Air Canada Sees Q2 Corp. Demand 'Uptick,' Operational Challenges

Air Canada reported strong demand in the second quarter, including an "uptick" in managed corporate business, and vowed to address what executives acknowledged during a Friday earnings call were operational challenges in June and July.

"We had more employees trained, better coordination with our key ecosystem partners and improved tools last summer, which resulted in strong operational results in both April and May, yet our June and July operations were not at expected levels due to several factors," said Air Canada president and CEO Michael Rousseau.

Air Canada finished last in both June and July in Cirium's monthly tally of on-time performance among major North American carriers, in each month logging less than 53 percent of arrivals within 15 minutes of the scheduled arrival time.

Rousseau said some factors for the operational challenges were beyond the carrier's control, including weather, but noted that the carrier would use "any influence we have in such instances as with attrition at our principal regional partner or global supply chain issues."

He added that Air Canada's "flight completion level and baggage delivery ratios are stable."

"Certainly, an objective of ours is to continue to improve OTP," he said.

Corporate Bump

While leisure, cross-border and transatlantic demand remained strong for the carrier, there also was a "slight uptick" in second-quarter managed corporate demand, said EVP of revenue and network planning Mark Galardo. 

"That's been roughly in the minus 30 percent range for quite some time, so we're seeing a slight uptick there," Galardo said.

"More encouraging," he said, was the performance of noncontracted corporate business and demand from small and midsized enterprises. "That's recovering much quicker and quicker than anticipated," he said. "We're starting to see, post-Labor Day, some pretty positive signals there."

Total second-quarter passenger revenue increased about 42 percent year over year to roughly C$4.9 billion (US$3.7 billion). Operational revenue increased about 36 percent to more than C$5.4 billion. Total second-quarter capacity increased 21 percent year over year, and Air Canada projected full-year 2023 capacity also to increase 21 percent. 

Air Canada Q1 results