During its recent earnings call, Air Canada, the Canadian flag carrier, discussed the recovery of service from the COVID-19 pandemic. For Air Canada, the pathway to full recovery is presently neither stalled nor easy, but ongoing.

Fuel prices are helping delay the rebound

AN AIR CANADA 777-300ER ON FINAL TO YVR
A Boeing 777-300ER, like this Air Canada one pictured here, burns thru 17,300 lb (7.8 t) of fuel per hour at cruising speed and can carry 320,863 lb in its fuel tanks.  That's a lot of jet fuel, eh?
Photo: AvgeekJoe Productions

The main delay of a return to a complete pre-pandemic Air Canada network is, as CEO Michael Rousseau explained during the earnings call, that fuel prices have been "volatile" due to Russia's military invasion of Ukraine. While Delta Air Lines is considering raising fares in response, American Airlines trusts in increased bookings to offset rising fuel costs. Air Canada is not just going to raise fares, but also look at ancillary sources of revenue to cover the pricing issues.

Staffing is not an issue

AIR CANADA EXPRESS LANDING AT YVR NEAR SUNSET
An Air Canada Express Bombardier Q400 landing at YVR
Photo: AvgeekJoe Productions

However, unlike US airlines who have been struggling with a pilot shortage, according to Rousseau, Air Canada has the employees on hand to help in recovering service. Furthermore, he said that,

"...pilots are not an issue for Air Canada, given the number of widebodies that we have in the fleet. We are a desirable employer to come to."

During the COVID-19 pandemic, many of Air Canada's pilots have kept both payroll plus currency in their aircraft.

Where recovery will be strongest

RISING AIR CANADA 787-8 AGAINST OVERCAST
An Air Canada 787 Dreamliner rises, symoblizing the recovery of Air Canada from the effects of the Covid19 pandemic.
Photo: AvgeekJoe Productions

Lucie Guillemette, Executive Vice President and Chief Commercial Officer at Air Canada, announced that passenger revenue is not back at 2019/pre-pandemic levels yet, but that things were on the upswing. Mrs.Guillemette went on to say,

This summer, we will be at nearly 80% of 2019, and we're targeting to be close to full recovery during 2024. Our strategy of focusing on our hubs and growing their respective global connectivity focusing on Sixth Freedom transit traffic to and from the United States and focusing on leisure VFR [Visiting Friends and Relatives] travelers will pay dividends. Our advanced bookings are accelerating and continue to meet our expectations.

Canadian COVID-19 protections do not stall Air Canada's recovery, but...

An Air Canada 787-9 Dreamliner on Final Under the YVR Blue Sky
Long range Air Canada aircraft that are also fuel efficient like the Boeing 787-9 pictured here on final to Vancouver International Airport (YVR) are key to Air Canada's recovery.
Photo: AvgeekJoe Productions

During the earnings call, Mrs. Guillemette and other Air Canada executives explained several times that Canadian COVID-19 protections like a vaccine requirement to fly are not hampering Air Canada's recovery, but rather it is the ongoing travel restrictions in the Asian-Pacific market that are causing problems. Nevertheless, there remains high demand for air cargo to the Asian-Pacific market - Air Canada has capitalized on this by converting some of its passenger aircraft to cargo platforms.

In fact, by September-October 2022, Air Canada executives expect a 70-80% North American recovery. This is due to lifting travel restrictions and business travel returning to Air Canada as the threat of perceived harm from COVID-19 subsides.

Due to the pandemic, investment company Bain & Company expects full industry recovery from COVID-19 to not arrive until the spring/second quarter of 2025. Still, inflation plus the Russian invasion of Ukraine and resulting volatile fuel prices are adding challenges to the mix.

What are your thoughts? Feel free to share in the comments below.

Sources: Bain & Company