For the second year running, Air Canada has posted a massive net first-quarter operating loss. This year the carrier has reported a CA$1.304 billion loss (CA$3.90 per diluted share) compared to a first-quarter operating loss of CA$1.049 billion (CA$4.00 per diluted share) in 2020.
In the first quarter of 2021, on a capacity reduction of 82%, operating expenses of CA$1.778 billion decreased CA $2.377 billion (57%) from the first quarter in 2020. First-quarter 2021 net cash flows used in operating activities of CA$888 million deteriorated by CA$868 million from the first quarter 2020 on lower operating results as a consequence of the continued impact of the COVID-19 pandemic and associated travel restrictions.
Net cash burn in the first quarter of 2021 stood at CA$1.274 billion, roughly CA$14 million per day, on average, which was below management expectations of between CA$15 to CA$17 million per day. Air Canada’s net cash burn in the first quarter of 2021 included CA$2 million per day in net capital expenditures as well as CA$4 million per day in lease and debt service costs. A combination of higher than anticipated operating earnings, favourable timing on working capital, and deferred settlement of aircraft lease returns was responsible for the lower-than-anticipated cash burn. The carrier has projected a net cash burn of between CA$1.180 billion and CA$1.370 billion for the second quarter of 2021, which includes CA$2 million per day in capital expenditures, net of financing, and CA$5 million per day in lease and debt service costs.
Compared to the first quarter of 2021, the second quarter also includes approximately CA$1 million per day in higher scheduled debt principal repayments and an increase in end-of-lease payments due to more aircraft being returned to lessors. The net cash burn projection excludes the amount of anticipated eligible refunds of non-refundable fares being processed following to the alteration to Air Canada’s refund policy which was announced on April 12, 2021 for flights impacted by the COVID-19 pandemic.
