Nearly two decades after the 9/11 terrorist attacks transformed airports, leading to security barriers where none had existed before, the coronavirus pandemic is once again upending air travel.
This time around, the focus is on health measures, and the use of technology that in theory could make the experience “touchless” and more automated, but could also lead to higher ticket prices.
Air travel is about to go through its biggest transformation since 9/11 — and passengers will pay for it
“We need faster, cleaner, better ways to get through the airport,” Robyn McVicker, vice president of operations and maintenance at Vancouver Airport Authority told the Financial Post. “It’s something that we believe is the future.”
Already, Vancouver airport and others are doubling down on touchless technology that allows passengers to print a baggage ticket and drop their bags off at a self-serve kiosk that eliminates the need to touch or interact with anyone at the airport.
She said her team is already working on a project called “Phoenix” that reimagines “every single process in the airport” using technology, whether that means waiting in line, waiting at the gate and even the need for paper tickets. In the future, McVicker thinks airports will begin using biometric facial scans, so that passengers can glide through the airport in less time, with less waiting.
“The industry has never been more aligned on how do we make things better than it is today,” said McVicker.
There is much at stake in figuring out how to bring air travel back. Airports across the country are already facing sharp declines in revenue. Even with widespread layoffs, some airports are looking to raise money by increasing the fees that passengers pay, or borrowing, just to support the costs of their overhead.
Nathan Janzen, a senior economist with the Royal Bank of Canada, said that aspects of the economy “that require people to congregate” will be the slowest to recover.
But he said airports form a crucial backbone to the economy, allowing people to travel to a region, facilitating investment in businesses and allowing a freer flow of goods.
“Those are the kinds of things that can be a structural impediment to a longer term to medium term recovery, if you don’t figure out a way to make them work,” Janzen said.
The drop in air travel has been dramatic. One day in mid-June, about 5,000 people arrived or departed on a flight out of the Vancouver International Airport — about 97 per cent less than the 75,000 people that would normally service the airport.
Across the country, other airports, big and small, are experiencing similar situations. In Calgary, for example, about 1,000 passengers were travelling on a day when normally there would be 24,500 passengers.
Toronto’s Pearson Airport reported a 97 per cent drop in passenger traffic in April.
At Winnipeg’s Richardson International Airport, around 350 people travelled through compared to nearly 13,000 on average at this time in prior years.
“But that’s really good news,” said Barry Rempel, president and chief executive of Winnipeg Airports Authority, “because we had days, for example, the 6th of May, we had fewer than a hundred people boarding.”
Rempel is hopeful that as federal and provincial authorities relax social distancing guidelines, air travel will slowly pick up again, but he knows that regional airports such as the one in Winnipeg will likely trail airports that have a more international flight list.
In any case, no one is under any illusion that air travel will snap back to pre-pandemic levels anytime soon.
In March, the country’s airlines gradually suspended most or in some cases all of their flights as federal and provincial health authorities issued new rules to contain the spread of COVID-19, in a move that corresponded with tens of thousands of layoffs.
Toronto-based Porter Airlines stopped flying altogether and still has no plans to resume flights until July 29 at the earliest.
Montreal-based Air Transat has said it plans to resume flying on July 23 after a four-month hiatus.
Calgary-based Westjet has said it is only flying five per cent of its schedule, and is not releasing a schedule beyond Aug. 5.
Montreal-based Air Canada has reduced its flight schedule by 85 to 90 per cent. A The company says it’s hopeful that it will see a recovery, which would mean that its flight schedule would only be reduced by 75 per cent.
All airlines have implemented temperature checks, health screening questions and enhanced cleaning. Seat distancing, or leaving the middle seat unoccupied on larger planes, and only booking every other seat on smaller planes, has also become de rigeur.
Transport Canada also requires all passengers at least two years old to bring their own face mask and wear it throughout the duration of the flight.
Despite these measures, people aren’t travelling.
“The airport’s not a comfortable place these days,” said Rempel. “It’s a welcoming building, but it’s empty.”
To coax people back into airports, he said staff are taking extra precautions — hand sanitizer stations have been added throughout the building and the staff to passenger ratio is high enough that every single screen can be immediately cleaned after it’s used.
They have even installed a new technology that cleans the escalator handrail on a constant basis.
“Think of it as a bath that the handrail goes through every time it makes a circuit,” said Rempel. “That’s the kind of thing we’re doing.”
Still, Rempel said his revenues are currently about three per cent of normal. While the Winnipeg Airport Authority slashed capital spending plans from $175 million to $7 million, Rempel has also applied to raise the airport‘improvement fee’ that every passenger pays as part of their ticket fare, from $25 to $38.
“If traffic comes back next year — it won’t, I believe — then we’ll be reducing that,” he said, adding that otherwise the increase should help sustain the airport through 2024 or 2025, by which time he expects air travel to resume to normal levels.
While the federal government has waived the lease payments that airports pay until December — which typically amount to between 11-12 per cent of total revenues, according to several airport executives interviewed for this article — Rempel said it will not be enough to save his airport.
Reid Fiest, a spokesman for Calgary Airports Authority, said his company is hoping the federal waiver is extended for four or five years so airports can manage their debt.
“We’re doing a lot to try and make people feel comfortable and that it’s safe to travel,” said Fiest, adding he expects it could take three to five years, “but there is still a lot of uncertainty.”
The simple reality is no one knows when air travel will return.
“It’s the billion-dollar question,” said McVicker. “The reality is forecasting is a voodoo science right now.”
MONTREAL, June 25, 2020 /CNW Telbec/ – Transat, one of the largest integrated tourism companies in the world and Canada’s holiday travel leader, ranks 18th on the 2020 list of the Best 50 Corporate Citizens in Canada, established annually by Corporate Knights research firm. This ranking recognizes organizations with outstanding records in governance and in the management of human, natural and financial resources.
