Air Canada’s cargo revenue falls 23.5% YoY

Air Canada reported CA$6.3 billion ($4.6 billion) in revenue for the third quarter of 2023, an increase of 19.2% year over year, but saw a 23.5% YoY decrease in cargo revenue to $154.8 million. [caption id="attachment_57136089" align="alignleft" width="300"] An Air Canada Cargo plane sits on the tarmac. (Photo/Air Canada Cargo)[/caption] THE BIG PICTURE: Air Canada’s earnings trends are similar to those reported by other carriers in Q3 and throughout the year. While overall revenue is up due to increased passenger demand, cargo revenue is down due to high capacity and low demand. “The summer is always a peak travel season in Canada,” Air Canada President and Chief Executive Michael Rousseau said in Monday’s earnings call. “We captured more than our share of traffic and flew in excess of 12.6 million customers in the period. This was a 10% increase year over year, which resulted in a historic system load factor of almost 90%.” BY THE NUMBERS: Air Canada saw the strongest cargo revenue in Q3 for its cross-Atlantic flights, according to the earnings report. Cargo revenue in Q3, broken down by geographical location, was: $15.8 million, down 15.4% YoY, for flights within Canada; $7.9 million, down 26.7% YoY, for flights across the Canada-U.S. border; $72 million, down 29.1% YoY, for cross-Atlantic flights, with origins and destinations principally in Europe, India, the Middle East and North Africa; $38.9 million, down 22.9% YoY, for cross-Pacific flights, with origins and destinations principally in Asia and Australia; and $20.2 million, down 3.4% YoY, for “other” flights, with origins and destinations principally in Central and South America, the Caribbean and Mexico. For the first nine months of 2023, Air Canada reported $12 billion in revenue, up 40.3% YoY. Additionally in the first nine months, cargo revenue was: $489.7 million, down 30.5% YoY, overall; $49.7 million, down 17.9% YoY, for flights within Canada; $23.8 million, down 13.2% YoY, for flights across the Canada-U.S. border; $236.2 million, down 20.2% YoY, for cross-Atlantic flights; $113.1 million, down 54.2% YoY, for cross-Pacific flights; and $67 million, down 8.8% YoY, for “other” flights. WHAT THEY’RE SAYING: While cargo revenue was down significantly in Q3, Air Canada executives look for a slight recovery in Q4 and in 2024. “Turning to cargo, revenues in the third quarter of 2023 declined [$47.5 million] from the third quarter of 2022, giving lower yields in all markets resulting from continued softness in demand,” Air Canada Executive Vice President Marc Barbeau said in the earnings call. “And although it’s relatively early, signals observed from the market demonstrate upticks in demand and in yield.” STATE OF PLAY: Air Canada is in negotiations with the Air Line Pilots Association (ALPA). Concurrent with Monday’s earnings call, ALPA picketed outside Pierre Elliott Trudeau International Airport (YUL). “Today’s earnings report clearly shows that Air Canada is back to pre-pandemic profits, thanks in large part to the contributions Air Canada pilots made throughout this past summer and beyond,” said First Officer Charlene Hudy , Air Canada ALPA Master Executive Council chair, in a statement released by ALPA. “Air Canada must invest in our pilot group so that we can retain and attract pilots at this global airline.” FLASHBACK: Rousseau recalled humanitarian efforts undertaken in Q3, including operating an extra flight to Yellowknife in the Northwest Territories to help evacuate residents from wildfires . Air Canada also helped evacuate Canadians from the Middle East this month following the outbreak of war between Israel and Hamas. “This month, we coordinated special flights with the government of Canada to bring Canadians home due to the conflict in the Middle East,” Rousseau said. “These flights take a tremendous amount of work and planning. … It is with great sadness we witness the terrible impact of the situation on civilians and sincerely hope for a peaceful resolution.” Air Canada has suspended flights to Tel Aviv’s Ben Gurion International Airport (TLV), but continues to monitor the situation, Barbeau said. MARKET REACTION: Shares of Air Canada (OTCMKTS: ACDVF) were up 1% from market open to $12.08 as of market close today. Air Canada has a market capitalization of $4.3 billion. Editor’s note: All amounts have been converted to U.S. dollars.

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