Category: Air Canada

Air Canada A220 Training

Provided by Air Canada Twitter

Every A220 pilot undergoes months of training on sophisticated simulator

October 2019

Every A220 pilot undergoes months of training on sophisticated simulator

Months before our new, modern Airbus A220-300 aircraft takes to the skies, dozens of pilots are immersed in training to prepare them to take the controls when we welcome our first A220-300 to the Air Canada fleet later this year.

Each pilot undergoes hours of training in classrooms and simulators, recreating a variety of situations so that when the time comes to accelerate down the runway toward V1, they are well versed in everything the A220-300 is capable of.

Simulator training is nothing new for pilots, who must continuously spend hours in these sophisticated training tools every six months to maintain their license to operate a particular aircraft.

And introducing an entire new aircraft to Air Canada’s fleet also represents a major undertaking that requires teamwork and input from every department within the company.

“Within flight operations, we’ve got multiple groups from training within the fleet itself dealing with the change, the rapid changing of the documentation from the manufacturer. We also are in communication with other departments within Air Canada such as maintenance, in-flight, cargo, ground operations, ensuring that everybody is on the same page throughout the introduction so that at entry into service goes smoothly,” said Rob Latter, Chief Pilot for the A220 at Air Canada.

Working out of our simulator facility near Toronto’s Pearson Airport, each pilot undergoes weeks of training that begins with four days of classroom sessions, where pilots have a desktop simulator on a computer to allow them to familiarize themselves with the flight deck.

After that, there are nine sessions of four hours each on what is known as an Integrated Procedures Trainer (IPT), which is a scaled down model of the full simulator. And for the A220, Air Canada is one of the only airlines to have opted to equip its IPT with a fully functional console between the Captain’s and First Officer’s seats, allowing for the pilots to train on the actual equipment and build up muscle memory. Training options that replace the fully functional piece with touchscreens don’t produce the same results.

Once they have completed this phase, pilots then undergo 11 sessions of four hours in the sophisticated A220-300 simulator, which replicates with stunning reality the flying capabilities of the aircraft.

Simulator sessions include taking off and landing at different airports, enabling pilots to manage the aircraft while encountering a multitude of weather conditions as well as a range of situations that can arise while operating a flight.

Robert Birch was one of the first pilots at Air Canada to go through A220 training and as a check pilot he helps certify the next group of pilots to be qualified on this aircraft.

“My initial impression of the flight deck is how spacious and roomy it is. How cleanly designed it is. It was obviously designed with the pilot in mind. I think it is going to be a really comfortable work space,” Birch said. “The best part of flying the A220 in the simulator so far is that the level of automation is very high. It’s got a great system of displays where you can customize them to your use and what your preferences are.”

Before the A220, Birch was a captain on the Airbus A320.

“The biggest difference for me on this is that this has a geared engine. That has made it much more fuel efficient,” Birch said.

Asif Khattak is also a check pilot for the A220 program and he too was impressed by the flight deck’s spaciousness.

“For a narrow body, it’s got a lot of room. It’s really nicely laid out. The overhead panel is very clean and the display units offer a great amount of visibility. The side windows on the aircraft are huge, as well as the front looking out. So, the visibility in the aircraft is fantastic.”

The automation and display screens on the aircraft make a pilot’s job much easier.

“It allows you to customize it from your own perspective of how you want to manage the flight deck. It’s also got a heads-up display unit which offers you a lot of situational awareness as well. From that perspective, I really enjoy the airplane,” Khattak said.

He also believes passengers will really love the A220-300.

“I think they will be pleasantly surprised when they come on board this aircraft. It’s got a feel of a widebody aircraft when you walk through the cabin. The windows are quite big, they can adjust the lighting as well, the overhead bins offer a lot of space. And I think the 3-2 layout that we are going to have in this cabin is a little different than perhaps they are used to on other narrow body aircraft. So it gives you the feeling that you are in a very big aircraft, or a widebody aircraft, but you are still in a narrow body plane,” Khattak said.

“One of the unique features of this aircraft is the economy cabin. It’s got a 3-2 configuration, so very few middle seats. And fewer middle seats makes for great comfort for passengers,” Birch said.

The fact the Airbus A220-300 was conceived and designed by a Canadian company and is built in Canada is a source of pride for all three pilots.

“The fact that it is a Canadian aircraft means a lot to anyone working at Air Canada,” Latter said.

“The most exciting thing about the A220 for me is that it’s a Canadian built and designed aircraft, built from scratch as a new airplane. I think it’s going to be great once we get it in the air,” Birch said.

“I am excited to get into an aircraft that is built by a Canadian company. Bombardier built this aircraft, they did a lot of research and design into this aircraft. They have a lot of experience building this airplane. So just excited to get into the airplane and get a feel for it in the air and how it handles,” Khattak said.

And the feedback from Birch, Khattak and other pilots who will go through the first rounds of training will help ensure a smooth transition for all of them.

