BREXIT and other factors for lower profits for Canadian Airports
- Nikola Cvetkovic
- Mar 21, 2019
- 2 min read
Air Canada reported lower profits in the second quarter, even though revenues were up slightly, as concerns grow over terrorist attacks in Europe and the Brexit vote in the U.K.
Benjamin Smith, president of passenger airlines, noted that the airline is seeing lower demand especially in originating traffic from the U.K., after the Brexit decision, where voters opted to leave the European Union in June of 2016.
He also specifically cited recent terrorism attacks in Belgium, France and Turkey as also having an impact on travel.
Air Canada, the biggest airline in Canada, has started to turn its sights from Europe, and focus on our closest neighbor, the United States. Their goal; to draw more US traveler to fly through Canadian airports in an effort to increase their revenue stream. The airline has added 10 new routes for traveling to the US.
Smith noted that the airline is using its discount Rouge brand on routes considered more leisure than business, where costs are lower.
“We are not deploying capacity in an irrational way. We are looking for margin expansion,” he said. “And we have the resilience to hold a stronger market position.”
It is also facing more competition from low-cost carriers like Wow Air, which is flying from Toronto to Europe, via a stop in Iceland, though Smith said it is still a “limited amount.”
In the next quarter, the airline will move some of its planes to flights over the Pacific, where demand is stronger. It is also cancelling its Toronto to Rio de Janeiro route after the Summer Olympics due to weak demand in Brazil, Argentina and Chile.
Smith added the airline won’t fly routes that don’t make economic sense — but would consider returning if demand picks up.
The airline reported $3.1 billion in revenues in this year’s second quarter, up $61 million from the same period last year — as it felt competitive pressure on flights over the Atlantic and in weak domestic markets such as Western Canada, due to low oil prices.
