Air Canada works to reduce capex as restrictions constrain business

The COVID-19 pandemic continues to wreak havoc on airlines worldwide, but Air Canada faces an added layer of uncertainty as Canada remains largely closed off for travel, with no target date for the lifting of restrictions. 

Air Canada continues to cut costs, build liquidity and rightsize its operations, which includes its ongoing efforts to retire 79 aircraft from its fleet and shrink its network footprint. 

There is also little doubt that Air Canada will need to adjust its aircraft order book as the company’s planned CAD3 billion capex for 2021 is not conducive to operating during a pandemic. As uncertainty over when Canada will ease restrictions remains firmly in place, the airline is already warning that it could possibly cancel orders for Airbus A220s and Boeing jets. 

Summary:

• Air Canada detects some signs of increasing domestic demand, but strict travel restrictions to, from and within Canada are resulting in the airline navigating a prolonged period of uncertainty about recovery.
• The airline is continuing steps to retire 79 aircraft, but is holding on to some Airbus A319s to retain some potential flexibility to upgauge aircraft or add capacity. 
• At the moment, Air Canada has allocated CAD3 billion in capex for 2021, but the company is attempting to whittle that down as it works with Boeing on a delivery schedule for 737 MAX narrowbodies. 

View more here: https://centreforaviation.com/analysis/reports/air-canada-works-to-reduce-capex-as-restrictions-constrain-business-533381