“The feedback from our initial pilot group that started their training – the ones that have completed it and still in training – are very positive,” Latter said. “With the aircraft itself, I’ve heard that the pilots love the technology level, the spaciousness of the cabin, the cleanness of the panels. It allows us to make the SOPs (standard operation procedures) flow very nicely from their perspective.”

Fast Facts

  • Number of aircraft ordered: 45
  • Seating: 12 business class, 125 economy class
  • Range: 3,200 nautical miles
  • Average of 20 per cent less fuel consumption per seat compared to similar aircraft
  • Noise footprint area up to 50% smaller than previous generation aircraft
  • First new routes announced: Montreal-Seattle, Toronto-San Jose, California

Air Canada prepares for Airbus A220 debut

News provided by Breaking Travel News – link to full story

Air Canada’s first Airbus A220 was unveiled earlier when it rolled out of the painting hangar at the final assembly line in Mirabel.

In December, Air Canada will be the first Canadian airline to take delivery of this Canadian-designed and developed aircraft when it receives the first of its 45 A220s on order.

The A220 features an innovative cabin design, as well as significantly lower emissions and a reduced noise footprint.

The A220-300 for Air Canada will provide passengers with superior comfort in a 137-seat dual-class cabin layout.

Air Canada’s brand new A220-300s will replace the flag carrier’s existing mainline fleet of smaller, older narrow-body aircraft and support the airline’s hub and network growth, creating one of the world’s youngest and most fuel-efficient fleets.

Now that the aircraft is decked out in Air Canada’s livery, it has moved to pre-flight activities in the A220 flight line hangar in Mirabel, before taking off for its first flight later this fall.

Currently, there are 94 A220 aircraft flying with six operators on regional and transcontinental routes in Asia, America, Europe, the Middle East and Africa, proving the great versatility of Airbus’ latest family member.

The A220 has an order book of 530 aircraft as of the end of October.

Airbus unveils the first Canadian-made A220-300 aircraft destined to a Canadian airline

Press Release from Airbus 8 November 2019

The first Airbus A220-300 for Air Canada on November 7, 2019, rolling out of the painting hangar at the A220 final assembly plant in Mirabel, Canada

Mirabel, Québec, Canada– Air Canada’s first Airbus A220 was unveiled this week when it rolled out of the painting hangar at the A220 final assembly line in Mirabel.

In December, Air Canada will be the first Canadian airline to take delivery of this Canadian-designed and developed aircraft when it receives the first of its 45 A220s on order. The A220 features an innovative cabin design, as well as significantly lower emissions and a reduced noise footprint.

The A220-300 for Air Canada will provide passengers with superior comfort in a 137-seat dual-class cabin layout. Air Canada’s brand new A220-300s will replace the flag carrier’s existing mainline fleet of smaller, older narrow-body aircraft and support the airline’s hub and network growth, creating one of the world’s youngest and most fuel efficient fleets.

Now that the aircraft is decked out in Air Canada’s livery, it has moved to pre-flight activities in the A220 flight line hangar in Mirabel, before taking off for its first flight later this fall.

Currently, there are 94 A220 aircraft flying with six operators on regional and transcontinental routes in Asia, America, Europe, the Middle East and Africa, proving the great versatility of Airbus’ latest family member. The A220 has an order book of 530 aircraft as of the end of October 2019.

Link to Air Canada’s first A220 video: https://www.airbus.com/search.footage.html?q=A220-300&lang=en#searchresult-footage-all-1

For more information about the A220 Family, please click here or insert directly in the press release appropriate hyperlink of the aircraft family product under its name.

Air Canada to operate three services from Montreal with leased A330-200

News provided by The Blue Swan Daily – line to full story

November 8, 2019

Air Canada plans to operate the following frequencies with A330-200 equipment leased from Air Transat during the winter 2019 and 2020 season (Routes Online, 07-Nov-2019):

  • Montreal-Cancun: Daily from 01-Dec-2019;
  • Montreal-Puerto Vallarta: Three times weekly from 15-Dec-2019;
  • Montreal-San Jose (Costa Rica): Four times weekly from 17-Dec-2019.

‘Don’t take a chance, dump your stash,’ says lawyer after Air Canada flight diverted to U.S.

News provided by CBC News – link to full story and updates

One passenger wondered aloud about the consequences for anyone carrying cannabis products

Meera Bains · CBC News · Posted: Nov 07, 2019

A domestic Air Canada flight AC125 travelling from Toronto to Vancouver was forced to redirect to the Seattle Tacoma International Airport due to mechanical issues. (Mark Blinch/The Canadian Press)

A Vancouver-bound Air Canada flight forced to land at the Seattle-Tacoma International Airport due to mechanical issues has sparked a discussion about what domestic air passengers should know if they happen to land on U.S. soil without advance warning.

