Air Canada Plummets 30% as it Cuts Capacity in Half
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Air Canada is on the verge of cutting capacity by 50 per cent in its second quarter. The airline has implemented this move in a bid to deal with the fallout of the Coronavirus. The COVID-19 has resulted in various travel restrictions and mass cancellation for airlines around the globe.
Air Canada the largest airline in the country made an announcement on Monday that it will pursue to save $500 million in cost by deferring its capital spending.
Moreover, the airline is also suspending the financial guidance for 2020 and 2021. However, these cost-cutting measures encompass many things. This include workplace reductions, at the same time, Air Canada did not elaborate on the number of layoffs that they expect.
Elsewhere, Air Canada stock has been facing a massive drop by 30.5 per cent to $17.62 per share. This was after the federal government gave an indication that it’s restricting all international flights and increase efforts to screen passengers for the rampant COVID-19. These measures include redirecting all flights from Europe, Asia and Africa.
The Canadian Prime Minister Justin Trudeau indicated that the move, which includes prohibiting non-Canadians from entering the country.
This also includes anyone showing symptoms of the COVID-19. Elsewhere, the public health officials are all hands on deck aiming to manage the spread of the virus in all parts of Canada.
Nevertheless, transport Minister Marc Garneau the newly implemented restrictions on all international flights will come into effect soon after midnight on Wednesday morning. This means we are going to witness the majority of planes sent to various airports such as Vancouver, Montreal, Toronto and Calgary.
Nevertheless, flights from the U.S, Mexico and other parts of the Caribbean will not be affected by the new developments.
Air Canada chief executive gave a statement highlighting that they are confident that the airline will surely navigate the imploding crisis. This is because of its vibrant financial position that encompasses $7.3 billion in liquidity. Therefore, they have more than enough funds to shield all pension obligation. At the same time, the organisation does not have any material debt this year.
Conclusion
Above all, Air Canada cost-saving measures encompass some layoffs. The targeted cost decrease of around $500 million alongside fuel jet prices will also assist the company to offset up to 60% of its revenues for the second quarter.