Air Canada ‘encouraged’ by government aid talks after C$4.65-billion loss

Air Canada’s chief executive and a top union official on Friday, February 12, expressed confidence Ottawa would provide an aid package for airlines after the carrier reported its biggest annual loss in at least 19 years due to COVID-19.

Air Canada shares were up 4.5% in afternoon trade. It reported a net loss for 2020 of C$4.65 billion ($3.65 billion) compared with a 2019 profit of C$1.48 billion.

Airlines have been among the hardest hit by the epidemic as people stay home.

Canada’s largest carrier, which last year cut over half its workforce, or 20,000 jobs, and other airlines are negotiating with the Liberal government on an aid package.

“I am very encouraged by the constructive nature of discussions that we have had…. I am more optimistic on this front for the first time,” Air Canada chief executive officer Calin Rovinescu said, a day after Canada approved the carrier’s purchase of rival Transat AT.

Jerry Dias, president of the Unifor private sector trade union, said he was confident an aid deal would happen.

“I’ve been speaking to the federal government as well as Calin and everybody and there’s no question, it’s imminent,” Dias said in a phone interview, without providing further details.

A government source in the finance ministry, which is leading the talks, declined to comment on Rovinescu’s remarks on the grounds the negotiations were continuing.

Canada has previously said passenger refunds and the restoration of regional routes would have to be part of a deal.

Carriers agreed in January to suspend winter travel to certain sun destinations through April 30 amid fears that new strains would spread during spring break.

Rovinescu, who retires this month, told analysts he expects an “improved dynamic” around the end of April, with COVID-19 testing replacing some quarantines.

Canada has some of the world’s toughest travel rules with a mandatory 14-day quarantine for arrivals and some domestic restrictions.

“It will not be completely eliminated, but we do see the potential for it to go to a 5- to 7-day quarantine,” Rovinescu said.

Asked about the CEO’s comments, Canada’s chief medical officer, Theresa Tam, said, “it’s probably premature right now to know what is happening at the end of April.”

Air Canada said it was seeking further cost reductions, plans to reduce its 1st-quarter capacity by about 85% compared with a year earlier, and projects quarterly net cash burn between C$1.35 billion and C$1.53 billion. – Rappler.com