What was supposed to be a five-hour domestic flight from Toronto to Vancouver last Sunday turned into a 13-hour international ordeal for passengers.

But once the plane landed in Seattle, one passenger wondered aloud about the consequences for anyone carrying cannabis products.

Harold Wax, a security executive in the real estate sector, who was one of 255 passengers aboard Air Canada flight AC125, said as the plane neared Vancouver the pilot announced he had to abort its first attempt to land due to fog.

Problems with the auto-landing system led to a second failed attempt. Wax said the pilot informed passengers that because of the two failed attempts the crew would divert to Seattle to refuel, then return to Vancouver.

The flight path taken by an Air Canada 787 Dreamliner on Nov. 3, 2019 which tried twice to land at Vancouver International Airport but then headed to the Seattle airport where it finally landed. (FlightAware.com)

But when the plane reached Sea-Tac Airport, passengers learned the plane would be grounded for maintenance and they would have to disembark. Wax said that’s when people aboard the plane became anxious.

“The passenger sitting beside me made a comment. She said ‘I really wonder how hard it’s going to be for passengers who don’t have a passport to get into the U.S.”’ Wax said.

“And I kind of chuckled and I said ‘I hope nobody is carrying cannabis or CBD oil.'”

‘Don’t take a chance, dump your stash’

Immigration lawyer Richard Kurland warned Canadians who find themselves in a situation such as this that they should be prepared to ditch any cannabis products if necessary. He said U.S. officials are often willing to forgive possession of personal use CBD oil but even that isn’t a sure bet.

“In cases where an emergency landing is required on U.S. territory, be aware that U.S. law will fully apply to you if you are transporting cannabis which may have been legal in Canada,” said Kurland.

Air Canada passenger Harold Wax said his domestic flight to Vancouver was diverted to Seattle which caused concerns aboard the flight over proper documentation and cannabis rules. (CBC News)

He said the airline should inform passengers if their flight is going to be diverted to an airport outside of Canada — to give them time to dispose of any cannabis products. 

“The best practical advice is queue for that washroom and the flight attendant should keep that washroom available to passengers who may need to dispose of any cannabis product in their possession.”

In terms of identification needed to cross the Canada-U.S. border, Kurland said in this type of situation, a passport might not be needed. “There is no need to carry every last candlestick of ID with you aboard an airplane,” he said.

In an emergency situation, current identification technology, including advanced biometrics is sufficient for Canadian travellers to be processed by U.S. border agents.

Air Canada responds

Air Canada said the 787 Dreamliner aircraft required a maintenance inspection in Seattle after developing a mechanical fault so the airline made an arrangement for authorities to enable passengers to “clear customers appropriately.”

Air Canada spokesperson Angela Mah said in a written statement that there were no problems dealing with U.S. customs and extra airline staff members were scheduled to work to help passengers.

“We were advised there were no issues for any reason clearing the passengers from this flight.”

Mah said the airline has a cannabis policy which states that in the event of a diversion, a passenger refused entry into a country because of cannabis possession is responsible for the consequences, including payment for the return trip home.

She said Air Canada regrets the inconvenience for last Sunday’s delay, and is in touch with customers. She said passengers were provided with overnight hotel rooms, though some left for Vancouver by ground transportation.

Cannabis edibles, CBD infused gummies and other products were legalized in Canada on Oct. 17, 2019. (Shutterstock / Victor Moussa)

Harold Wax said upon landing, he didn’t immediately see staff at the Air Canada counter, so he carpooled with other passengers to Vancouver.

He said the experience was an important reminder about what a worst-case scenario can look like.

“If you are flying on a domestic flight, you got to understand there’s a chance that you might get diverted whether it’s an emergency of a malfunction or something else.

“You could be diverted to the United States.”

Canada’s flight attendants band together to demand safety assurances over 737 Max

News provided by TravelWeek.ca – link to full story

Canada’s flight attendants band together to demand safety assurances over 737...

Tuesday, November 5, 2019 Posted by Travelweek Group

OTTAWA — Flight attendants on both sides of the U.S.-Canada border are standing in solidarity over safety concerns about the Boeing 737 Max.

The unions representing flight attendants at Air Canada, Sunwing and WestJet are showing their support for their American counterparts, who last week expressed their concerns about the troubled aircraft. In a letter dated Oct. 30, American Airlines’ flight attendants union, which represents 28,000 employees, said they are refusing to “walk onto a plane that may not be safe and are calling for the highest possible safety standards to avoid another tragedy.”

The Air Canada Component of CUPE (Air Canada Mainline and Air Canada Rouge), CUPE local 4055 (Sunwing), and CUPE local 4070 (WestJet, WestJet Encore and Swoop) are calling on Transport Canada to take its responsibility in ensuring the safety of these aircraft.

In an official statement, CUPE said: “The safety of passengers and crew must always come first. The federal government’s decision to ground the Boeing 737 Max in Canada was the right thing to do. Given the record of Boeing and the Federal Aviation Administration in that file, it will now be up to Transport Canada to provide assurances that these aircraft are fully compliant and safe for union members and the travelling public.”

