemic."
Air Canada's stock was up 4 per cent midday on Friday, trading at $20.08 per share on the Toronto Stock Exchange. The stock is down about 8 per cent year-to-date.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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