“We are very proud to be among the best corporate citizens in terms of sustainable development, especially since we are the only company in our industry to receive this honour,” said Jean-Marc Eustache, President and Chief Executive Officer of Transat, adding: “Even though the COVID-19 crisis is leading us to focus our energy mainly on resuming our commercial and air operations, we are not losing sight of our commitments to corporate responsibility. We are relentlessly pursuing our efforts of the past 13 years to become a North American leader in sustainable tourism.” He concluded: “I want to share this recognition with our employees and partners, who not only share our values, but also contribute significantly to this achievement.”
Corporate Knights evaluates companies’ performance using up to 21 key indicators, including energy and water consumption, production of waste and atmospheric emissions, employee turnover, representation of women in executive management and on boards of directors, pension fund status, supply chain management and innovation.
Since 2007, Transat has implemented various sustainable development initiatives based on four pillars: the environment, communities, operations and the workplace. Among other initiatives, the Company has a fuel management program for its aircraft fleet and is part of a consortium for the development of sustainable aviation fuel. In its Sun market, 33% of the company’s all-inclusive resorts hold a certification recognized by the Global Sustainable Tourism Council (GSTC), the world benchmark in this area. In addition, Transat offers numerous programs and activities that promote its employee wellness, development, recognition and social engagement. As a result of its efforts, in 2018 Transat became the world’s first major international tourism company to obtain Travelife certification for all of its tour operator and travel agent activities, in recognition of best practices in sustainable development in the tourism industry.
For comprehensive information on Transat’s sustainability initiatives, visit transat.com.
OTTAWA – Canada’s airlines want the government to ease travel restrictions, border closures and mandatory quarantines so their businesses can take off again.
Representatives from Air Canada, WestJet and Air Transat all testified at a House of Commons health committee, with a unified message that it’s time for Canada to gradually open up to the world.
Ferio Pugliese, a senior vice president of government relations for Air Canada, told MPs that other countries are moving to reopen quicker.
“Canada needs to move at a better pace than it has thus far,” he said. “Canada we believe now needs to work urgently with stakeholder to reopen its borders.”
Pugliese said Air Canada has cut hundreds of flights and thousands of jobs and is working at five per cent of its usual capacity. He said, long-term, airlines still have fixed costs and they will become more and more unmanageable if planes stay grounded.
“As long as these restrictions stay in place and we are not looking at balanced ways of reopening the economy, it will have a tremendous impact on the financial viability of these businesses.”
Currently, with a few exceptions, only Canadian citizens and permanent residents are allowed to enter the country. Canadians returning from overseas have to quarantine for 14 days upon their arrival and some provinces are even requiring quarantines for people arriving from other parts of Canada.
Government relations director Howard Liebman, with Air Transat, said his company can’t wait until the virus goes away.
“We can’t wait years until there is a widely available vaccine to get back in the air.”
He said the company has tentative plans to open up this summer, but they know the flying public won’t be returning in waves.
Liebman said Transat, as a leisure operator, has been completely grounded since the pandemic began and is feeling the strain.
“We have not operated or sold tickets in more than three months,” he said. “There is no business or industry that can go for three months without revenue or operations.”
Commercial aviation is an essential service
Jared Mikoch-Gerke, WestJet’s manager of aviation security, said the Calgary-based airline had grounded two-thirds of its fleet and cut thousands of jobs.
While they are calling on the government to ease restrictions, he said they still expect it will be a long way before things return to normal.
“We don’t anticipate returning to pre-COVID levels until 2022,” he told the committee.
All of the panelists said Canada should move gradually, opening up to specific countries with low levels of COVID-19 transmission, safe corridors that would prevent a wider outbreak.
“These would be routes between international locations that have done a good job,” said Mikoch-Gerke.
The airlines said they are using multiple safety measures, including enhanced cleaning, requiring masks and screening at airports, but said the commercial aviation businesses needs to resume for the Canadian economy to take off.
“Commercial aviation is an essential service and an element of critical infrastructure,” said Mikoch-Gerke.
We are in the safety business
Before the committee met Monday, Prime Minister Justin Trudeau was asked about easing restrictions to help the tourism industry. He said he feels for the industry, but Canada can’t take any chances.
“We know that reopening too quickly or carelessly would lead us to a resurgence that might well force us to go back into lockdown, to shut down the economy once again and nobody wants that.”
He said the government had offered financial support for businesses specifically so they wouldn’t have to take unnecessary risks.
“We have significant supports out for industries, for businesses large and small and for Canadians to be able to make it through the coming months, but we are going to be very, very careful about when and how we start reopening international borders.”
Several MPs were also skeptical of allowing airlines to reopen or removing the current restrictions
With cases rising in many parts of the world, NDP MP Don Davies asked the airlines if they were worried opening the borders could be a terrible decision.
“We might be walking into a second wave,” he said.
“Are you not concerned we may be walking into another flare-up,” he asked the airlines.
All of the airlines admitted reopening the borders comes with some risk, but they said they are confident it can be done safely.
“We are in the safety business and we are in the risk management business, that’s what we do,” said Pugliese.
Several MPs also grilled the airlines about refunds for passengers. Most airlines have offered travel credits or vouchers for the thousands of cancelled flights that resulted from COVID-19.
Conservative MP Matt Jeneroux said it is unfair to consumers.
“It’s unfathomable to me that if someone paid for a service, but didn’t receive that service that they would still be charged for that service.”
Pugliese said Air Canada had refunded almost $1 billion in flights for customers who bought tickets that included the option of a cash refund.
He said the current rules don’t require cash refunds in cases like this and they have extended the travel vouchers they are offering so they won’t expire as quickly. More than 30,000 Canadians have signed a petition, submitted to the House of Commons requiring cash refunds for cancelled flights.
Mikoch-Gerke with WestJet said the current rules allow airlines to offer credits when the cause for a cancellation is out of their control.
“We do believe that refunding and reimbursing with travel credits is an appropriate response in exceptional circumstances.”