Like the U.S. flight attendant unions, CUPE must be consulted before Transport Canada makes the decision to allow the Max to fly in Canada again.

“We need access to all the information required to assess the safety of these aircraft,” said CUPE. “The highest possible safety standards will be called for to avoid another tragedy. Simply stating these aircraft are safe does not make it so.”

Air Canada, Sunwing and WestJet are the three Canadian airlines operating the Boeing 737 Max. CUPE represents more than 13,000 flight attendants across all three airlines.

New Orleans and São Paulo Starting out of YUL this Winter

Provided by Aéroports de Montréal/CNW

MONTRÉAL, Nov. 4, 2019 /CNW Telbec/ – New direct flights now confirmed for the winter season will soon be offered out of YUL Montréal–Trudeau International Airport, as the city continues to attract travellers from all over the world. Such a wide variety of available destinations continues to establish YUL as an important international hub.

Highlights for the winter:

  • Two new destinations will be added to YUL’s offering: New Orleans, Louisiana, reachable year-round via Air Transat (November 3), and São Paulo, Brazil, operated by Air Canada during the winter season as of December 11.
  • Accessible for the first time out of YUL by direct flight, São Paulo will offer business travellers an opportunity to easily reach one of the most important economic and industrial centres.
  • The winter season will also see an increase in the number of seats offered to several destinations, including 6% more to sun destinations and 12% more to Europe, the Middle East and Asia. Additionally, the international sector will experience 11% growth this winter.
  • Air Canada will add four weekly flights to its Montréal–Tokyo route, and will increase seating by 50%.
  • Air Transat will now operate its flight to Madrid year-round, while Austrian Airlines, a new carrier that just joined the YUL family on April 29, will offer its Montréal–Vienna service during the winter season.
  • Corsair will fly to Paris year-round, while Air Canada will increase service on its Montréal-Lyon route to four flights weekly.

SOURCE Aéroports de Montréal

Air Canada A319 crew failed to hear landing clearance

News provided by FlightGlobal.com – link to full story

30 October 2019 by DAVID KAMINSKI-MORROW, FlightGlobal.com

Canadian investigators have disclosed that an Air Canada Airbus A319 touched down at San Francisco despite its crew’s not hearing the landing clearance.

The aircraft (C-FZUJ) had been operating from Toronto on 3 October, says Transportation Safety Board of Canada.

It states that San Francisco controllers cleared the aircraft to land.

“However, it was not heard by the flight crew because the approach frequency had not been switched to the tower frequency,” it adds.

The aircraft landed without further incident.

None of the 110 occupants was injured, says the safety board. Air Canada is conducting an investigation into the event.

Air Canada aims to hire 350 pilots ahead of eventual Boeing 737 Max return

News provided by TheRecord.com – link to full story – with a hint from P.N.

Once authorities lift the airspace ban it could take up to a year for all 50 Max jetliners slated to be in operation by mid-2020 to hit the skies.

Oct 29, 2019 by Christopher Reynolds The Canadian Press

air canada

The 737 Max crashes in Indonesia and Ethiopia within five months killed 346 people, including 18 Canadians. – The Canadian Press file photo

MONTREAL — Air Canada says it plans to hire 350 pilots next year in anticipation of the return of the Boeing 737 Max, whose grounding continues to weigh on Canada’s largest airline.

Chief executive Calin Rovinescu said once authorities lift the airspace ban it could take up to a year for all 50 Max jetliners slated to be in operation by mid-2020 to hit the skies.

“This is a process that will indeed be gradual. This is not an overnight process,” he said.

Rovinescu cited “the serious disruption to our overall operations and to our cost structure and profitability” caused by the now eight-month grounding of the 24 Max planes in its fleet and 12 more that had been scheduled for delivery by mid-2019.

“The removal of 36 737 Max aircraft, or about 24 per cent of our narrow-body fleet, from our schedule during our peak summer season exacted a toll,” he said on a conference call with analysts Tuesday.

Rovinescu’s reiteration of the “extremely challenging and complex situation” of the 737 Max came less than an hour before Boeing CEO Dennis Muilenburg sat down for withering questions from U.S. senators about two fatal crashes and whether the company concealed information about a critical flight system.

“We have made mistakes, and we got some things wrong,” Muilenburg conceded.

Some members of the Senate Commerce Committee cut Muilenburg off when they believed he was failing to answer their questions about a key flight-control system implicated in both crashes.

Boeing successfully lobbied regulators to keep any explanation of the system, called MCAS, from pilot manuals and training. After the crashes, the company tried to blame the pilots, said Sen. Richard Blumenthal.

“Those pilots never had a chance,” Blumenthal said. Passengers “never had a chance. They were in flying coffins as a result of Boeing deciding that it was going to conceal MCAS from the pilots.”

