Air Canada cuts MAX and A220 orders

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This morning Air Canada released its financial results for the third quarter of 2020. As might be expected, the company recorded a net loss of $ 685 million. Air Canada carried 88% fewer passengers compared to the same period in 2019. The airline took on $ 2.1 billion more in debt during the quarter, bringing its gross debt to $ 11.1 billion. The airline absolutely needs to find a way to stop its rising debt.

Until now, the Canadian government has left the airlines to fend for themselves. Air Canada must therefore take the necessary measures to reduce its capital expenditure for the period 2020-23. To do this, it reduced its MAX8 order from 50 to 40. In addition, Air Canada postponed the delivery of the 16 MAX8 scheduled between 2021-23 to a later date. At the end of November, the company also cut its A220 order by 12 aircraft. It expects to receive 5 more A220-300s by the end of 2020 and postpones deliveries scheduled for 2021-22.

Finally, Air Canada mentions that the acquisition of Transat A.T. will allow it to compete more effectively internationally. I expect this transaction to be completed by march 2021.

Faced with an unprecedented crisis, Air Canada must make difficult decisions. The cancellation and postponement of A220 deliveries will impact the Airbus plant in Mirabel. This is a direct consequence of the lack of a federal assistance program for air transport. Today’s announcement by the airline arguably explains the statement made by Canada’s Transport Minister on a Sunday afternoon. The latter was undoubtedly trying to prevent the blow. The ball is now in Marc Garneau’s court and it is up to him to find a solution for air transport and aerospace industries.

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