European Union regulators are suspending their investigation into Air Canada’s proposed purchase of Transat AT pending the arrival of more data from the two Canadian travel companies.
The European Commission’s antitrust body launched the four-month investigation into the $720-million deal in May to determine whether it would hurt competition in Canadian and European markets, leading to higher prices, diminished quality or less choice for Atlantic travellers.
A preliminary review by the EU executive branch found that the would-be transaction could significantly reduce competition on 33 origin and destination city pairs between the two jurisdictions.
Air Canada says that “it is typical of this process to ‘stop the clock’ to allow more time” to submit information. Tour operator Transat, which owns Air Transat, says dates have been pushed “slightly” beyond the initial September deadline as a result.
The Canadian Competition Bureau warned in March — based on information collected prior to the COVID-19 pandemic — that eliminating the rivalry between the two Montreal-based carriers would discourage competition by prompting higher fares and fewer services, ultimately resulting in less travel by Canadians on a range of competing routes.
The takeover would give Air Canada control of more than 60 per cent of transatlantic air travel from Canada and 45 per cent of passenger capacity to sun destinations, according to the federal agency’s report.
Transat has said it expects to close the deal in the fourth quarter of the year.
TORONTO — Canada’s airlines have taken swift action amid border closures and travel restrictions in the wake of the coronavirus pandemic. In many cases airlines have temporarily suspended operations entirely.
Here’s the latest from Canada’s airlines. Updates will be added as soon as they become available.
LATEST UPDATE: June 16 – WestJet; June 12 – Transat; June 11 – Sunwing; June 9 – WestJet; June 4 – Flair Airlines; May 27 – Porter Airlines; May 20 – Sunwing; May 11 – Air Canada
UPDATED MAY 11: Air Canada has extended its route suspensions until at least May 31 and into early June for a large swath of its network, with some exceptions. On May 8 ACV notified the trade that Air Canada’s operating schedule for June, while certainly reduced, includes service to Cancun, Varadero, Cayo Coco, Montego Bay, Barbados, Paris, Athens and Barcelona. Updated information about route suspensions for flights within North America as well as Atlantic, Pacific, South America and Mexico/Caribbean routes can be found here.
UPDATED JUNE 4: Flair Airlines has announced that it will resume service to Kelowna and Winnipeg while delaying the launch of other destinations as part of its new summer schedule. Its current route schedule will be expanded to include both Kelowna and Winnipeg in addition to Toronto, Edmonton, Calgary and Vancouver. However, as a result of ongoing travel restrictions, Flair will also be delaying the launch of service into Ottawa and Atlantic Canada. Full refunds are being offered to passengers booked on cancelled flights to the affected destinations: Ottawa, Halifax, Saint John, N.B., and Charlottetown. Impacted guests will be contacted through email with instructions on how to receive their refunds. The airline’s latest change policies are at https://flyflair.com/travel-info/customer-service/covid-19-updates.
UPDATED JUNE 11: Sunwing has suspended all southbound flights through July 31. Passengers with departures dates for flights or vacation packages March 17 – July 31 are eligible to receive a future travel credit for the value of the original amount paid. The credit can be redeemed against future travel to anywhere Sunwing Airlines operates for up to two years from the original departure date For departure dates Aug. 1, 2020 onwards standard terms and conditions apply to changes and cancellations. For the most up to date information see https://www.sunwing.ca/en/promotion/packages/travel-advisory/.
Swoop has suspended all regular international and transborder flights until May 31. Check https://www.flyswoop.com/coronavirus/ for the latest updates. Swoop’s ModiFly is included in all new bookings more than seven days from departure and free to add for existing bookings more than seven days from departure. Swoop’s repatriation flights started March 23.
UPDATED JUNE 12: Transat is set to resume both its flights and tour activities starting July 23. Its new flight schedule, running through Oct. 31, will include 22 destinations in Europe, the South, the U.S. and Canada. South and Europe packages will be available, with Transat’s network of travel agencies gradually reopening starting June 15. More information for Transat can be found at https://www.airtransat.com/en-CA/book/resumption-of-our-operations#%2Fresults.
UPDATED JUNE 16: From July 5 through August 4, WestJet will offer operations to 45 destinations including 39 in Canada, five in the U.S. and one in Mexico. On June 1 WestJet announced it was offering refunds for select flights that include a U.S. or UK destination. The policy does not include flights within Canada or to continental Europe, Mexico or the Caribbean. If clients chose to voluntarily cancel their booking, they are not eligible for a refund to original form of payment, with some exceptions. The refunds apply to U.S. and UK flights March 1 – June 30.
Canada’s beleaguered airline industry is taking cautious steps to restart operations after travel restrictions brought on by the COVID-19 pandemic grounded much of the sector — but getting planes back in the air will be a costly and risky undertaking.
Flair Airlines is one Canadian carrier ramping back up operations next month. In July, the low-cost domestic airline, which launched three years ago, will expand its routes across the country.
But even though many Canadians are hesitant about boarding a plane, airlines need to start offering flights with more safety measures so the industry can recover, said Flair CEO Jim Scott.
“It’s a chicken and an egg problem. You can’t attract passengers if you don’t have a flight,” Scott told CBC News. “If you have a flight and people don’t show up, you have to operate it. If you operate it at a loss, eventually you’ll go out of business.”
Scott said that operating an airline at this time is a juggling act that involves estimating how much traffic will return to the industry and matching that to the industry’s ability to accommodate it — all at a rate that breaks even or generates revenue on every flight.
“If we get it wrong, we can lose an awful lot of money,” he said.
The company has already let go of 50 per cent of its workforce because of the pandemic and cancelled a planned expansion into the Maritimes due to provincial travel restrictions and quarantine rules.
Daunting process for many airlines
It’s a similar story for other airlines: Air Canada announced in May that it was slashing its workforce by 50 to 60 per cent, while WestJet laid off half its 14,000-member workforce in March before rehiring most of them under the federal government’s wage subsidy program.