The 737 Max crashes in Indonesia and Ethiopia within five months killed 346 people, including 18 Canadians.

Air Canada has removed the Max from its flight schedule until at least Feb. 14, while WestJet Airlines Ltd. has ruled the aircraft’s return until Jan. 4 but is mulling an extension.

While Air Canada covered more than 95 per cent of planned flying in the third quarter, it was forced to cancel some routes and lease a pair of Airbus A330s on top of lease extensions for Airbus A320s and Embraer 190s, all of which are less fuel efficient than the Max 8.

The 12 undelivered Max aircraft now sit on Boeing lots, delaying Air Canada’s hiring of pilots — the company currently has about 400 Max pilots, relegated to training for the time being. Fourteen more Max 8s were slated for delivery in the first half of 2020, but may now be pushed back.

The company will be able to remove about 15 planes from its fleet over the next 12 to 15 months, on top of the two A330s, chief financial officer Michael Rousseau estimated.

Air Canada shares hit an all-time high Tuesday after the airline reinstated its 2019 profit forecast, even as the absent Max continues to hamper its earnings.

The Montreal-based company’s earnings fell slightly below expectations last quarter, but its stock climbed nearly four per cent or $1.70 Tuesday to close at a record $47.42 on the Toronto Stock Exchange.

Analyst Walter Spracklin of RBC Dominion Securities said the effects of the grounding were to be “most significantly felt” in third quarter, when summer travel demand soars and capacity becomes tightest.

“With the Max assumed to re-enter the fleet mid February, we expect 2020 to be a bit of a choppy year as capacity and capex bump up and spending on re-crewing increases,” he wrote in a note to investors. “That said we expect this to be largely absorbed, even if noisy.”

Doug Taylor, an analyst with Canaccord Genuity, highlighted how “the company has been able to effectively pass the added costs through to customers.”

Air Canada reinstated its financial guidance, which it had suspended in March due to uncertainty over the Max grounding, with an adjusted earnings margin of 19 per cent and a free cash flow target of between $1.3 billion and $1.5 billion for the year.

Net income fell nine per cent year over year to $636 million in the quarter ended Sept. 30. Revenue dropped three per cent to $5.53 billion.

On an adjusted basis, earnings per diluted share rose to $2.27, up from $2.10 a year earlier but below analyst expectations of $2.34, according to financial markets data firm Refinitiv.

Aircraft fuel, which comprises close to one-quarter of Air Canada’s operating expenses, cost the company $1.09 billion last quarter, 11 per cent less in the third quarter of 2018.

The company saw capacity decline year over year for the first time in several years, but expects capacity growth of three per cent in the fourth quarter, said chief commercial officer Lucie Guillemette.

Revenue from high-yield business cabin passengers increased by $33 million or nearly four per cent year over year.

Domestic passenger revenues rose by $123 million or nearly nine per cent despite a slight capacity reduction, with a new fare category adding to a higher yield.

Despite capacity reductions in all key markets, Air Canada saw growth in its revenue, yield — average fare per passenger per mile — and passenger revenue per available seat mile, another key metric.

Rovinescu said he hopes Air Canada’s acquisition of Transat A.T. Inc., which shareholders approved overwhelmingly in August, will receive regulatory approval by mid-2020 following heavy scrutiny from the Competition Bureau.

This report by The Canadian Press was first published Oct. 29, 2019.

— with files from The Associated Press

Air Canada Reports Third Quarter 2019 Results

Provided by Air Canada/CNW

  • Record third quarter operating revenues of $5.553 billion
  • Operating income of $956 million
  • EBITDA of $1.472 billion, up 9 per cent over the prior year’s third quarter
  • Record unrestricted liquidity of $7.355 billion and leverage ratio of 0.8

MONTREAL, Oct. 29, 2019 /CNW Telbec/ – Air Canada today reported third quarter 2019 EBITDA(1) (earnings before interest, taxes, depreciation, amortization and impairment) of $1.472 billion compared to third quarter 2018 EBITDA of $1.351 billion, an increase of $121 million or 9 per cent. The airline reported third quarter 2019 operating income of $956 million compared to third quarter 2018 operating income of $923 million. 

“I am pleased to report an excellent third quarter for Air Canada, in which we generated record operating revenues of close to $5.6 billion and reached record liquidity of nearly $7.4 billion. Impressive as such strong results are on their own, they are even more meaningful given that we achieved them despite the serious disruption to our operations and to our cost structure created by the Boeing 737 MAX grounding. Our record performance is a testament to the resourcefulness, skill and dedication of the entire Air Canada team, and I applaud and thank them for their hard work taking care of our customers since the Boeing 737 MAX grounding occurred,” said Calin Rovinescu, President and Chief Executive Officer of Air Canada.

