Air Canada's Blockbuster Summer
North America's global champion turned in a very profitable third quarter, thanks to robust long-haul demand.
I have returned home from the Skift Aviation Forum, where I enjoyed meeting many of you and learning some gems from the executives I interviewed, including how much United spends annually on food ($2 billion), and how much Sun Country's highest-paid pilot made last year ($750,000). I also satiated my curiosity by asking aviation legend Steve Udvar-Hazy if he ever feels guilty about leasing an aircraft to an airline that he knows cannot afford it.1
We even made some news, as Southwest president Bob Jordan told me the airline may expand to Dallas/Fort Worth International Airport in 2025, since it’s out of room at Love Field.2 And red-eyes probably are coming, too. Think Herb Kelleher could have imagined such a day?
But more context about the Skift event will come another day. In this post, I want to update you on Air Canada’s earnings, because just like Jordan told me Southwest always listens to its customers, I take your feedback. And many of you have told me you like the earnings recaps, because we all know how annoying it is to track these calls. I’m happy to do it for you, because I’m a nerd.
It’s easier, frankly, to write about an airline like Air Canada, which has a cohesive, easy-to-understand strategy and is committed to seeing it through, than a whack-a-mole carrier like JetBlue, which always seems to be chasing the next big thing, like Mint, the Northeast Alliance, Europe, or that awful merger idea with Spirit. I don’t know if Air Canada’s success will last forever — external forces can bring down even the most disciplined management teams — but for now the airline is humming, despite considerable competition from domestic low-cost and ultra-low-cost airlines.
You'll recall Mark Galardo, executive vice president of network and revenue planning, told us in September that Canada has a massive mid-to-late summer travel peak, a bit later than in the United States. So we should not be surprised that Air Canada made money from July through September. But the numbers it released Monday are remarkable: Air Canada posted an operating margin of 22.3 percent on total revenues of $6.34 billion Canadian, or about $4.6 billion U.S.
No one is suggesting such results are sustainable year-round. But just like executives at Delta and United, the two other premium global network airlines in North America, Air Canada’s management said the demand remains steady heading into winter.
Let's take a look at some highlights of the earnings call.