Air Canada has canceled orders for 12 Airbus A220s and 10 Boeing 737 Max 8s, or about 40 per cent of its remaining deliveries, as part of a series of moves meant to mitigate Covid-19-related financial strain, the airline said in an earnings filing on Monday.
Along with the cancellations, the airline said it will defer deliveries of Airbus and Boeing narrowbodies and accelerate the retirement of 79 aircraft flying for the mainline and LCC Air Canada Rouge.
Early this month, Air Canada concluded an amendment to the purchase agreement for Airbus A220-300s resulting in the deferral of 18 aircraft deliveries scheduled for 2021 and 2022. The airline still expects to take delivery of five A220s this quarter. The airline also reached an agreement with Boeing to defer its remaining 16 Max deliveries scheduled to occur from 2021 through 2023.
Through the fleet restructuring and what the airline called other capital reduction initiatives, Air Canada has lowered total projected capital expenditures by about $3 billion over the 2020 to 2023 period, compared with total projected capital expenditures at the end of 2019.
Air Canada reduced second and third quarter 2020 ASM capacity by 92.0 percent and 81.7 percent, respectively, versus the same quarters in 2019, and plans to reduce fourth-quarter 2020 capacity by some 75 percent year-over-year. The airline said it will continue to adjust capacity and take “other measures” to adjust for declining demand resulting from health warnings, travel restrictions, quarantines, and border closures. On June 30, Air Canada suspended service indefinitely on 30 domestic regional routes and closed eight stations at regional airports in Canada.
Overall, Air Canada reported an operating loss of $785 million in the third quarter, compared with operating income of $956 million in the third quarter of 2019. Total revenue passengers carried declined 88 percent in the quarter versus the same period last year. Unrestricted liquidity amounted to $8.189 billion on September 30.