“During the quarter, our airline delivered on key metrics. This included EBITDA of $1.472 billion, an increase of 9 per cent from the previous year, higher operating income, and improved yields. Our leverage ratio(1) was 0.8 at the quarter’s end, a decrease of 50 per cent from December 31, 2018. The significant progress we have made on our balance sheet was recognized in the third quarter and, earlier this year, by upgrades from major debt rating agencies, advancing us to one level below our goal of investment grade status.

“Through great effort and teamwork, we have successfully managed through the extremely challenging 737 MAX grounding for nearly eight months now, most recently adjusting our schedule to remove the aircraft until February 14, 2020 and wet leasing two Airbus A330 aircraft to ensure we have sufficient capacity this winter. However, the removal of a scheduled 36 737 MAX aircraft during our peak summer season exacted a toll from a financial, route, product, and human resources perspective and the grounding is preventing us from realizing our full potential,” said Mr. Rovinescu.

“I nonetheless remain confident that if regulators unground the aircraft near-term, our on-going transformation will quickly regain its previous trajectory. For this reason, we have chosen at this time not to adjust our long-term financial targets presented at our last Investor Day. Much of my confidence flows from the professionalism our employees have demonstrated throughout this year since the aircraft was grounded, as well as the strong loyalty shown by our customers, and I thank both groups for their commitment to and support of Air Canada.

“As well, we were extremely pleased to see that during the third quarter Transat A.T. shareholders approved the definitive acquisition agreement with Air Canada, by a vote of nearly 95 per cent. This overwhelmingly favourable vote underscores the numerous benefits for all stakeholders from the proposed merger, which now remains subject to applicable regulatory approvals and customary conditions.”

Third Quarter Income Statement Highlights

Air Canada began consolidating Aeroplan’s financial results on the date of the acquisition of Aeroplan, January 10, 2019. Air Canada adopted accounting standard IFRS 16 – Leases effective January 1, 2019 and restated 2018 amounts (including for period-over-period comparisons).

On a capacity reduction of 2.1 per cent, record third quarter system passenger revenues of $5.164 billion increased $146 million or 2.9 per cent from the same quarter in 2018. The increase in system passenger revenues was driven by a yield improvement of 4.8 per cent, partly offset by a traffic decrease of 1.8 per cent. System yield in the third quarter of 2019 improved due to the constrained capacity resulting from the grounding of the Boeing 737 MAX aircraft as well as a generally improved pricing environment, mainly in North America. The yield increases also included additional revenues from Aeroplan flight redemptions and other revenues subsequent to the Aeroplan acquisition on January 10, 2019. 

In the third quarter of 2019, operating expenses of $4.597 billion increased $105 million or 2 per cent from the third quarter of 2018. Air Canada’s cost per available seat mile (CASM) increased 4.5 per cent from the third quarter of 2018. The airline’s adjusted CASM(1) increased 9.3 per cent over the same quarter in 2018. These increases reflected, in large part, the impact of the Boeing 737 MAX aircraft grounding which resulted in a system ASM decline of 2.1 per cent versus planned system ASM growth of approximately 3 per cent, in addition to creating higher costs associated with replacement aircraft, and on-going operating expenses, including depreciation and pilot wages, that continued to be incurred in relation to the Boeing 737 MAX aircraft despite their grounding. Given that the Aeroplan loyalty business was not consolidated in Air Canada’s financial results in 2018, for a more meaningful comparison of the cost performance of the on-going airline business, Air Canada’s adjusted CASM for the third quarter and first nine months of 2019 excludes the operating expenses of Aeroplan.

Air Canada’s third quarter EBITDA of $1.472 billion was 9 per cent higher than the third quarter of 2018, and better than the increase of approximately 5 per cent projected in Air Canada’s news release dated July 30, 2019. This better than expected EBITDA performance was primarily driven by a lower fuel price per litre than what Air Canada had previously assumed in its guidance.

Third quarter 2019 net income amounted to $636 million or $2.35 per diluted share compared to third quarter 2018 net income of $702 million or $2.55 per diluted share. The third quarter of 2019 included foreign exchange gains of $27 million while the third quarter of 2018 included foreign exchange gains of $145 million. Air Canada reported adjusted net income(1)  of $613 million or $2.27 per diluted share in the third quarter of 2019 compared to adjusted net income of $580 million or $2.10 per diluted share in the third quarter of 2018. 

Financial and Capital Management Highlights

At September 30, 2019, unrestricted liquidity (cash, cash equivalents and short and long-term investments, and undrawn lines of credit) amounted to a record $7.355 billion (September 30, 2018 – $5.309 billion). 

At September 30, 2019, net debt of $2.999 billion decreased $2.215 billion from December 31, 2018, reflecting an increase in cash, cash equivalents and short and long-term investment balances of $1.654 billion and a decrease in long-term debt and lease liabilities of $561 million. At September 30, 2019, Air Canada’s leverage ratio was 0.8 versus a ratio of 1.6 at December 31, 2018.

