Air Canada sees pandemic impact lasting years

Air Canada expects it will take three years to recover from the “darkest period ever” in commercial aviation as the coronavirus pandemic continues to prove cataclysmic to the industry.

Canada’s largest airline on Monday reported a $1.05-billion loss in the first quarter compared to a $345-million profit in the same period last year due to crashing demand and revenue from COVID-19 global travel restrictions.

It plans to permanently downsize its head count and fleet to account for reduced capacity, which it expects to cut from last year by 85 to 90 per cent in the second quarter and 75 per cent in the third quarter.

“We expect that both the overall industry and our airline will be considerably smaller for some time, which will unfortunately result in significant reductions in both fleet and employee levels,” chief executive Calin Rovinescu said on an analyst call Monday.

The airline’s stock price dropped nine per cent to $17.52 by Monday afternoon, although the fall was part of a wider industry sell-off after billionaire Warren Buffett’s

Berkshire Hathaway sold its position in the four largest American carriers. It started the year with $7.4 billion in liquidity and ended the first quarter with $6.5 billion.

The airline plans to cut $1 billion in costs this year to help mitigate the revenue disappearance, an increase from previously announced cuts of $500 million and $750 million. It’s retiring 79 planes, about half of which will be replaced with newer models and half representing a permanent capacity reduction, and offering voluntary buyouts to its employees.

Canada’s federal government has not announced a bailout package for the domestic airline industry. Prime Minister Justin Trudeau repeated Monday the government is “looking very carefully” at airline aid, but didn’t promise anything specific.