Air Canada generated second-quarter revenue of C$ 5.4 billion ($4 billion), up 36% from C$3.9 billion during the same period a year ago, as international travel rebounded strongly from the Covid-19 pandemic.
The revenue surge was driven by a 42% increase in passenger revenue over the second quarter of 2022.
“We are particularly pleased with our international performance, propelling nearly 70% of the [year-on-year] increase in passenger revenues,” said Michael Rousseau, Air Canada’s chief executive, during the company’s quarterly earnings call on 11 August.
Demand for transatlantic flights has been strong as North American travellers have returned to Europe en masse, and the carrier “more than doubled” its capacity in the Pacific region year-on-year, notes Mark Galardo, the carrier’s senior vice-president of revenue and network planning.
The Montreal-based carrier posted a C$838 million profit in the quarter, up C$1.2 billion from the carrier’s C$386 million loss in the second quarter of 2022.
The carrier flew more than 11.2 million passengers during the three-month period, up 23.4% from the same three months of 2022.
Expenses increased 9% to C$4.6 billion, “driven by increases in nearly all line items, reflecting higher operated capacity and traffic”, the carrier says. Costs were partially offset by a 31.4% decrease in the price of jet fuel.
The carrier’s capacity increased 21% from the second quarter of 2022.
“However, despite having more trained resources than last summer and improved tools, our operations in June and July were not at expected levels,” Rousseau says.
Severe summer weather in Montreal and Toronto has proven particularly problematic for the airline’s operations, he says.
In response, Air Canada is stepping up efforts to “protect the customer journey from disruption, regardless of the cause”, Rousseau says. “This includes using any influence we have in such instances as pilot attrition at our principal regional partner or global supply chain issues, or working to mitigate the effects of situations beyond our control, such as disruptive storm activity in our key hubs and markets.”
Air Canada also reduced its capacity outlook for full-year 2023, from a 23% increase in available seat miles over last year to a 21% increase, citing “moderate Canadian GDP growth for 2023” and higher jet fuel costs.
While results were strong on the passenger side, the carrier’s cargo segment struggled in the second quarter, generating revenue of C$227 million, down from C$299 million last year.
“Our cargo business, like others in the industry, experienced lower demand and yields than expected,” Rousseau says.
The carrier ended the quarter with six Boeing 767 Freighters, compared with four freighters a year earlier.
As of 30 June, Air Canada’s fleet totalled 354 aircraft – 200 in its mainline fleet, 114 flying for Air Canada Express and 40 for low-cost subsidiary Air Canada Rogue.
The mainline operation has added eight jets so far this year and expects to end 2023 with 198 aircraft, accounting for the retirements of two Airbus A319s.
Air Canada plans to add eight aircraft to its mainline fleet next year – two Boeing 777 Freighters, one 787-9, two 767 Freighters and three Airbus A220-300s.