Partnerships key to Air Canada’s recovery

Air Canada is seeking to develop new interline agreements to help boost traffic.

Increasing the number of global partnerships to help diversify traffic will be a key focus for Air Canada as depressed passenger demand begins to recover.

That’s according to CCO Lucie Guillemette who was speaking following the publication of the airline’s second quarter (Q2) financial results, which have been heavily impacted by the COVID-19 crisis.

She said that the transatlantic partnership with fellow Star Alliance members United Airlines and Lufthansa Group would help to de-risk the carrier’s ramp up and enhance its global customer offering, adding that Air Canada would focus on hub-to-hub markets where partners can provide feed.

“We have opportunity as well to bolster some of the interline agreements that we currently have and also develop new ones as the COVID environment continues,” Guillemette said.

She said Canada’s flag carrier is unlikely to return to all the international destinations served prior to the coronavirus pandemic “for several years,” but explained those markets are “still available” via other transatlantic gateways served by potential new partners.

“From that perspective, we are pursuing opportunities with other interlines that can give us feed on some of the markets that we operate,” Guillemette said.

“And the same holds true for Asia. There are opportunities for us, for example, in Japan, to expand some of our interline agreements.”

However, Guillemette said that the recovery, particularly in transatlantic markets, would be “slow and uneven” given the ongoing travel restrictions in place.

Transatlantic services that have resumed in recent weeks include flights from Toronto (YYZ) to Munich (MUC) and Rome (FCO), as well as from Montreal (YUL) to Geneva (GVA) and London Heathrow (LHR). Amsterdam (AMS), Barcelona (BCN) and Vienna (VIE) among others will return to its network before the end of the month.

Air Canada’s capacity in the three months to the end of June was 92% down on the same period last year, while Q3 seat capacity is expected to be 80% lower year-on-year. In June, the airline announced plans to suspend 30 domestic regional routes and close eight stations as it continues to re-shape its network.

Guillemette said that Air Canada’s domestic and transborder recovery would be patchy due to interprovincial travel restrictions and the high number of COVID-19 cases in the US.

But she added: “Looking to our transborder network, we resumed service in selected cities in the United States at the end of May, and we'll continue to strategically and selectively build back our network through the third quarter.”

Air Canada reported a net loss of C$1.75 billion ($1.26 billion) in the quarter to June 30, compared with a profit of C$343 million a year ago. Operating revenue fell 89% over the same period, dropping to C$527 million.

Photo credit: Nigel Howarth