Air Canada turning to ‘bench strength’ after COO poached

Bloomberg

Air Canada has a succession gap now that its No. 2 executive is leaving to run Europe’s largest airline. But the Canadian carrier has a deep management bench that will minimise disruption, say Cowen & Co. and RBC Capital Markets.
Chief Operating Officer Ben Smith will leave Air Canada on August 31 to take charge at Air France-KLM, the companies said. Smith was seen by analysts as a likely successor to Air Canada CEO Calin Rovinescu, who will turn 63 next month.
Smith is leaving Air Canada after the carrier reported records last year for sales and a broad measure of earnings. During a decade-long revamp under Rovinescu, the Montreal-based airline has added more fuel-efficient aircraft such as the Boeing Co. 787 Dreamliner, expanded the Rouge discount unit and cut costs with a 2016 debt financing.
“Ben will be missed, but Air Canada remains well positioned to drive profitability over the next several years,” Cowen’s Helane Becker said. “Air Canada has good bench strength to replace Ben with an internal candidate. We do not expect there will be much deviation from current plans.”
Air Canada fell 1.1 percent to C$23.60 in Toronto. Air Canada soared 89 percent last year following a gain of 34 percent in 2016.
Over the last few years, Smith spearheaded the expansion of Air Canada’s network to more than 200 destinations worldwide with a fleet of about 350 planes.
He also worked to develop Toronto’s Lester B. Pearson International Airport as the carrier’s main global hub under a so-called “sixth freedom” strategy designed to entice US passengers to fly through Canada on their way to Europe and Asia.
Smith’s departure is “a negative” for Air Canada in the near term, said Walter Spracklin, an analyst at RBC Capital Markets in Toronto.
“We had considered Mr. Smith to be the airline’s next CEO and therefore his departure leaves a gap in terms of succession,” Spracklin said.