Air Canada to Cut Capacity by 50% in Response to Coronavirus Outbreak

Air Canada announced it will cut capacity by approximately 50% in comparison to the same period in 2019 as it responds to a drop in demand due to the outbreak of Covid-19.

The adjustment includes a drop in capacity in the airline’s Pacific markets by 75% for April.

The airline is also reducing its 2013 order for 61 Boeing 737 Max aircraft by aa 737 Max 11 jets that were scheduled for delivery in 2023 and 2024.

“This amendment reflects the company’s evolving and long-term fleet planning requirements, and Air Canada intends to backfill this capacity,” the airline said in a statement.

Air Canada expects to mitigate 50% to 60% of the company’s revenue loss in the second quarter through significantly lower fuel prices, cost savings due to capacity reductions which would include fewer salaries, and a general cost-reduction program.

The carrier is suspending its share repurchase program, initiating a company-wide cost-reduction program, and deferring capital expenses.  It is also tapping into its $600 million revolving line of credit and attempting to raise additional liquidity in the coming weeks, it said.

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