While continuing to show week-over-week improvement and an “accelerating recovery,” Air Canada’s business travel traffic is currently about 50% of 2019 levels, it said. Executive Vice President and Chief Operating Officer Lucie Guillemette on Tuesday during a first-quarter earnings call.
“If I look at May and June, and project further, we already see that threshold being exceeded by about 40%,” Guillemette said, detailing the company’s optimism for the segment. “Secondly, when we look at the indicator of small and medium[-sized enterprise] business travel, even though we don’t have contractual agreements with some of these SMEs, we are seeing this traffic coming back.”
For North America, Air Canada is seeing steady progress, and by September and October, Guillemette predicts business travel could recover 20-30% from 2019 levels.
“There is an opportunity to capture some of the demand from businesses in the United States, which has recovered faster than demand in Canada, but of all the segments where we are very happy to see the return, it would be in this area,” she said. “We are definitely seeing signs of recovery. … On the yield side as well, we are seeing positive returns relative to 2019 for the return of business travel.”
All in all, it was an “interesting” first quarter, which started slowly due to the omicron variant and ended on a “very positive note” with the elimination of several travel restrictions, “resulting in reservations representing more than 90% of March 2019 levels,” said Michael Rousseau, President and Chief Executive Officer of Air Canada. “It’s also a very positive leading indicator for much stronger results in the second and third quarters.”
Due to renewed travel demand, the company increased capacity in the first quarter by about 2% from the previous quarter and nearly 240% from the first quarter of 2021, Rousseau said. Capacity in the first quarter of 2022 was approximately 55% of the same period in 2019. During the first quarter, the carrier also announced that it would add new routes to the United States and restore 41 North American routes. With these additions, Air Canada expects to reach 90% of its pre-pandemic North American capacity this summer, Guillemette said.
Air Canada reported a first-quarter operating loss of C$550 million (US$429.7 million) on revenue of $2.57 billion (US$2.01 billion). Those numbers are up from an operating loss of C$1.05 billion (US$820.3 million) a year earlier on revenue that was about 3.5 times lower in the first quarter of 2021. Q1 passenger revenue of C$1.92 billion (US$1.5 billion) increased almost fivefold from the first quarter of 2021, the company said.
U.S. cross-border passenger revenue of $425 million was up $396 million from the first quarter of 2021, Guillemette said.
For the second quarter, Air Canada expects to increase its capacity by about 414% compared to the same quarter in 2021, which is equivalent to about 73% of the capacity of the second quarter of 2019, according to the company.
Air Canada results for the fourth quarter of 2021