Air Canada is suspending 30 domestic routes and closing operations at eight regional airports across the country as the airline grapples with weak demand due to the COVID-19 pandemic.
The Montreal-based airline (AC.TO) announced the changes Tuesday, citing “weak demand for both business and leisure travel due to COVID-19 and provincial and federal government-imposed travel restrictions and border closures, which are diminishing prospects for a near-to-mid-term recovery.”
The 30 routes that will be “suspended indefinitely” include 14 routes in the Maritimes and Newfoundland and Labrador, 12 in Quebec and Ontario, and four in Western Canada. The company will close eight stations at regional airports across the country, meaning they will no longer have a presence at those airports.
“Air Canada expects the industry's recovery will take a minimum of three years,” the company said in a statement.
“As a consequence, other changes to its network and schedule, as well as further service suspensions, will be considered over the coming weeks as the airline takes steps to decisively reduce its overall cost structure and cash burn rate.”
The decision also impacts Chorus Aviation, as 21 of the 30 suspended routes are operated by its subsidiary Jazz Aviation through a partnership with Air Canada. The eight stations that will close are also operated by Jazz.
“The COVID-19 crisis and provincial and federal government-imposed travel restrictions and border closures are having a significant negative effect on passenger demand for Canadian air travel," said Chorus Aviation chief executive Joe Randell in a statement Tuesday.
"I am saddened by the impact today's announcement will have on our employees, suppliers and the affected communities, but respect and understand the difficult choice our partner, Air Canada, has had to make."
Chorus Aviation’s stock (CHR.TO) was down approximately 2.7 per cent, trading on the Toronto Stock Exchange at $2.92 as of 2:34 p.m. ET on Tuesday. Air Canada’s stock was also down approximately 3 per cent to $16.95.
RBC Capital Markets analyst Walter Spracklin said in a note to clients Tuesday that Air Canada’s decision highlights the airline’s “willingness to reduce costs and cash burn rates and we continue to remain confident in the company’s ability to preserve liquidity going forward.”
Air Canada reported a net loss of more than $1 billion in the first quarter of 2020, as COVID-19 lockdowns and global travel restrictions brought airline traffic to a halt. The company has since undertaken several steps to cut costs, including laying off approximately 20,000 employees, representing more than 50 per cent of its payroll. The airline expects system-wide capacity to be down 85 per cent in the second quarter of the year, and down at least 75 per cent in the third quarter.
The following routes have now been suspended by Air Canada:
In the Maritimes/Newfoundland and Labrador:
Deer Lake-Goose Bay
Deer Lake-St. John's
Goose Bay-St. John's
Baie Comeau-Mont Joli
Gaspé-Iles de la Madeleine
In Western Canada:
The eight regional airports where Air Canada will shutter its stations include:
Bathurst, New Brunswick
Wabush, Newfoundland and Labrador
Baie Comeau, Quebec
Mont Joli, Quebec
Val d'Or, Quebec
North Bay, Ontario