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Air Canada Tightens Its Belts

Discontinues Service on 30 Domestic Regional Routes and Closes Eight Stations

Air Canada is indefinitely suspending service on 30 domestic regional routes and closing eight stations at regional airports in Canada.

These structural changes to Air Canada's domestic regional network are being made as a result of 'continuing weak demand for both business and leisure travel due to COVID-19 and provincial and federal government-imposed travel restrictions and border closures, which are diminishing prospects for a near-to-mid-term recovery.'

As the company has previously reported, Air Canada expects the industry's recovery will take a minimum of three years. As a consequence, other changes to its network and schedule, as well as further service suspensions, will be considered over the coming weeks as the airline takes steps to decisively reduce its overall cost structure and cash burn rate.

As a result of COVID-19, Air Canada reported a net loss of $1.05 billion in the first quarter of 2020, including a net cash-burn in March of $688 million. The carrier has undertaken a range of structural changes including significant cost savings and liquidity measures, of which today's announced service suspensions form part.

Other measures include:

  • A workforce reduction of approximately 20,000 employees, representing more than 50 per cent of its staff, achieved through layoffs, severances, early retirements and special leaves;
  • A company-wide Cost Reduction and Capital Deferral Program, that has to date identified around $1.1 billion in savings;
  • A reduction of its system-wide capacity by approximately 85 per cent in the second quarter compared to last year's second quarter and an expected third quarter capacity reduction of at least 75% from the third quarter of 2019;
  • The permanent removal of 79 aircraft from its mainline and Rouge fleets;
  • And raising approximatively $5.5 billion in liquidity since March 13, 2020, through a series of debt, aircraft and equity financings.
  • Further initiatives are being considered.
FMI: www.aircanada.com

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