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Tuesday airline updates: Air Canada expects 3-year recovery

written by Dylan Nicholson | May 5, 2020

Air Canada chief executive Calin Rovinescu has dramatically announced the world is living through “the darkest period ever in commercial aviation”.

Rovinescu highlighted the difficulties the airline is facing and stated that it may take three years for the airline to recover after the COVID-19 pandemic comes to an end.

He also revealed his plans to accelerate the retirement of 79 planes, including Boeing 767s, Airbus A319s, and Embraer 190s.

Seat capacity, meanwhile, will reduce by between 85-90 per cent in the second quarter, and 75 per cent in the third. The airline will also continue to adjust capacity and may take other measures as required to account for passenger demand, health warnings, travel restrictions and border closures globally.

“We’re effectively putting the airline in a state of hibernation, unwinding a decade of international growth. We expect it to take three years for Air Canada to get back to 2019 levels of revenue and service,” Rovinescu said.

Air Canada’s net loss was reported to be $1.05 billion for the first quarter.

In other airline news:

  • United Airlines is closing its long-haul pilot base at Los Angeles International Airport. It is a significant move by the US mega carrier. LAX is usually the second busiest airport in the US and a jumping-off point for long-haul flights across the Pacific and elsewhere. But United Airlines is slashing its pilot workforce, and indicators are there won’t be any long-haul flying out of LAX for at least a year. It has also ordered seven new 787 Dreamliners to be delivered in 2021.
  • Brazilian Carrier GOL Linhas Aéreas, the Brazilian carrier, announced a net loss of US$419.28 million in the first quarter.  The airline also said that it has enough liquidity and it is “in a strong position to face this crisis”.
  • KLM has announced that wearing face masks will be compulsory on its flights as they begin to restart. Effective 11 May, the rule applies to all KLM flights. Passengers must wear masks when boarding flights and while onboard.
  • Airbus is working in partnership with a Silicon Valley start-up to develop a new way to keep us safe in flight. The last line of defense technology will use living cells combined with microprocessors to sniff out explosives and could be further refined even to detect coronavirus.
  • Norwegian has secured a more positive future for itself after finally getting its bondholders to agree to a substantial debt-to-equity swap today. Creditors will have more than $900 million of debt converter into equity, balancing the airline’s equity ratio and allowing it to unlock millions in government support. Shareholders voted 95 per cent in favour of the move, even though it leaves them with only 5 per cent of the company.
  • Southwest Airlines CEO Gary Kelly has claimed that flying is safe again. In a televised interview, he said that this was due to all of the measures being taken by the US low cost-carrier to reduce virus transmission.
  • Jetstar Asia is continuing the suspension of most of its services until the end of May. The Singapore based low-cost carrier first suspended services in mid-March as governments in the region began implementing travel bans.

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