Air Canada threatens to cancel Airbus A220 order if government doesn’t ease restrictions

Jul 31, 2020

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 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

Featured image by Edward Russell/TPG.

Chase Sapphire Preferred® Card

WELCOME OFFER: 60,000 Points

TPG'S BONUS VALUATION*: $1,200

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.
Intro APR on Purchases
N/A
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

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.

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.