Air Canada today announced its financial results for the second quarter of 2022.
“The last three months have been very busy from an operational perspective for our company, our employees and our customers. The road to recovery from any extreme event is rarely straight and easy. This quarter is up from nearly 8 million, or 70% of total customers, in the second quarter of 2021, or 70% of total customers for the full year. Thank you to our employees for their incredible hard work, professionalism and dedication to transporting customers safely in 2021,” said Michael Rousseau, President and CEO of Air Canada.
“The industry around the world is facing unprecedented conditions as it emerges from restrictions linked to the pandemic. The situation is especially difficult in Canada, where we have rebuilt capacity to reach 80% of 2019 levels in a few months after a nearly two-year suspension of air traffic. Despite meticulous planning and design, participants involved in the aviation system are again Faced with significant pressure to launch We continue to work together to bring the travel experience up to expectations and are encouraged by the latest developments.
“Financially, we are pleased that we generated $154 million in EBITDA, a significant increase from negative quarterly EBITDA of $656 million a year ago, and operating income approached $4 billion in the quarter, an improvement of approximately $3.1 billion from the second quarter of 2021. Compared to pre-pandemic levels, Q2 2022 Advance ticket sales reached 94% of Q1 2019. In the second quarter, our operating efficiency, as measured by seat mile availability, was 73%. In the same quarter of 2019, despite lower capacity, passenger revenue was 80% of what was generated in the second quarter. % in 2019, driven by higher yields,” Rousseau said.
“We expected travel to recover significantly once restrictions are lifted and prepared accordingly. We entered the peak summer travel period at approximately 90% of our pre-pandemic staffing levels, at which time we plan to operate approximately 80% of our pre-pandemic schedule. In the second quarter of 2022, we will have a load factor of 80.5%. We delivered, which is a significant improvement from the levels in the second quarter of 2021, but a decrease of approximately four percentage points compared to the second quarter of 2019. We have also reduced our planning in July and August in advance to minimize the short-term impact on the industry’s recovery efforts and on customers and employees. We have recently taken additional measures to smooth out peaks and streamline traffic flow.
“Finally, while many participants play a unique and essential role in the aviation system, we recognize that our customers experience these interconnected efforts as one journey. We continue to work closely with our service providers and governments to address the issues facing aviation in Canada and around the world. We are aware of the inconvenience and disruption some of our customers are experiencing and are deeply sorry for them. This is not a typical business for us. We thank our customers for their understanding and loyalty to Air Canada during these unprecedented times,” Rousseau concluded.
Financial results for the second quarter of 2022
Air Canada announced the following financial results for the second quarter of 2022:
Operating capacity, measured by available seat miles (ASM), increased approximately fivefold compared to the second quarter of 2021. Capacity was 73% in the second quarter compared to the second quarter of 2019, according to Air Canada’s projections. First quarter 2022 earnings release on April 26, 2022.
Passenger revenue of $3.441 billion was about eight times higher than in the second quarter of 2021.
Operating revenue of $3.981 billion was a nearly five-fold increase compared to the second quarter of 2021.
Operating expenses of $4.234 billion increased by $2.264 billion compared to the second quarter of 2021.
Cost per available seat mile (CASM) decreased to 20.8 cents, compared to CASM of 49.3 cents in the second quarter of 2021.
* 13.1 cents per available seat mile (adjusted CASM) compared to 2021 adjusted CASM of 41.5 cents.
An operating loss of $253 million, an improvement from an operating loss of $1.133 billion in the second quarter of 2021.
EBITDA * (excluding special items) or earnings before interest, taxes, depreciation and amortization of $154 million, better than negative EBITDA of $656 million in the second quarter of 2021.
A net loss of $386 million, or $1.60 per diluted share, compared to a net loss of $1.165 billion, or $3.31 per diluted share, in the second quarter of 2021.
In the second quarter of 2021, there was $1.077 billion in cash from operations and $1.377 billion used in operations. This improvement of $2.454 billion was driven by better operating results and stronger advance ticket sales in the second quarter of 2022 and assumes refunding of eligible non-refundable tickets that were $997 million in the second quarter of 2021.
- EBITDA (excluding special items), EBITDA margin, adjusted pre-tax profit (loss), free cash flow, net debt and adjusted CASM (discussed in this press release) are non-GAAP financial measures, non-GAAP statements or subsidiary financial measures. Such measures are not recognized measures of financial reporting under GAAP, do not have standardized meanings, are not comparable to similar measures presented by other entities, and should not be considered a substitute for or superior to GAAP results. For a reconciliation of Air Canada’s non-GAAP financial measures, non-GAAP reporting and subsidiary financial measures and Air Canada’s non-GAAP measures used herein, see the “Non-GAAP Financial Measures” section of this press release. Print to the most comparable GAAP financial measure.
Outlook for the second quarter of 2022
Relaxation of travel restrictions
In the second quarter of 2022, there was further relaxation of travel restrictions by the Canadian government. These changes include:
Effective April 1, 2022, fully vaccinated travelers will not be required to provide a negative COVID-19 test result prior to entry.
Random checks for fully vaccinated travelers were temporarily suspended from June 11, 2022 and resumed on July 19, 2022 (including unvaccinated travelers and randomly selected fully vaccinated travelers) and are now performed off-site.
As of June 20, 2022, travelers will no longer be required to present proof of vaccination to board a flight in Canada. Requirements for travelers entering Canada remain unchanged.
Foreign nationals must be fully vaccinated to qualify for entry into Canada unless they meet the exemptions set out in orders placed under the Quarantine Act. Generally, unvaccinated or partially vaccinated travelers authorized to enter Canada must be quarantined and subject to the federal requirement to receive a covid. 19 Pre-arrival, post-arrival and eighth day inspection.
Routing and Scheduling Network
At the end of June 2022, Air Canada decided to pre-cancel approximately 8% of its scheduled flights in July and August 2022 in response to the unprecedented challenges facing the aviation system. This reduction represents an average of about 154 fewer flights per day. , mainly on domestic and US transboundary routes to and from Toronto and Montreal (at peak), totaling about 378 million ASM.
In July 2022, Air Canada signed a contract to purchase two new Boeing 777 freighters expected to be delivered in 2024.
In the third quarter of 2022, Air Canada expects to increase its ASM capacity by approximately 131% compared to the same quarter in 2021 (or approximately 79% ASM capacity in the third quarter of 2019).
Air Canada now offers the following guidance for the full year 2022:
Air Canada plans to increase its ASM capacity by approximately 150% of 2021 ASM levels by 2022 (or approximately 74% of 2019 ASM levels). Air Canada will continue to adjust capacity and take other measures as needed, including taking into account passenger demand, public health guidelines and travel restrictions worldwide, and other factors such as inflation and other cost pressures.
In 2022, Air Canada expects adjusted CASM to be approximately 15-17% above 2019 levels. Passenger service and delivery costs. To a lesser extent, it also accounts for the increase in wages, salaries and benefits.
Through 2022, Air Canada maintains its annual EBITDA margin* expectation of approximately 8-11%.
Air Canada has made assumptions in preparing forward-looking statements. Among them, Air Canada assumes modest growth in Canadian GDP for 2022. Air Canada now assumes that the Canadian dollar will trade at an average of CAD 1.28 per US dollar throughout 2022 and that jet fuel prices will average CAD. $1.27 per liter through 2022.
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