Flair took advantage of that program, but Scott said topping up employees’ salaries is still costly. The carrier is in the midst of private talks with Ottawa for tens of millions of dollars in loans because the airline doesn’t bring in enough revenue to qualify for the government’s offer of bridge financing for large Canadian businesses.
Bigger carriers who do qualify for the financing haven’t said whether they’ll sign on and say they’re looking into the conditions tied to receiving it.
Canadian airlines have chosen to ramp up operations for the coming season despite those circumstances.
After cutting 90 per cent of its operations, Flair is inching back up to 30 per cent of normal operations in order to expand its routes.
Air Transat revealed last week that it expects to resume its flights on July 23 to almost two dozen international destinations including France, Italy and Mexico as long as travel restrictions at that time allow it.
Air Canada is also adding more international destinations to its slate including London, Paris and Frankfurt, while WestJet said in an email to CBC that it was “working through an updated July schedule that will include an increase in daily flight frequencies.”
“While increased flying is a positive sign, it is important to remember that we are only flying five per cent of our schedule and an increase in flight numbers is not an indication of our recovery or return to normal operations,” the email read.
Glamour is gone, Scott says
Expanding service amid a public health crisis means air travel has become an entirely new experience.
“The glamour is out of flying right now,” said Scott. “People are very quiet. They board the airplane with social distancing. I think the social element of flying, talking to a neighbour, meeting people, having jokes with flight attendants and so on, those days are gone for now.”
A number of safety measures are already in place in airports across the country, including a requirement for all passengers and staff to wear masks, the completion of health-screening questionnaires and enhanced cleaning protocols.
Passengers travelling to, from or within Canada will have to undergo mandatory temperature checks before boarding. Some airlines are already doing this, including Air Canada, WestJet and Flair Airlines.
Flying itself is now significantly different: some airlines have suspended food and beverage service, while others no longer distribute pillows and blankets.
Airlines are also disinfecting their planes with medical-grade cleaning products between flights.
Flair’s fleet is sanitized before every trip, and passengers on connecting flights must deplane when they stop in a new city while the plane is cleaned again. The company is “fogging” down the aircraft with a sanitizer procured from Germany.
In other measures, passengers on Air Transat flights will be given their own face covering, gloves, sanitizer and wipes. Air Canada passengers can expect to receive a similar kit, along with an empty seat directly adjacent to their own.
WATCH | How Flair Airlines disinfects its fleet:
Passengers cautious too
Passengers will be guarded when entering this new era of air travel, said Ian Jack, a spokesperson for the Canadian Automobile Association (CAA).
“I think a lot of people today are simply worried that we’ll have a repeat of March [and] April where they’ll buy a ticket, they’ll spend potentially thousands of dollars and then the flight will get cancelled … because we got a COVID outbreak somewhere in the world,” said Jack, whose association is also a consumer group that previously fought for air passenger rights.
Jack said those embarking on air travel this summer should be particularly diligent about checking travel advisories and rules about refunds.
“The biggest concern is that … people are going to get burned again,” Jack said. “Either they’re not going to be able to fly where they want to go and they won’t get a refund, or that they’re going to get to their destination and find that things are closed.”
By Christopher Reynolds, The Canadian Press | Thu., June 11, 2020
MONTREAL – The head of Transat AT is calling on government for financial support, which it says would enable the travel company to refund passengers whose flights were cancelled due to the COVID-19 pandemic.
“I say clearly to the various level of government, help us find a solution that is acceptable to all stakeholders, and we are all for it,” CEO Jean-Marc Eustache said on a conference call with analysts Thursday.
Canadian airlines have mainly offered travel credit instead of reimbursements for the hundreds of thousands of trips that never took place amid border shutdowns and quarantines.
Eustache’s remarks came as the tour operator reported a loss of $179.5 million for the quarter ended April 30, compared with less than $1 million in losses a year earlier.
Transat said Thursday it would resume operations on July 23 after grounding its fleet on April 1, with plans to gradually start flying on 23 international routes and some domestic ones.
However, Ottawa continues to require a 14-day quarantine for all arrivals — in line with many other countries — making travel outside the country a “non-starter” for Canadians, National Bank analyst Cameron Doerksen said.
Eustache pointed to the contrast between Canada’s lack of sector-specific support and the billions in financial aid from other governments to justify the absence of refunds for Canadian customers.
“What is overlooked is that the government demand (for reimbursement) has been accompanied by assistance plans that are out of all proportion to what we have seen in Canada,” he said.
Transportation authorities in the United States and European Union have required airlines, including foreign ones, to offer refunds for flights cancelled as a result of the pandemic.
Unlike its U.S. and many European counterparts, Ottawa has held off on handing out grants or loans particular to the airline sector, turning instead to a wage subsidy accessible to most employers and loans starting at $60 million for large companies.
WestJet Airlines Ltd. offers a partial exception to Canadian airlines’ policies. The airline quietly changed its position this month to allow customers whose flights to the U.S. or U.K. were cancelled due to the pandemic to recoup their cash. The policy does not apply to other destinations, including flights within Canada.
The discussion over refunds remains heated. Three petitions — two were presented to the House of Commons over the past month — with more than 110,000 signatures call for full refunds before any financial aid is handed out to airlines.
Transat chief financial officer Denis Petrain said Thursday that “no significant” amount of fares have been refunded since mid-March.
Eustache publicly expressed concern for the first time Thursday about the impact of the coronavirus crisis on Air Canada’s deal to buy Transat for $720 million. The transaction has shareholder approval but still requires a green light from regulators in Canada and the EU.
The financial flogging and capacity reductions at airlines on both sides of the Atlantic could “impact the ability to reach an agreement with regulatory authorities,” he said.
One worry is whether a beefed-up Air Canada could offer appropriate “remedies” to rivals for gobbling up a larger slice of the market.
