Air Canada suspends flights to Italy over coronavirus concerns

Paris / France - April 24, 2015: Air Canada Boeing 777-300ER C-FIVS passenger plane arrival and landing at Paris Charles de Gaulle AirportParis / France – April 24, 2015: Air Canada Boeing 777-300ER C-FIVS passenger plane arrival and landing at Paris Charles de Gaulle Airport

Air Canada is suspending all flights between Canada and Italy over concerns about the coronavirus outbreak, which has prompted the Italian government to put the entire country under lockdown. “Due to Italian government regulations and ongoing health and safety concerns, Air Canada will suspend its service between Canada and Italy as of March 11,” airline spokesperson Peter Fitzpatrick said in a statement. “Affected customers will be notified and offered travel options, including a full refund.”

Canada’s largest airline currently operates a daily flight to Rome, alternating from Toronto and Montreal. Fitzpatrick said that the last flight to Rome will depart Toronto on Tuesday evening, and return to Montreal on Wednesday. The airline said it will continue monitoring the situation, but said it currently plans on resuming service to Rome on May 1.

Italy was put under lockdown on Monday in an effort to combat the coronavirus as the number of cases swelled to more than 9,000 as of Monday evening. A total of 463 people have died of the virus in Italy. More than 109,500 people have been infected with coronavirus – known as COVID-19 – as of March 9.

Nearly 81,000 of those cases are in China. A total of 3,809 people have died of the virus globally. Airlines around the world have been cutting capacity and taking emergency measures in order to reduce costs as more travellers opt to stay home amid fears of the spreading virus, named COVID-19.

According to the International Air Transport Association (IATA), an industry group representing 290 airlines around the world including Air Canada and WestJet, passenger demand has fallen by double-digit percentages and traffic on some routes “has collapsed.” IATA said that in a worst-case scenario, where the virus continues to spread globally, passenger demand in Canada and the United States will fall by 10 per cent, resulting in a £21.1 billion loss in revenue. Globally, the continued spread of the virus could result in a 19 per cent decline in passenger demand, amounting to losses of £113 billion.

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On Tuesday, some analysts adjusted financial forecasts for Air Canada, citing the coronavirus outbreak impact on demand.

Although Air Canada has not provided formal guidance on how the coronavirus has impacted its financial situation, RBC Capital Markets analyst Walter Spracklin reduced 2020 revenue estimates by 15 per cent. He also lowered expectations for earnings before interest, tax, depreciation and amortization (EBITDA) by 20 per cent. “Our assumptions are that AC started to cut capacity in (the first quarter) and this will accelerate through the remainder of the year,” Spracklin wrote in a note to clients Tuesday.

National Bank Financial analyst Cameron Doerksen also said that while Air Canada is well positioned financially to weather the storm brought on by the coronavirus outbreak, it will see a severe decline in passenger demand.

“With many major companies suspending all non-essential business travel and large events being cancelled globally, not to mention a likely reduction in leisure travel demand, our baseline assumption is that Air Canada will see severe demand disruption in (the second quarter) with the impact lingering through the remainder of 2020,” Doerksen wrote in a note to clients Monday.

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References

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  3. ^ Yahoo Finance Canada Weekly Brief. (subscription.yahoo.net)

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