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'Perfect storm' causing constant delays at Air Canada, despite windfall profits: CEO

MONTREAL — A "perfect storm" of problems lies behind Air Canada's wave of flight delays over the summer, its CEO said, even as the country's largest airline roars back to profitability.
An Air Canada ticketing station is shown at Pearson International Airport in Toronto on Wednesday, April 8, 2020. Air Canada says earnings reached heights not seen since before the COVID-19 pandemic amid high travel demand and pricier fares, and despite low on-time performance numbers. THE CANADIAN PRESS/Nathan Denette

MONTREAL — A "perfect storm" of problems lies behind Air Canada's wave of flight delays over the summer, its CEO said, even as the country's largest airline roars back to profitability.

Despite more staff and revamped technology, Air Canada's operations in June and July failed to meet "expected levels," Michael Rousseau told analysts on a conference call Friday.

The chief executive identified "severe weather" — thunderstorms, in particular — and "global supply chain issues" as culprits.

Flight tardiness and cancellations have particularly plagued Air Canada's large network of regional flights, run by Jazz Aviation. Rousseau cited a pilot shortage amid new competitors such as Flair Airlines and Lynx Air, stricter regulations on shift length as well as enrolment at flight schools, which shrank during the COVID-19 pandemic.

"We have this almost perfect storm that exists at this point in time," Rousseau said. "We're working hard with our partner, Jazz, on solving that problem right now … but it will take some time to transition."

In spite of tens of thousands of delayed flights in its second quarter, Air Canada posted earnings that soared to pre-pandemic levels amid high travel demand and pricier fares.

It reported net income of $838 million for its second quarter compared with a loss of $386 million a year earlier — and nearly a billion dollars in losses through all of 2022.

Strong demand propelled more than 11 million customers across its network in the quarter, Rousseau said. Analysts also noted higher ticket prices behind the thicker profit margins.

Canadians' urge to travel remained unbridled by consistent delays across Air Canada's network, with half of the carrier's flights routinely arriving late or cancelled outright over the past two and a half months.

The company ranked last among North America's 10 biggest airlines for on-time performance in July, according to a report by aviation data firm Cirium this week.

Its planes arrived punctually 51 per cent of the time, versus 62 per cent for WestJet — in seventh place. Alaska Airlines, which had a similar number of monthly flights to Air Canada's 36,000, snagged the top spot at 82 per cent.

In the quarter ended June 30, Air Canada reported that operating revenues climbed to $5.43 billion from $3.98 billion in the same period a year earlier.

On an adjusted basis, diluted earnings hit $1.85 per share versus a loss of $1.12 per share a year prior, the Montreal-based company said Friday. The latest figure towered over analyst expectations of 68 cents per share, according to financial markets data firm Refinitiv.

"Air Canada had a very strong quarter benefiting from strong customer demand, full planes, high ticket prices and low fuel costs," said RBC Dominion Securities analyst Walter Spracklin in a note to clients.

This report by The Canadian Press was first published Aug. 11, 2023.

Companies in this story: (TSX:AC, TSX:CHR)

Christopher Reynolds, The Canadian Press

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