Airline sector remedies — key to securing a regulatory thumbs-up — often include giving up slots at airports as a kind of concession, but a devastated market and shrunken competition could mean many carriers would not have the capacity to seize the slots even if they wanted them.
Last month, European regulators launched an in-depth investigation into the deal amid European Commission concerns it may reduce competition and result in higher prices.
Nonetheless, Eustache expressed optimism that Transat’s main customer base — vacationers to Europe and sun destinations and passengers visiting friends and family within Canada — were likely to be among the first groups to take up air travel again, “well before business travellers,” who are outside Transat’s realm, he said.
Transat has negotiated on fixed costs such as aircraft rent, deferring payments and reducing overall costs to between $10 million and $15 million per month, down from $60 million, the company said. Some of its older aircraft are being dismantled for components. “We’re selling parts now,” said Eustache.
Significant uncertainty persists, despite Transat’s plan to take to the skies next month.
“Nobody knows what’s going to happen tomorrow,” he said. “Can you tell me when the borders are going to be open? Can you tell me when the people will travel on a plane?”
In April passenger kilometres fell 98 per cent at airlines globally, while annual revenue is expected to fall by 55 per cent or US$314 billion, according to the International Air Transport Association.
At Transat, revenue in its second quarter fell to $571.3 million compared with $897.4 million in the same quarter last year.
On an adjusted basis, the Montreal-based company reported a loss of $38.8 million or $1.03 per share for the quarter compared with an adjusted loss of $6.4 million or 17 cents per share in the same quarter a year ago.
This report by The Canadian Press was first published June 11, 2020.
MONTREAL, June 11, 2020 /CNW Telbec/ – Transat A.T., which stopped flying on April 1 due to the COVID-19 pandemic, announced today its plan to start resuming flights on July 23, pending the relaxation of travel restrictions.
The union representing Air Transat flight attendants views this as excellent news. However, these recalls to work will affect only a small minority of its members. For the vast majority, returning to work could be a matter of months or even years.
“We expect that only 250 of the 2,000 flight attendants will return to work when flights resume. Considering the impact of the pandemic on our industry, we hope that flight attendants will not be forgotten by Canadians, and we call upon the government to take action to protect these jobs,” said Julie Roberts, union president of the Air Transat Component of CUPE.
Today, to ensure that the flight attendants are not forgotten, CUPE’s Air Transat Component launched a campaign aimed at the Federal Government and the Canadian public, demanding concrete actions, as it is essential that jobs in the airline sector be preserved. We should not forget that flight attendants have always been committed to the safety of Canadians, particularly during the repatriation flights at the start of the crisis in March.
Air Transat flight attendants are emergency specialists whose primary role is to ensure passenger safety. They are divided into three local unions, corresponding to their three bases: CUPE 4041 (Montreal-YUL), CUPE 4047 (Toronto-YYZ) and CUPE 4078 (Vancouver-YVR). The Air Transat component oversees these three local unions.
In total, CUPE represents nearly 15,000 members in air transportation in Canada, including Air Transat, Air Canada, Air Canada Rouge, Sunwing, CALM Air, Canadian North, WestJet, WestJet Encore, Flair Air, Swoop, Cathay Pacific and First Air, Air Georgian.
With nearly 122,000 members in Quebec, CUPE is present in 11 sectors, including social services, communications, education, universities, energy, municipalities, government corporations and public agencies, air and land transport, the mixed sector and maritime transport. It is the largest affiliate of the FTQ.
/CNW Telbec/ – Transat A.T. Inc. is pleased to announce the resumption of its flights and tour operator activities as of July 23, 2020. It will offer a new flight schedule to 22 destinations in Europe, the South, the United States and Canada until the end of the summer season on October 31, 2020. The company will also offer South and Europe packages during this period and will gradually reopen travel agencies in its network starting June 15, 2020. In addition, Transat unveils its Traveller Care program, rolling out new health measures to ensure the safety of its customers and employees.
MONTREAL, June 11, 2020 “After these long months that put the entire tourism industry to the test, we are very happy to announce today the resumption of our operations,” says Annick Guérard, Chief Operating Officer of Transat. “We will gradually operate a flight schedule with 23 international routes to Europe, the South and the United States, in addition to a domestic flight schedule between major Canadian cities.
“To address the concerns caused by COVID-19 and to prioritize the safety of our customers and employees, we will be implementing new health measures as part of our Traveller Care program,” adds Guérard. “In compliance with the recommendations and requirements of regulatory authorities, these measures will accompany our travellers throughout their travel experience, from the travel agency to the airport to on board to the destination. We look forward to welcoming travellers again and to share the passion that unites us.”
Flights for summer 2020
Transat expects to resume its flights and tour operator activities as of July 23, provided that the travel restrictions applicable on that date allow it.
From Montreal, Air Transat will gradually operate direct flights to Athens (Greece), Bordeaux (France), Lisbon (Portugal), Lyon (France), Nantes (France), Marseille (France), Paris (France) and Toulouse (France). Travellers from Toronto will benefit from direct flights to Athens (Greece), Glasgow (Scotland), London (England), Manchester (England), Porto (Portugal) and Rome (Italy).
For travellers who wish to fly south, Air Transat will offer direct flights to Cayo Coco (Cuba), Cancun (Mexico), Fort Lauderdale (Florida) and Punta Cana (Dominican Republic) from both Montreal and Toronto, in addition to one direct flight a week to Port-au-Prince (Haiti) from Montreal.
To open the door to even more destinations via connecting flights and to allow Canadians to explore more of their country, the airline will also offer domestic flights between Montreal, Toronto, Calgary and Vancouver.
Depending on demand and the easing of regulatory restrictions, Air Transat may enhance its flight schedule for the months of September and October. Customers are strongly encouraged to familiarize themselves with the governmental guidelines and entry requirements of their destinations, as they vary from country to country.
