Air Canada’s cargo revenue falls 27%

Air Canada today reported a record CA$21.8 billion ($16.2 billion) in operating revenue for 2023, an increase of 31.9% year over year, but cargo revenue fell 27% YoY to $685.6 million. [caption id="attachment_99014" align="alignright" width="300"] (Courtesy/Air Canada)[/caption] THE BIG PICTURE: The carrier attributed its cargo decline to soft volume and yield but said in its earnings report that increased freighter operations to Central and South America and to Europe partially offset the YoY decline. Air Canada’s 2023 cargo revenue decline was smaller than other major North American carriers: American Airlines ’ cargo revenue fell 34.1% YoY to $812 million; United Airlines ’ cargo revenue fell 31.1% YoY to $1.5 billion; and Delta Air Lines ’ cargo revenue fell 31% YoY to $723 million. BY THE NUMBERS: Air Canada saw $3.8 billion in fourth-quarter revenue, an increase of 10.8% YoY, but Q4 cargo revenue fell 15% YoY to $181 million. Adjusted EBITDA was $386.6 million, up 33.9% YoY. Cargo revenue by region in Q4 was: $18.5 million in Canada, down 16% YoY; $8.9 million in the United States, down 6.5% YoY; $77.2 million in the Atlantic, down 27.4% YoY; $48.2 million in the Pacific, down 2.7% YoY; and $28.2 million in other areas, up 9.9% YoY. Adjusted EBITDA for 2023 was $3 billion, up 173.3% YoY. In full-year 2023, cargo revenue by region was: $69.7 million in Canada, down 17.7% YoY; $33.4 million in the U.S., down 10.6% YoY; $320.5 million in the Atlantic, down 22.2% YoY; $164.7 million in the Pacific, down 45.8% YoY; and $97.2 million in other areas, down 4% YoY. WHAT THEY’RE SAYING: Air Canada’s 2023 revenue growth was carried by increased passenger volume. “We saw a 36% growth in passenger revenues, primarily stemming from a strong demand for travel in all markets and a better operating environment,” Mark Galardo , executive vice president of revenue and network planning, said on today’s earnings call. Despite decreased cargo revenue, Galardo expects the carrier to weather the storm and see improvement in 2024. “2023 had challenging market conditions [and] we’ve taken all the necessary measures to position ourselves to take advantage of the recovery,” Galardo said. “This includes strategically adjusting our freighter plan so that we can keep focusing on improving overall results for the long term and on maximizing cargo network value with our entire fleet. “As we eventually receive the 787-10 with larger cargo capacity, taking advantage of global cargo flows to our hubs will become an important lever to further diversifying revenue streams,” he added. At the end of 2023, Air Canada Cargo operated seven Boeing 767 freighters, up from three at the end of 2022. STATE OF PLAY: Air Canada has been in contract negotiations with its pilots, represented by the Air Line Pilots Association (ALPA) for more than seven months. “Today’s earnings report shows that Air Canada continues to grow, thanks in large part to the contributions Air Canada pilots made throughout this past holiday season and beyond,” First Officer Charlene Hudy , Air Canada ALPA Master Executive Council chair, said in an ALPA release. ALPA is seeking a pay increase to make pilots’ salaries comparable with those of pilots at U.S. airlines, which pay pilots 50% to 300% more than Canadian pilots are paid, ALPA said in its release. Air Canada noted in its earnings report that labor costs and relations remain a risk to financial success, as there is always a risk of labor conflicts and disruptions. “A new agreement with pilots will bring a change in wages and other cost-related items,” Chief Financial Officer John Di Bert said on today’s earnings call. “We have factored our best estimates into our guidance with a view of the Canadian pilot market and our desire to be a leading employer of choice for Canadian pilots.” FLASHBACK: In the past two years, Air Canada Cargo began operating freighter services to more than a dozen destinations, including: Toronto, Halifax and St. John’s in Canada; Miami, Atlanta and Dallas in the U.S.; Quito, Ecuador; Lima, Peru; San Juan, Puerto Rico; Mexico City and Guadalajara in Mexico; Bogota, Colombia; Madrid; Frankfurt, Germany; Basel, Switzerland; and Liege, Belgium. Air Canada also enhanced its interline cooperation with Emirates SkyCargo , adding booking options between the Americas and Southeast Asia and India through key European hubs, according to the Canadian carrier. FUTURE LOOK: Air Canada is setting its 2024 adjusted EBITDA expectations in the range of $2.7 billion to $3.1 billion. “A long-term perspective also allows us to see clearly past more immediate, temporary headwinds,” President and Chief Executive Michael Rousseau said on today’s earnings call. “Among these are economic uncertainty, the evolving regulatory environment, inflation and supply chain issues. We will manage these conditions, either because they will resolve themselves or it will simply become part of the environment in which all carriers operate.” MARKET REACTION: Shares of Air Canada ( OTCMKTS: ACDVF ) were down 6.61% from market open to $13.36 as of market close today. Air Canada has a market capitalization of $4.78 billion. Editor’s note: All amounts have been converted to U.S. dollars. Register here for Air Cargo Next ’s free webinar, “The Role of Drones in the Future of Air Cargo,” on Tuesday, March 26, at 11 a.m. ET.

Air Canada’s cargo revenue falls 27%

Carrier saw biggest cargo revenue drop, 45%, in Pacific region

Digital Pulse: Cargo.one adds SriLankan Cargo capacity to platform

6th Brazilian 737 Classic freighter operator emerges

Related Posts

ABX to launch A330P2F CMI service for Amazon

Amazon pauses 767 CMI arrangement with 21 Air following MIA crash

NTSB analyzes flight crew decision-making in 21 Air crash

6th Brazilian 737 Classic freighter operator emerges

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password