Net cash flows from operating activities of $834 million increased $284 million from the third quarter of 2018. In the third quarter of 2019, free cash flow(1) of $533 million decreased $64 million from the third quarter of 2018. In the third quarter of 2018, Air Canada received proceeds of $293 million from the sale and leaseback of 25 Embraer aircraft while no such proceeds were received in the third quarter of 2019. In the third quarter of 2019, the increase in cash flows from operating activities over the third quarter of 2018 was partly offset by an increase in capital expenditures of $55 million. Excess cash amounted to $2.683 billion at September 30, 2019. Refer to section 6.1 “Liquidity” of Air Canada’s Third Quarter 2019 MD&A for additional information on excess cash.

For the 12 months ended September 30, 2019, return on invested capital (ROIC(1)) was 15.5 per cent, significantly higher than Air Canada’s weighted average cost of capital of 7.2 per cent.

Normal Course Issuer Bid

In the third quarter of 2019, Air Canada purchased, for cancellation, a total of 2,111,800 shares at an average cost of $43.15 per share for aggregate consideration of $91 million (6,426,287 shares at an average cost of $38.87 per share for aggregate consideration of $250 million for the first nine months of 2019). At September 30, 2019, a total of 20,533,751 shares remained available for repurchase under Air Canada’s issuer bid which is scheduled to expire May 30, 2020.

Full Year 2019 Outlook and 2020-21 Investor Day Targets

As indicated in its October 16, 2019 news release, Air Canada removed Boeing 737 MAX flying from its schedule until February 14, 2020. Final decisions on returning the Boeing 737 MAX aircraft to service will be based on Air Canada’s safety assessment following the lifting of government safety notices and approval by regulatory authorities. 

Air Canada’s projected capital expenditures, discussed in section 6.6 of Air Canada’s Third Quarter 2019 Management’s Discussion and Analysis of Results, reflect Air Canada’s assumption that the remaining 12 Boeing 737 MAX aircraft previously scheduled for delivery 2019 will now be delivered in 2020. Air Canada continues to expect the 14 737 MAX aircraft scheduled for 2020 to be delivered in 2020.

For the full year 2019, Air Canada projects the following:

  • EBITDA margin (earnings before interest, taxes, depreciation, amortization and impairment, as a percentage of operating revenue) of approximately 19.0 per cent
  • ROIC of between 15.5 per cent and 16.0 per cent
  • Free cash flow of between $1.3 billion to $1.5 billion.
    Free cash flow for 2019 is being positively impacted by a number of factors, including the deferral of the delivery of 12 Boeing 737 MAX aircraft from 2019 to 2020, lower capital expenditures across many different areas (mainly timing-related), a stronger working capital performance, the impact of aircraft lease extensions which defers the end of lease maintenance obligation, and the favourable impact of higher cash and investment balances on net interest expense. 
  • A leverage ratio not exceeding 1.0 at December 31, 2019 (measured by net debt over trailing 12-month EBITDA)

The financial guidance provided in Air Canada’s news release dated February 28, 2019 for the years 2020 and 2021 with respect to annual EBITDA margin and annual ROIC, as well as the cumulative free cash flow over the 2019-2021 period, remains in place. 

Major Assumptions

Assumptions were made by Air Canada in preparing and making forward-looking statements (including EBITDA margin, ROIC and free cash flow guidance referred to above for the years 2020 and 2021). 

As part of its assumptions, for 2019, Air Canada assumes:

  • Modest Canadian GDP growth for the fourth quarter and full year
  • That the Canadian dollar will trade, on average, at C$1.33 per U.S. dollar in the fourth quarter and full year
  • That the price of jet fuel will average 77 CAD cents per litre in the fourth quarter and full year

Air Canada’s assumptions as they pertain to the 2020-to-2021 period are provided in Air Canada’s news release dated February 28, 2019. Air Canada’s guidance for 2020 and 2021 also assumes the return to service of the Boeing 737 MAX aircraft in the first quarter of 2020. 

It is premature to assess what the impact of Air Canada’s acquisition of Transat A.T. would be, and it is therefore not factored into Air Canada’s guidance. 

The outlook provided constitutes forward-looking statements within the meaning of applicable securities laws and is based on a number of assumptions (including those provided above) and subject to a number of risks. 