Flexibility offered to customers
Fully aware that travel plans can change, Transat is implementing a policy offering more flexibility to travellers whose flights are scheduled to operate this summer. Customers who booked before March 4, 2020, can change their travel dates, destination or package at no charge up to seven days before departure. If they prefer to cancel their trips instead, they will be able to obtain a travel credit valid for 24 months.
Customers who booked on or after March 4—the date Transat launched its “Book with peace of mind” policy—can make the same changes at no charge up to 24 hours before departure. If they prefer to cancel their trips instead, they will be able to obtain a travel credit valid for 12 months.
Passengers whose fare types allow for modification or cancellation will be able to benefit from those conditions if they wish to change or cancel a flight that is scheduled to operate this summer.
Temporary suspension of certain routes
COVID-19 and its impact on the tourism industry are forcing Transat to extend the suspension of some of its flights, significantly reduce its capacity and completely cancel certain routes for the 2020 summer season.
Until the end of the summer season, the airline is suspending its flights to certain destinations in Europe (Amsterdam, Basel-Mulhouse, Barcelona, Brussels, Copenhagen, Dublin, Faro, Lamezia, Madrid, Malaga, Nice, Prague, Venice and Zagreb), the South (Cayo Largo, Holguin, Montego Bay, Puerto Plata, Puerto Vallarta, Roatan, Santa Clara, Samana and Varadero) and the United States (New Orleans, Orlando and San Diego). It is also suspending all its direct flights to Europe and the South from Vancouver and Quebec City. Customers affected by these cancellations will receive a travel credit for the value of the amount received on file, which they can use within 24 months of their original return dates.
New health and safety program: Traveller Care
Transat also unveils today its Traveller Care health and safety program. Based on the recommendations of regulatory authorities, the travel experience has been completely revised: at the travel agency, at the airport, on board and even at destination.
At travel agencies: Clients will be encouraged to make an appointment before presenting themselves at a branch; there will be a limit of one client per consultation; and Plexiglas partitions will be installed at travel agents’ desks.
At the airport: To limit the risk of spreading the virus, certain measures will be implemented at the airport. Among these, passengers will be asked health-related questions, and counters and self-service kiosks will be regularly disinfected.
On board: All necessary precautions will be taken to provide a safe inflight experience. Frequently touched cabin surfaces will be thoroughly cleaned with hospital-grade disinfectant before each flight, and the aircraft will be thoroughly cleaned with electrostatic disinfectant every 24 hours. Passengers will receive a complimentary Traveller Care kit (including a face covering, gloves, hand sanitizer and disinfecting wipes). Passengers and crew will be required to wear face coverings throughout the flight. And the inflight service will be revised to reduce handling and contact. In addition, on board all Air Transat aircraft, passengers can count on reliable HEPA (High Efficiency Particulate Air) filters, which eliminate 99.995% of small particles, such as bacteria and viruses, refreshing cabin air every three minutes.
At destination: Reinforced preventive measures during transfers and excursions will be put in place for customers who have purchased a South or Europe package. In addition, Transat’s hotel partners will be implementing rigorous health and safety protocols so that travellers can enjoy their vacations with complete peace of mind. To provide support at destination, Transat representatives will be available at all times, by phone or via the Air Transat app.
Early year improvement abruptly halted by the COVID-19 pandemic Gradual resumption of flights beginning July 23, 2020 European approval of the transaction with Air Canada postponed until the fourth quarter
For the second quarter:
Revenues of $571.3 million.
Adjusted operating income1 of $21.1 million (operating loss of $29.6 million).
Adjusted net loss3 of $38.8 million (net loss attributable to shareholders of $179.6 million).
Resumption of operations:
Resumption of flights and tour operations beginning on July 23, 2020
Twenty-three international and a domestic program operating during the summer
Transaction with Air Canada:
Decision by the European Commission to open an in-depth (“Phase II”) investigation to assess the transaction with Air Canada.
Canadian approval process still underway to obtain a decision from the Minister of Transport
If the required regulatory approvals are obtained and conditions are met, it is expected at the present time that the arrangement will be completed during the fourth quarter of the 2020 calendar year.
MONTRÉAL, June 11, 2020 /CNW Telbec/ – Transat A.T. Inc. (“Transat” or the “Corporation”), one of the largest integrated tourism companies in the world and Canada’s holiday travel leader, announces its results for the second quarter ended April 30, 2020.
“The coronavirus pandemic and resulting border closures have hit the airline industry in ways that are without precedent. It has caused all Transat flights to be suspended since April 1. This has led to a steep decline in our results, although we were seeing a clear improvement over the first four months of the year,” stated Jean-Marc Eustache, President and Chief Executive Officer, Transat. “The extraordinary measures we were obliged to take, including the temporary layoff of 85% of our workforce, are aimed at preserving our cash flow to weather this period.” Like all airline and travel industry players, we continue to explore other opportunities to enhance our cash flow.”
“We are deeply pleased to announce today the gradual resumption of our flights beginning July 23. We will reopen 23 international routes over the summer, as well as some domestic ones. With our Traveller Care program, we are implementing all the necessary protocols to safeguard our clients’ health. This is a first step towards getting healthy operations back on track, from both a business and financial perspective,” he added.
The global air transportation and tourism industry has faced a collapse in traffic and demand. Travel restrictions, uncertainty about when borders will reopen, both in Canada and at the destinations the Corporation flies to, and the need for quarantine and physical distancing measures create significant demand uncertainty for the remaining part of fiscal 2020 and for fiscal 2021. For the moment, Transat cannot predict all the impacts of COVID-19 on its operations and results, or when the situation will improve. Until the Corporation is able to resume operations at a sufficient level, the situation will affect its cash. However, the Corporation has implemented a series of operational and commercial as well as financial measures, including cost reduction, aimed at preserving its cash flow. The Corporation is monitoring the situation daily to adjust these measures as it evolves.
