Question

How Covid-19 impacted Airline industries- Air Canada and West Jet?

Answer in detail for both the airlines.

Answer 1

In its first quarter results, Air Canada has reported a slide in revenues and earnings, predominantly due to the impact of the coronavirus.

The carrier noted a 15% year-on-year decrease in revenues, from C$4.4bn in the first quarter of 2019 compared with C$3.7bn in the same period of this year.

Ebit for the first quarter decreased by 81% year on year, from C$583m in 2019 to C$71m in 2020.

The carrier said that its results “reflect the severity and abruptness of the impact that the Covid-19 pandemic has had” on airlines.

Calin Rovinescu, president and chief executive of Air Canada, said: “The impact was exacerbated during the month of March with mandated social distancing, unprecedented government-imposed travel restrictions in Canada and around the world and the shutting down of economies.”

However, he pointed out: “The past quarter was the first in 27 consecutive quarters that we did not report year-over-year operating revenue growth. Our solid January and February results gave us every encouragement that this performance would continue until the sudden and catastrophic impact of Covid-19’s onset in Europe and North America in early March.

“We are now living through the darkest period ever in the history of commercial aviation.

“Be assured that we are resolutely committed to bringing our airline successfully through this crisis.”

From March 22, Air Canada operated more than 500 cargo-only flights utilising passenger aircraft, to ensure that supply chains continued moving and essential cargo such as personal protective equipment was transported to areas dealing with the virus outbreak.The number of airports in Canada it is now serving has been reduced from 62 to 40.

The carrier has also planned to operate up to 150 cargo-only flights per week in the second quarter of this year, utilising its Boeing 787 and 777 aircraft, as well as its four newly-converted Boeing 777 and four converted Airbus 330 aircraft in which cargo capacity has been doubled with the removal of the passenger seats.

WestJet announced a number of organizational changes on June 24 that will affect the jobs of 3,333 employees, including consolidating call centre activity in Alberta, contracting out airport operations in many airports and restructuring its office and management staff.
The pandemic has seen the airline park two-thirds of its fleet after border shutdowns prompted it to suspend most of its schedule — including all international trips.WestJet will contract out airport operations in all domestic airports outside of Vancouver, Calgary, Edmonton and Toronto.The company said a priority in selecting airport partners will be preferential hiring interviews for some of the 2,300 WestJet airport workers now facing layoffs.The COVID-19 crisis has been devastating for the aviation industry as travel restrictions and fears about the virus has caused traffic to plummet.

Last week fewer than 7,500 passengers arrived at Canadian airports from the U.S., down more than 98 per cent from a year earlier, according to the Canada Border Services Agency.
WestJet’s scheduled operations have dropped by more than 90 per cent year over year.