Air Canada Sets Second Quarter Cargo Revenue Record
Hindered by strict government border restrictions, Air Canada disappointed investors with a loss of US $ 918.3 million in the second quarter, but the freight division did better than expected with record revenue of US $ 274 million. dollars.
Freight sales for the period ending June 30 were 33% higher than in 2020 and double the amount in 2019, before the pandemic.
Air Canada (OTCUS: ACDVF) was one of the more aggressive passenger carriers to switch to dedicated cargo operations when global cargo capacity plummeted 16 months ago and fares soared with the services normal passengers scuttled by the pandemic. And he was one of the first carriers to modify passenger planes to carry additional cargo by removing cabin seats.
Since the start of the pandemic, Air Canada has operated more than 10,000 cargo flights alone. Regular and on-demand freight services are available in more than 30 cities around the world on widebody Boeing 777s and 787-9s, as well as Airbus A300s. Seven planes have had seats removed and can hold crates on the main deck.
A total of 3,257 all-cargo flights were operated in the second quarter of 2021, with all-cargo revenues representing 67% of total cargo revenues for the quarter.
First-half cargo revenue increased 53% to $ 489 million from the same period a year ago and 80% from 2019. And sequentially, Air Canada’s cargo revenue has increased increased $ 59 million from the first quarter. The gains from 2020 were due to increased traffic as yields were down 26%. Performance comparisons are unfavorable due to a brief anomalous spike in rates a year ago amid the global panic purchase of personal protective equipment and other supplies related to COVID.
The strong performance of Air Canada Cargo, combined with hypergrowth in e-commerce and forecasted annual compound growth rates of 4% to 6% for air cargo as a whole, motivated management at the end of the year. last to change its business model and operate a fleet of pure freighters in parallel with passenger services.
Air Canada anticipates an all-cargo fleet of eight aircraft and expects to have two 767 freighters in service during the fourth quarter. The company uses 767s from its own fleet that have gone beyond their usefulness to carry passengers. He has already identified preliminary destinations they will serve, including Miami, Mexico and South America.
“We are extremely proud of the strongest quarterly results Air Canada Cargo has ever seen, which is a testament to our continued efforts to maintain stable and constant capacity flows for our customers around the world through cargo flight only,” said Matthew Casey, who was promoted in May to senior director of global freight sales and revenue optimization, said in a statement.
Overall, Air Canada’s operating revenue ($ 640.5 million) was down 82% from 2019 levels, with capacity down 86%. The company said it was still burning $ 9 million a day. The airline has been handcuffed by government bans on non-essential travel and foreign nationals entering the country, as well as a 14-day quarantine requirement for returning Canadians.
The results contrast sharply with those of the major US airlines which have seen leisure travel rebound to near 2019 levels, are at – or near – breakeven and expect to have positive operating profit in 2019. third quarter thanks to the world’s fastest COVID vaccination campaign, a huge domestic market and fewer cross-border restrictions.
As Canada begins to reopen its economy, Air Canada executives forecast a better third quarter.
Immunization rates in Canada are rising and the government’s easing of travel restrictions in June, including the elimination of the quarantine period for fully vaccinated Canadians, has resulted in a significant increase in bookings. Further increases are expected once restrictions on travel between the United States and Canada come into effect on August 9.
Air Canada’s forecast for the third quarter calls for a 65% improvement in capacity from 2019 and a decrease in daily cash consumption to between $ 3.4 and $ 4.5 million.
Last week’s announcement of an improved summer schedule coincides with the easing of restrictions and includes 55 routes and 34 destinations in the United States
“We are relieved to see our passenger network begin to rebuild and continue to provide cargo flights only in markets where capacity is still limited. With the arrival of our first 767 freighters in the fourth quarter, the combination of these, the resumption of our continued freight and passenger flights sets a strong picture for the remainder of the year, ”said Casey.
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