Air Canada today reported second quarter 2019 earnings of $916 million compared to second quarter 2018 results of $739 million.
READ MORE: Air Canada acquires Transat A.T. Inc.
"I am delighted to report an excellent second quarter, including record operating revenues of $4.757 billion and record liquidity of nearly $7 billion. Although our results exceeded expectations, the Boeing 737 MAX grounding negatively impacted EBITDA growth year-over-year. Our management team and all employees involved with this complex issue did an incredible job implementing creative solutions for our fleet, schedule, network and operations to get passengers to their destinations during the quarter," said Calin Rovinescu, president and CEO of Air Canada.
Boeing: removed through 2020
According to Rovinescu, the impact of the Boeing 737 MAX grounding will be felt more acutely in Air Canada's very busy summer period and, as a result, third quarter EBITDA (earnings before interest, taxes, depreciation, amortization and impairment) is expected to increase approximately five per cent versus the third quarter of 2018.
"Third quarter projected capacity is expected to decline approximately two per cent compared to the third quarter of 2018, as opposed to an originally planned capacity increase of approximately three per cent," Rovinescu said. "In our planning, we will be removing the Boeing 737 MAX from our schedule until at least Jan. 8, 2020. This reflects our prudent approach to scheduling, giving customers certainty when booking their fall and especially their winter holiday travel. At present, we have no visibility on reliable timing for the return to service of the Boeing 737 MAX as we await regulatory approvals. If the aircraft are returned to service earlier, we would look for opportunities to have some enter the fleet for either replacement flying or as back-ups."
The role of Transat A.T. Inc.
According to Rovinescu, Air Canada is seeing revenue growth in each market segment and system passenger revenues up 10.7 per cent on capacity growth of 2.3 per cent.
Following Transport Canada's order to ground the Boeing 737 MAX 8 fleet, Air Canada undertook extensive and strategic planning to rebook affected passengers with as little disruption to their travel plans as possible, including substituting or rerouting planes.
"We also managed costs well, especially with the challenges of sourcing replacement flying for some of the Boeing 737 MAX aircraft that are out of service," Rovinescu said. "We have now exceeded our CTP cost savings goal of $250 million and reduced our leverage ratio to 0.9 from 1.2 in the previous quarter. On June 27, we announced that we had concluded a definitive agreement to acquire Transat A.T. Inc. which, we believe, once closed, will benefit all stakeholders. Already, the merger's benefits have been recognized by key stakeholders, including Unifor, Aéroports de Montréal, Tourism Montréal, leading travel agencies, the Chamber of Commerce of Metropolitan Montreal, the Conseil du patronat du Québec and the Federation of Chambers of Commerce of Québec."
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