Canadian air carriers’ stocks plunge as border closes
Canadian airlines slashed flight schedules as their stocks took another plunge on Wednesday after the U.S. and Canada announced plans to close the border to non-essential travel.
Air Canada, Canada’s largest airline, announced it will gradually suspend its international and U.S. flights by March 31 and drastically cut its domestic and cross-border schedules until at least April 30.
While it will operate flights in the short term to repatriate travellers stuck abroad, after April 1 it plans to cut the number of airports it services internationally to six from 101; in the U.S. to 13 from 53; and domestically to 40 airports from 62.
Chief executive Calin Rovinescu described the travel restrictions as understandable but cataclysmic for the airline industry.
“We are working around the clock to deal with the impact for our customers and our business of the various travel restrictions that are being made by governments at unprecedented speed without advance warning,” he said in a statement.
Air Canada is working with the federal government to figure out how to maintain essential operations, bring as many Canadians home as possible, including through charter flights, and to maintain the shipment of goods and cargo.
Air Canada’s stock fell nearly 20 per cent Wednesday to close at $12.90 and vacation airline Transat A.T.’S stock dipped two per cent to $5.88 on the Toronto Stock Exchange. During the volatile trading day, Air Canada’s stock fell as much as 40 per cent and Transat’s dropped 20 per cent.
Air Canada shares have fallen about 75 per cent since Jan. 1.
Transat announced Wednesday it will gradually suspend flights until April 30 and temporarily lay off a “significant” portion of its employees in response to COVID-19 border closures that have decimated demand for international flights.
The Montreal-based airline said it will reduce work hours and salaries for remaining employees and executives as it focuses on repatriating customers to their home countries.
Porter Airlines Inc. followed suit, announcing it will halt all operations end of the day on Friday until June 1. Both actions follow similar moves by Sunwing Vacations and Westjet Airlines Ltd., which cancelled flights to international and U.S. destinations earlier this week. Air Canada has also slashed its capacity. All airlines will continue to operate international and U.S. flights over the next few days to bring as many Canadians home as possible, although passengers are advised to monitor their websites for flight cancellations.
“This is an unprecedented situation, beyond our control, which is forcing us to briefly suspend all of our flights to contribute to the effort to fight the pandemic, protect our customers and employees and safeguard the company,” Transat chief executive Jean-marc Eustache said. “We are doing everything we can so that this has as little impact as possible on our employees and customers, whom we make sure to bring back home.”
Porter, which operates in Toronto, said it will waive change and cancellation fees for customers scrambling to get home in the next few days. “The speed of developments related to COVID -19 is shocking. It is having an unprecedented impact around the globe on businesses, economies and people,” Porter chief executive Michael Deluce said in a statement.
The International Air Transport Association predicts the air travel disruptions will erase more than US$113 billion in revenue globally, with about $20 billion in revenue lost in North America alone. Those estimates were calculated before widespread travel restrictions in the U.S. and Canada.
Financial Post
With a file from The Canadian Press