Air Canada Soars As Much As 29% on Vaccine and Cash Outlook
(Bloomberg) -- Air Canada jumped as much as 29%, the most since March 25, after the airline said it burned less cash than expected in the third quarter and Pfizer Inc. reported good results from tests of a Covid-19 vaccine.
The shares were up 21% to C$19.13 in Toronto as of 9:46 a.m. Before the markets opened Monday, Air Canada said flight capacity will drop 75% in the fourth quarter compared with a year earlier. But the airline will put off decisions about suspending even more routes while it talks with the Canadian government about financial aid.
“I would be cautiously optimistic” about the impact of a vaccine, Chief Executive Officer Calin Rovinescu said in a conference call with analysts. In the meantime, the company is pressing the Canadian government for better Covid-19 testing at airports so that it can relax the mandatory 14-day quarantine for travelers coming into the country.
Canada’s largest airline reported third-quarter revenue of C$757 million ($581 million), down 86% from a year earlier, and suffered an operating loss of C$785 million.
The company said it expects to burn between C$1.1 billion and C$1.3 billion in cash in the fourth quarter, slightly higher than in the third quarter, partly because of payments it must make to end leases with aircraft owners.
“The company continues to reduce its cost structure and capital commitments,” CIBC analyst Kevin Chiang said in a note. While the company’s cash burn forecast for the fourth quarter is “is a touch higher than we expected,” the overall second-half picture is better, he said.
Transport Minister Marc Garneau said Sunday the federal government is ready to start discussions with Canada’s major airlines on a bailout package. The government wants to see airlines bring back regional routes that were cut because of the pandemic.
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