Air Canada adds capacity for spring flying after Q1 loss

By Allison Lampert

MONTREAL (Reuters) -Air Canada on Tuesday said it is adding capacity to meet a rebound in spring traffic and sees ticket sales and business travel improving after reporting a larger-than-expected quarterly loss, sending shares down more than 5%.

Carriers are benefiting from a broader revival in travel demand as COVID-19 pandemic-related restrictions ease, but face pressures from higher fuel costs.

Chief Executive Michael Rousseau said the Canadian government is reviewing the use of mask and vaccine mandates for airline travel.

Canada’s largest carrier is increasing second quarter available seat mile (ASM) capacity by approximately 414% compared with the same three months in 2021.

“This summer, we will be at nearly 80% of 2019, and we’re targeting to be close to full recovery during 2024,” Air Canada Chief Commercial Officer Lucie Guillemette told analysts.

Guillemette expects positive yields compared with 2019 for corporate travel. Business travel, now 50% below 2019, is expected to improve to 40% below that level by June.

When asked about the possibility of relaxing mask mandates, Transport Minister Omar Alghabra told reporters in Ottawa to “stay tuned” and “we’re reassessing every policy that we have.”

But Canadian Minister of Health Jean-Yves Duclos also said on Tuesday he thinks “we expect Canadians to keep wearing a mask when they travel by air.”

Canada is seeing higher travel demand ahead of the busy summer season and attracted more than one million travelers during the week of April 11 for the first time since the pandemic.

Rousseau said passenger ticket sales last month were more than 90% of March 2019 levels, “a leading indicator to much stronger 2022 second- and third-quarter results.”

Air Canada reported quarterly revenues more than doubled from a year ago C$2.57 billion ($2.01 billion) but also reported a loss of C$2.72 per diluted share versus a loss of C$3.90 per diluted share during the same period in 2021.

Analysts were expecting a loss of C$1.49 a share, according to estimates from Refinitiv.

Air Canada shares were trading at C$22.88.

($1 = 1.2798 Canadian dollars)

(Reporting by Allison Lampert in Montreal. Additional reporting by Steve Scherer in Ottawa; Editing by Andrew Heavens, Will Dunham and Paul Simao)