(1)Non-GAAP Measures

Highlights

The financial and operating highlights for Air Canada for the periods indicated are as follows:

(Canadian dollars in millions, except where indicated)Third Quarter    First Nine Months  
2019 (1)2018 (2)$ Change2019 (1)2018 (2)$ Change
Financial Performance Metrics





Operating revenues5,5535,41513814,76313,819944
Operating income956923331,5051,317188
Income before income taxes878954(76)1,603619984
Net income636702(66)1,324397927
Adjusted pre-tax income (3)857815421,207968239
Adjusted net income (3)61358033870683187
Operating margin %17.2%17.0%0.2 pp10.2%9.5%0.7 pp
EBITDA (3)1,4721,3511212,9712,594377
EBITDA margin % (3)26.5%24.9%1.6 pp20.1%18.8%1.3 pp
Unrestricted liquidity (4)7,3555,3092,0467,3555,3092,046
Net cash flows from operating activities8345502845,0352,9222,113
Free cash flow (3)533597(64)1,6491,039610
Net debt (3)2,9994,992(1,993)2,9994,992(1,993)
Return on invested capital (“ROIC”) % (2)(3)15.5%NMNM5.5%NMNM
Leverage ratio (2)(3)0.8NMNM0.8NMNM
Diluted earnings per share$2.35$2.55($0.20)$4.86$1.44$3.42
Adjusted earnings per share – diluted (3)$2.27$2.10$0.17$3.19$2.47$0.72
Operating Statistics (5)

% Change

% Change
Revenue passenger miles (“RPM”) (millions)27,95428,465(1.8)72,71071,5591.6
Available seat miles (“ASM”) (millions)32,45733,137(2.1)86,38385,2681.3
Passenger load factor %86.1%85.9%0.2 pp84.2%83.9%0.2 pp
Passenger revenue per RPM (“Yield”) (cents)18.517.64.818.317.45.5
Passenger revenue per ASM (“PRASM”) (cents)15.915.15.115.414.65.8
Operating revenue per ASM (cents)17.116.34.717.116.25.5
Operating expense per ASM (“CASM”) (cents)14.213.64.515.414.74.7
Adjusted CASM (cents) (3)10.09.29.310.810.16.4
Average number of full-time equivalent (“FTE”) employees (thousands) (6)33.230.29.832.829.710.4
Aircraft in operating fleet at period-end404409(1.2)404409(1.2)
Average fleet utilization (hours per day)11.811.61.310.810.62.0
Seats dispatched (thousands)17,78017,970(1.1)49,14748,6151.1
Aircraft frequencies (thousands)148.1159.5(7.1)418.2441.2(5.2)
Average stage length (miles) (7)1,8251,844(1.0)1,7581,7540.2
Fuel cost per litre (cents)74.783.0(10.0)76.479.2(3.5)
Fuel litres (thousands)1,633,1201,652,137(1.2)4,364,3514,304,1691.4
Revenue passengers carried (thousands) (8)14,62714,806(1.2)39,49538,9951.3
(1)Air Canada began consolidating Aeroplan Inc.’s (“Aeroplan”) financial results on January 10, 2019, the date of its acquisition of Aeroplan.  Refer to section 9 “Accounting Policies” and section 10 “Critical Accounting Estimates and Judgements” of Air Canada’s Third Quarter 2019 MD&A for additional information.
(2)Air Canada adopted accounting standard IFRS 16 – Leases effective January 1, 2019 with restatement of 2018 amounts.  ROIC and leverage ratio as at September 30, 2018 are not meaningful (“NM”) as trailing 12 months financial data is used in the calculation of both measures and 2017 amounts have not been restated for the adoption of IFRS 16 – Leases.
(3)Adjusted pre-tax income (loss), adjusted net income (loss), EBITDA (earnings before interest, taxes, depreciation, amortization and impairment), EBITDA margin, free cash flow, ROIC, leverage ratio, adjusted earnings (loss) per share – diluted and adjusted CASM are each non-GAAP financial measures and net debt is an additional GAAP measure. Refer to section 16 of Air Canada’s Third Quarter 2019 MD&A for descriptions of Air Canada’s non-GAAP financial measures and additional GAAP measures.
(4)Unrestricted liquidity refers to the sum of cash, cash equivalents and short and long-term investments, and the amount of available credit under Air Canada’s revolving credit facilities. At September 30, 2019, unrestricted liquidity was comprised of cash, cash equivalents and short-term investments of $5,869 million, long-term investments of $492 million and undrawn lines of credit of $994 million. At September 30, 2018, unrestricted liquidity was comprised of cash, cash equivalents and short-term investments of $4,922 million and undrawn lines of credit of $387 million.
(5)Except for the reference to average number of FTE employees, operating statistics in this table include third party carriers (such as Jazz Aviation LP (“Jazz”), Sky Regional Airlines Inc. (“Sky Regional”), Air Georgian Limited (“Air Georgian”) and Exploits Valley Air Services Ltd. (“EVAS”)) operating under capacity purchase agreements with Air Canada.
(6)Reflects FTE employees at Air Canada and its subsidiaries. Excludes FTE employees at third party carriers (such as Jazz, Sky Regional, Air Georgian and EVAS) operating under capacity purchase agreements with Air Canada.
(7)Average stage length is calculated by dividing the total number of available seat miles by the total number of seats dispatched.
(8)Revenue passengers are counted on a flight number basis (rather than by journey/itinerary or by leg) which is consistent with the IATA definition of revenue passengers carried.

SOURCE Air Canada