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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Air Canada    AC   CA0089118776

AIR CANADA

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Airlines plan furloughs; Air New Zealand sees smaller carrier in a year

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03/30/2020 | 10:30pm EDT
FILE PHOTO: An Air New Zealand aircraft passes a fuel truck on the tarmac of Auckland Airport during fuel shortages in New Zealand

Major global airlines projected layoffs, furloughs and capacity cuts over the next few months, with Air New Zealand on Tuesday warning it expected staffing levels to be 30% lower than it is now, due to the coronavirus pandemic.

Airlines have been rushing to shore up liquidity, reduce capital expenditure and cut costs to stay afloat amid the worst crisis to hit the global aviation industry.

Data firm OAG said the aviation industry was less than half the size it was in mid-January due to the rapid capacity cuts implemented by airlines around the world. Around 40% of the world's passenger jet fleet is now in storage, according to data from aviation firm Cirium.

Air New Zealand said it will lay off about 3,500 employees, nearly a third of its workforce, in the coming months, as the outbreak forced it to cancel nearly all flights.

The virus "has seen us go from having revenue of $5.8 billion to what is shaping up to be less than $500 million annually," Chief Executive Officer Greg Foran told staff in an email. "We expect that even in a year's time we will be at least 30% smaller than we are today."

New Zealand's national carrier, which employs 12,500 people, warned the layoffs estimate was a "conservative" assumption and the numbers could rise if the domestic lockdown and border restrictions were extended.

Air Canada will cut second-quarter capacity by 85%-90%, place about 15,200 unionized employees off duty and furlough about 1,300 managers, beginning on or about April 3.

Canada's largest airline said it is drawing down about C$1 billion ($706 million) in credit to bolster liquidity, while senior executives will forgo between 25%-50% of their salary and board members agreed to a 25% cut.

Low-cost U.S. carrier Spirit Airlines Inc is cancelling all flights to and from the New York region after U.S. officials warned against travel to the area because of the pandemic.

On Monday, Germany's Lufthansa said 27,000 of its staff would reduce hours, Britain's EasyJet PLC said it would lay off 4,000 UK-based cabin crew for two months, and low-cost carrier flydubai said it would reduce staff pay for three months.

U.S. airlines have been pushing the Treasury to release up to $58 billion in government grants and loans and had threatened to quickly start laying off tens of thousands of workers within days if they did not get a bailout.

The $2.2 trillion stimulus and assistance legislation signed into law last week by President Donald Trump gives passenger airlines $25 billion in cash assistance to cover payroll costs and $25 billion in loans, while cargo carriers are eligible for $4 billion in grants and $4 billion in loans.

Treasury said airlines should apply for grants by April 3.

American Airlines Holdings Inc intends to apply for up to $12 billion government aid, ensuring no involuntary layoffs or pay cuts in the next six months, executives said in a memo to employees.

"We certainly hope and expect that by that time, the virus will be contained, Americans will be flying again and we will be back to flying a full schedule," Chief Executive Doug Parker and President Robert Isom said in the memo.

In Australia, Virgin Australia Holdings Ltd said it was seeking a possible government loan of A$1.4 billion ($864 million) which could convert to equity under certain circumstances to help it weather the coronavirus crisis.

Virgin's shares are tightly controlled by foreign airlines including Singapore Airlines Ltd, Etihad Airways and Chinese conglomerate HNA Group that have also seen a sharp deterioration in revenues.

(Reporting by Jamie Freed in Sydney and Rachit Vats in Bengaluru; additional reporting by Tracy Rucinski in Chicago; Editing by Sriraj Kalluvila and Lincoln Feast.)

By Jamie Freed and Rachit Vats

Stocks mentioned in the article
ChangeLast1st jan.
AIR CANADA 4.48% 20.29 Delayed Quote.-59.97%
AIR NEW ZEALAND LIMITED 8.61% 1.64 End-of-day quote.-44.03%
AMERICAN AIRLINES GROUP INC. 11.18% 18.59 Delayed Quote.-41.64%
DEUTSCHE LUFTHANSA AG 5.48% 10.87 Delayed Quote.-37.20%
EASYJET PLC 6.99% 891.2 Delayed Quote.-41.52%
HOPE, INC. 0.08% 2624 End-of-day quote.-18.51%
LETS HOLDINGS GROUP CO., LTD. -2.43% 11.63 End-of-day quote.92.55%
NEXT 1.48% 5480 Delayed Quote.-23.06%
RISE, INC. 0.00% 24 End-of-day quote.-20.00%
SINGAPORE AIRLINES LIMITED -1.14% 4.33 End-of-day quote.-52.10%
VIRGIN AUSTRALIA HOLDINGS LIMITED 6.17% 0.086 End-of-day quote.-42.67%
WORLD CO., LTD. 0.49% 1638 End-of-day quote.-39.13%
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Financials
Sales 2020 7 944 M 5 913 M 5 913 M
Net income 2020 -3 224 M -2 399 M -2 399 M
Net Debt 2020 6 902 M 5 137 M 5 137 M
P/E ratio 2020 -1,91x
Yield 2020 -
Capitalization 5 760 M 4 297 M 4 287 M
EV / Sales 2019
EV / Sales 2020 1,59x
Nbr of Employees 33 000
Free-Float 70,4%
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Mean consensus OUTPERFORM
Number of Analysts 17
Average target price 25,93 CAD
Last Close Price 20,29 CAD
Spread / Highest target 82,4%
Spread / Average Target 27,8%
Spread / Lowest Target -6,36%
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Managers
NameTitle
Calin Rovinescu President, Chief Executive Officer & Director
Vagn Ove Sørensen Chairman
Benjamin M. Smith COO & President-Passenger Airlines
Michael Stewart Rousseau CFO & Deputy Chief Executive Officer
Catherine Dyer Chief Information Officer & Senior Vice President
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AIR CANADA-59.97%4 260
DELTA AIR LINES, INC.-44.63%20 568
RYANAIR HOLDINGS PLC-12.24%15 748
AIR CHINA LIMITED-31.61%12 348
UNITED AIRLINES HOLDINGS, INC.-55.61%11 356
CHINA EASTERN AIRLINES CORPORATION LIMITED-22.55%8 575