Air Canada threatens to cancel Airbus A220 order if government doesn’t ease restrictions
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Air Canada is fed up with the Canadian government’s travel restrictions and is threatening to cancel its order for the made-in-Canada Airbus A220 to get them eased.
A combination of international arrival restrictions, including the closure of the U.S.-Canada border, plus internal restrictions and quarantines has hit the Montreal-based carrier hard, said Air Canada CEO Calin Rovinescu during a second quarter earnings call Friday. On top of this, the Canadian government has provided minimal financial support beyond an employee wage subsidy program.
“Without government industry support and as travel restrictions are extended, we will look at other opportunities to reduce costs and capital, including further route suspensions and possible cancellations of Boeing and Airbus aircraft on order,” he said.
Sign up for the free daily TPG newsletter for more airline news!
Key to Rovinescu’s threat is Air Canada’s order for 38 A220-300s — it already flies seven of the jets. The jets were designed by Montreal-based Bombardier and acquired by Airbus in 2018, and are assembled at Montreal Mirabel (YMX) airport. A plant that employs hundreds of Canadians.
Air Canada has already dropped eight smaller Canadian cities from its map and ended service on 30 routes due to COVID-19. Many believe the map paring is part of the airline’s ongoing campaign to get the government to ease restrictions and provide some form of aid.
The airline reported a net loss of Canadian dollar 1.75 billion ($1.28 billion) in the second quarter. Passenger traffic fell by nearly 97% compared to the same three-month period in 2019.
Related: Air Canada drops 8 cities from route map amid coronavirus adjustments
Air Canada reports a C$1.75b net loss in 2Q20.
Revenues fell 89% to C$527mn, and capacity was down 92% vs 2Q19. https://t.co/ptMTIQvjGg
— Edward Russell (@byerussell) July 31, 2020
Air Canada does not envision a market where all travel restrictions are lifted. Citing the continuing pandemic, Rovinescu called for lesser “science-based measures” based on the European Union model. This could allow some travel to resume while presumably keeping the virus at bay.
Despite threatening its order, Air Canada still envisions the A220 as central to its future fleet and map. The airline’s chief commercial officer Lucie Guillemette said Thursday July 30 the jet will be a “cornerstone of some of our longer term recovery.”
Both the plane’s capabilities, which includes added range and improved efficiency compared to older aircraft its size, and positive customer feedback have exceeded Air Canada’s expectations, she added.
Related: First look onboard Air Canada’s first Airbus A220
The carrier introduced the A220 in January, debuting it on flights between Montreal Trudeau (YUL) and Calgary (YYC). TPG’s Zach Griff called the jet a “joy to fly” after riding on the inaugural sortie.
Air Canada has moved forward with plans to retire 79 jets from its fleet. It removed all 30 of its Boeing 767s — including the 25 at its budget arm Rouge — as well as its remaining 14 Embraer E190s and six Airbus A319s, between April and June, a quarterly financial filing shows. Another 29 of its A319s are slated for retirement in the next few months.
“Although we will emerge smaller with fewer aircraft, fewer people and fewer cities served… we will be nimbler and more competitive,” said Rovinescu.
Related: Global air travel unlikely to recover until 2024 as COVID remains ‘issue’ in US, elsewhere
E.T. was apparently a pop culture sensation when Air Canada received its first 767 https://t.co/mG9bKSIV5L pic.twitter.com/qvvNzY4itW
— Edward Russell (@byerussell) June 4, 2020
Featured image by Edward Russell/TPG.
Sign-up Successful!
Welcome to The Points Guy!
Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in the first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants in the first three months of card membership.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Earn 50,000 Bonus Miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
- Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees
Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.
Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.