The Corporation has taken the following measures regarding the COVID-19 pandemic:
From April 1, and through July 22, the Corporation has suspended all flights and is constantly monitoring demand and constraints by destination with a view to a gradual return to operations;
In March, as a precautionary measure, the Corporation drew down on its $50.0 million revolving credit facility agreement. As at April 30, the Corporation’s cash and cash equivalents totalled $733.7 million;
Senior executives and the Board of Directors agreed to a voluntary reduction in their compensation from 10% to 20%;
In March, the Corporation decided to early retire all of its Airbus A310s from its fleet;
In order to protect its cash and allow recovery after the restrictions have been lifted, the Corporation has granted its customers a travel credit valid for 24 months for flights cancelled due to the exceptional situation and including travel restrictions imposed by governments;
Since March, the Corporation has been renegotiating with aircraft lessors, as well as the owners of the premises it occupies, to defer a number of monthly lease payments. The Corporation has also been negotiating with its suppliers to benefit from cost reductions and changes in its payment terms, and has implemented measures to reduce expenses and its investments. Preserving cash is a priority for the Corporation and other opportunities are being evaluated to achieve this objective;
As of the end of March, the Corporation proceeded with the gradual temporary layoff of a large part of its personnel, up to more than 85%;
In April, the Corporation made use of the Canada Emergency Wage Subsidy (“CEWS”) for its Canadian workforce, which enabled it to finance a portion of the salaries of its staff still at work and to propose employees temporarily laid off to receive a part of their salary equivalent to the amount of the grant received, without work counterpart.
Second Quarter Highlights
The Corporation’s results for February showed a strong improvement over the previous year (adjusted operating income $28.3 million higher than in February 2019 and operating income up by $28.1 million). Following a stronger first quarter than the previous year’s, these results put the Corporation on track to return to profitability for the winter season.
Starting in mid-March, restrictions on international travel and government-imposed quarantine measures made travel sales very difficult. The flights operated during the last two weeks of March were mainly intended for the repatriation of the Corporation’s customers to Canada or their country of origin, resulting in very significant costs. Thereafter, the Corporation suspended all of its flights as of April 1 and therefore had no more sales from that date. As a result, the Corporation recognized revenues of $571.3 million during the quarter, a decrease of $326.1 million (36.3%) compared with 2019. Operations generated an operating loss of $29.6 million compared with $3.8 million in 2019, a decline of $25.8 million, as the decrease in operating expenses was not sufficient to offset the drop in revenues. Adjusted operating income1 amounted to $21.1 million, compared with $40.4 million in 2019, down $19.2 million.
Net loss attributable to shareholders amounted to $179.5 million or $4.76 per share (diluted) compared with $0.9 million or $0.02 per share (diluted) in 2019. The net loss attributable to shareholders for the quarter includes an $89.1 million charge for changes in the fair value of fuel-related derivatives and other derivatives due to the collapse in fuel prices, a $32.5 million foreign exchange loss mainly related to the remeasurement of lease liabilities and a $21.7 million charge to reduce the carrying value of deferred tax assets. Excluding non-operating items, Transat reported an adjusted net loss3 of $38.8 million ($1.03 per share) for the second quarter of 2020, compared with $6.4 million ($0.17 per share) in 2019.
Six-month Period Highlights
As a result of the above factors, the Corporation experienced a moderate deterioration in its performance for the winter season as a whole. The impact of the pandemic reversed a very strong start to the first half of the year, as revenues were up $45.2 million and operating income was $23.6 million higher at the end of the first quarter. This improvement continued in February, as adjusted operating income1 for the first four months of the year was up $63.3 million compared with 2019, due to a significant improvement in the profitability of the sun destinations program, our main program during the winter season.
For the six-month period as a whole, the Corporation ultimately recognized revenues of $1.3 billion, a decrease of $280.9 million (18.2%) compared with 2019, and operations generated an operating loss of $54.6 million, compared with $52.4 million in 2019, down $2.2 million. Transat reported adjusted operating income1 of $48.5 million compared with $32.8 million in 2019, an improvement of $15.7 million.
Net loss attributable to shareholders amounted to $213.4 million or $5.65 per share (diluted) compared with net income of $53.9 million or $1.43 per share (diluted) for the corresponding six-month period of last year. The net loss attributable to shareholders includes an $97.0 million charge for changes in the fair value of fuel-related derivatives and other derivatives due to the collapse in fuel prices, a $35.0 million foreign exchange loss mainly related to the remeasurement of lease liabilities and a $21.7 million charge to reduce the carrying value of deferred tax assets. Before non-operating items, Transat reported an adjusted net loss3 of $59.1 million ($1.57 per share) for the first six months of 2020, compared with $45.6 million ($1.22 per share) in 2019.
As at April 30, 2020, cash and cash equivalents amounted to $733.7 million, compared with $796.3 million on the same date in 2019. This change was mainly attributable to a decrease in receipts of deposits from customers related to the summer season ($125,0 million), the acquisition of two replacement engines for the A321neo LR fleet ($33.4 million), and to costs related to the transaction with Air Canada ($13.3 million), partially offset by the $50.0 million drawdown on its revolving credit facility agreement.
The working capital ratio was 0.99, compared with 1.15 as at April 30, 2019. This change was mainly attributable to higher trade and other payables and the increase in the current portion of lease liabilities.
Deposits from customers for future travel amounted to $605.1 million, compared with $629.7 million as at April 30, 2020, a decrease of $24.5 million. The decrease in deposits from customers compared with January 31, 2020 (amounting to $809 million) is mainly due to the seasonal nature of operations and represents a decrease usually seen in this period of the year.
As a result of this sudden, unpredictable and unprecedented health crisis and the resulting travel restrictions, the Corporation decided, like other Canadian carriers, to issue travel credits for cancelled trips. Customer deposits as at May 31, 2020 included these travel credits amounting to $416 million, 58% of which was placed in trust, with the difference representing deposits made directly with Air Transat or foreign subsidiaries. This exposes the Corporation to litigation and enforcement measures by legislative and regulatory authorities, including class action suits, which the Corporation intends to contest in good faith and with good reason.
