Air Canada CEO calls for reopening plan for travel as airline loses $1.3B in Q1

·3 min read

Air Canada's chief executive is calling on the federal government to eliminate the mandatory hotel quarantine and implement a reopening plan that will allow international travel to and from Canada.

Michael Rousseau, Air Canada's chief executive officer, urged Ottawa to act and introduce a reopening plan, "because air transport is a central pillar in the nation's infrastructure."

"It is time to develop and communicate a reopening plan for international travel to and from Canada. After 14 months of restrictions, Canadians who we know are eager to travel want and deserve clear guidelines," Rousseau told analysts on a conference call on Friday following the release of first-quarter results.

"The current mandatory hotel quarantine for arrivals has proven ineffective. It should be eliminated… We believe that with a vaccination program now underway nationally, a modified and more relevant approach to testing and quarantine would keep Canadians safe while allowing our country to reopen for international travel."

The push comes as Air Canada reported a net loss of $1.3 billion in the three-month period ending March 31, steeper than the $1 billion loss the company saw during the same time last year. Operating revenue fell from nearly $3 billion last year to just $729 million, a decline of 80 per cent. 

The Montreal-based airline continues to grapple with dramatically reduced demand due to ongoing travel restrictions related to the COVID-19 pandemic. The company says traffic declined 89.5 per cent in the quarter when compared to 2020, while capacity as measured by available seat miles fell 82.1 per cent. Air Canada says it burned through $14 million per day through the quarter.

The federal government introduced mandatory hotel quarantine for travellers coming to Canada by air in February. Non-essential travellers coming into the country are required to take a COVID-19 test when they arrive, before leaving the airport. They are then required to go to a quarantine hotel, at their own expense, until their test is returned, for up to three days.

Rousseau says that Air Canada has been regularly consulting with the government about opening up travel and he is hoping there will be recommendations made in the next several weeks.

National Bank Financial analyst Cameron Doerksen wrote in a note to clients Friday that travel restrictions remain "the primary impediment to recovery" for Air Canada. 

"With no real sign that the Canadian government will ease international travel restrictions anytime soon and many interprovincial restrictions still in place, we do not expect a material recovery in travel for the peak summer season," Doerksen wrote. 

Last month, Air Canada struck a deal with the federal government for a financial aid package that will allow the airline to access up to nearly $6 billion in liquidity. As part of the deal, the airline agreed to provide refunds for passengers who purchased non-refundable tickets but did not travel due to COVID-19. The deal also provided Ottawa with a $500 million equity stake in the airline.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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