Air Canada drops after cutting summer flights as delays drag

Bloomberg

Air Canada shares dropped after the company said that it will make “meaningful” reductions to its summer flight schedule in order to quickly bring passenger volumes down to a manageable level.
Canada’s largest air carrier fell 6%, recovering slightly from an 8.8% tumble in intraday trading — its biggest drop since early March — as investors balked at its post-pandemic operational disruptions. Air Canada said it plans to cut 154 flights per day, on average, for the next two months; the carrier operates about 1,000 daily flights.
“This surge in travel has created unprecedented and unforeseen strains on all aspects of the global aviation system,” Michael Rousseau, chief executive officer of Air Canada, said.
The changes will primarily reduce the frequency of smaller flights in the evening and late at night on domestic and US routes. But the airline will also suspend flights between Montreal and three cities — Pittsburgh, Baltimore, and Kelowna — and between Toronto and Fort McMurray.
The Toronto and Montreal hubs will be the most affected, while international flights will remain mostly unchanged.
Scotiabank analyst Konark Gupta said that unlike US carriers, the key factor behind Air Canada’s cancellations is not a labour shortage, but instead is the result of a lack of airport workers, including security and customs officers.
He reduced his third quarter estimates slightly for the carrier, but said that airlines should still benefit from robust demand for international travel.
Air Canada “is not the only airline facing these issues, which are already well known to the market given the US airlines had been canceling flights, while raising revenue guidance,” Gupta said.