Following the adoption of the IFRS 16 accounting standard, leases with terms of more than 12 months are now recorded as right-of-use under assets and lease liabilities under liabilities. As at April 30, 2020, lease liabilities amounted to $821.0 million.
Off-balance-sheet agreements, excluding contracts with service providers, stood at $1.1 billion as at April 30, 2020. This amount was mainly composed of commitments to take delivery of the 14 A321neos undelivered.
As the pace of recovery is impossible to assess following the announcement of the deconfinement measures or the possible evolution of the pandemic and its effects, the Corporation, similarly to the vast majority of air carriers and other travel industry players in the normal course of their operations following the impacts of COVID-19, is currently reviewing various opportunities to increase its cash flow. In particular, the Corporation has initiated discussions with its financiers and the various levels of government to improve its cash flow.
The Corporation adopted IFRS 16, Leases, on November 1, 2019. The 2019 comparative figures have been restated to reflect these changes.
To sum up, the adoption of this standard resulted in increases of $748.4 million in assets, $716.9 million in liabilities and $22.7 million in equity, respectively, as at October 31, 2019. For the year ended October 31, 2019, the adoption of this standard resulted in an increase in net income attributable to shareholders of $0.8 million. The main changes related to the adoption of IFRS 16 are described in note 3 to the interim condensed consolidated financial statements for the quarter ended April 30, 2020.
Resumption of operations
Transat expects to resume its flights and tour operator activities as of July 23, provided that the travel restrictions applicable on that date allow it. It will operate a condensed flight schedule for the period from July 23 to October 31, 2020 and offer more than 20 destinations. It plans to serve 13 European destinations (in France, the United Kingdom, Greece, Italy and Portugal) and five destinations in the South and the United States (Mexico, Dominican Republic, Cuba, Haiti and Florida) from Montréal or Toronto, as well as a domestic program linking the main Canadian airports (Montréal, Toronto, Calgary and Vancouver). The Corporation plans to add additional frequencies and destinations to the flight schedule for the following months based on border openings and deconfinement measures in place.
The Traveller Care program, also announced today, aims to ensure the safety and peace of mind of the Corporation’s customers with new health measures at check-in, at boarding, on board and at destination.
Transat is seizing the opportunity to accelerate the transformation of its fleet to become more efficient and provide a better experience for its customers, while taking an important step in the energy transition in air transportation.
Airline operations remain suspended until July 22, 2020.
In addition, the Corporation also plans to gradually reopen its travel agencies, which had been closed due to the lockdown related to the pandemic.
In the current situation, it is impossible for the moment to predict the impact of the COVID-19 pandemic on future bookings, the resumption of flight operations announced today and financial results.
The Corporation has implemented a series of operational, commercial and financial measures, including cost reduction, aimed at preserving its cash. The Corporation is monitoring the situation daily to adjust these measures as it evolves. Please see the Risks and Uncertainties section of the Corporation’s MD&A for the second quarter of fiscal 2020 (and that of October 31, 2019) for a more detailed discussion of the main risks and uncertainties facing the Corporation.
Consequently, the Corporation does not at the moment provide an outlook for summer 2020 or winter 2021.
Discussions relating to the sale of the Corporation
On August 23, 2019, Transat’s shareholders approved the arrangement agreement with Air Canada, under which it is provided that Air Canada will acquire all issued and outstanding shares of Transat for a cash consideration of $18.00 per share [the “arrangement”]. The arrangement remains subject to certain customary closing conditions, including regulatory approvals, particularly authorities in Canada and the European Union.
Notably, a public interest assessment regarding the arrangement is being undertaken by Transport Canada. On March 27, 2020, as part of this assessment process, the Commissioner of Competition released the report provided to Transport Canada summarizing his assessment of the impacts on competition. On May 1, 2020, Transport Canada in turn provided its assessment report to the Minister of Transport.
On May 25, 2020, the European Commission decided to open an in-depth (“Phase II”) investigation to assess the transaction with Air Canada. This extension, until a date between September 30, 2020 and November 19, 2020, is part of the European Commission’s normal process of assessing the impact of transactions submitted for its approval, which is currently complicated by the COVID 19 pandemic and the impact it is having on the international commercial aviation market.
While the Corporation remains firmly committed to completing the transaction with Air Canada, certain factors beyond its control and related to the COVID-19 pandemic could influence the outcome of the proposed arrangement. The market conditions of the global industry have been completely transformed. Among other things, the vast majority of North American, European and international air carriers have announced reductions in capacity and requested financial assistance measures. This could impact the possibility of reaching an agreement with regulatory authorities regarding an appropriate package of remedies aimed at obtaining the necessary approvals.
Moreover, the effects of the pandemic could force the Corporation to take certain measures, including the use of certain additional sources of funding, while its capacity to take such measures is restricted by the covenants undertaken under the arrangement agreement with Air Canada. Among other things, the Corporation has undertaken not to incur additional indebtedness except in the normal course of its operations and on conditions allowing for repayment without penalty upon closing of the arrangement. The agreement also provides that Air Canada’s consent for measures that would not be taken in the normal course of business may not be unreasonably withheld.
If the required approvals are obtained and the conditions are met, it is now expected that the arrangement will be completed during the fourth quarter of the 2020 calendar year. Under the arrangement agreement, the deadline for obtaining the regulatory approvals cannot be extended beyond December 27, 2020. This date, initially set for June 27, 2020 may be deferred, to the extent that the regulatory approvals are not obtained, for three one-month periods upon notification by one of the parties, and subsequently for three additional one-month periods under certain conditions. The Corporation has informed Air Canada of its decision to activate the first one-month period, which defers, for now, the June 27 deadline to July 27, 2020.
The management information circular dated July 19, 2019 contains additional information regarding the arrangement.