Air Canada says Paris Olympics are hurting sales, pilots react to Q2 results

Air Canada says the 47 per cent decline in its quarterly profit is linked to a softening demand in key international markets, including France, which some travellers are avoiding this summer due to the Olympic Games.

“Core Europe, markets like France, Germany, where there’s a significant point-of-sale Europe component, that was quite weak,” said Mark Galardo, Air Canada’s head of revenue and network planning, in an analyst call yesterday, as reported by the Canadian Press.

“The Olympics and a bit of the Euro soccer tournament all contributed to some of those declines.”

READ MORE: Air Canada reports lower Q2 profit as excess capacity, competition hurt pricing

The Olympics are typically viewed as a boon for tourism, but it appears many travellers avoided the City of Light this season as parts of central Paris, where famous landmarks have been transformed into sporting venues, are closed off for the duration of the games.

In Paris, where you’d think hotels would see a record-breaking summer, local reports have claimed that occupancy rates, in the weeks leading up to the Games, were down compared to previous years.

The idea that the masses are avoiding Paris this summer has been shared by other airlines.

Last month, France’s flag carrier Air France implied that its international customers were shunning Paris during the Games, noting a high number of empty seats on its planes.

Solid, but soft results 

Air Canada, which is the official carrier of Team Canada, reported operating revenue of $5.5 billion for the second quarter, a two per cent rise from the same period in 2023.

"Our second-quarter results were solid, although they did not achieve our internal expectations," CEO Michael Rousseau told analysts on a conference call Wednesday.

The airline has increased flights this year, so passenger revenue per available seat mile was down more than four per cent. 

READ MORE: Air Canada reports lower Q2 profit as excess capacity, competition hurt pricing

North American airlines are struggling to uphold prices as the rush to capture the strong demand for summer travel left some carriers with extra capacity, which has led to a wave of discounts to fill seats.

Last month, Air Canada cut its full-year core profit forecast, citing a lower yield environment and competition on international routes.

The updated outlook reflected lesser-than-expected load factors for the second half of the year, the airline said at the time.

READ MORE: On Location - Bleachers, scaffolding & lots of fences – Paris prepares for the Summer Olympics

The airline’s updated guidance also accounts for sustained supply chain pressures, evolving market conditions and ongoing geopolitical issues.

Operating expenses that were nine per cent above last year's helped account for the plunge, as the cost of jet fuel and labour rose, Air Canada’s Chief Financial Officer John Di Bert said Wednesday.

Despite company growth, Air Canada's post-COVID rebound remains incomplete four and a half years after travel restrictions crippled aviation.

"We’re still not back to 2019 levels in terms of scale and the size of the airline," Di Bert said.

Possible pilot strike nears

Looking ahead, there are other costs Air Canada will have to consider. The airline has yet to finalize a new contract with the union that represents its pilots, which might add new financial pressures.

The Air Line Pilots Association, which represents Air Canada’s pilots, issued a statement on Wednesday, reacting to the airline’s Q2 results.

Air Canada pilots have been in contract negotiations with their employer since June 2023. They are currently in federal conciliation, which will end on August 26, at which time a 21-day cooling-off period will begin.

If a new contract is not reached between the two parties by the end of the cooling-off period, the pilots, who have a strike ballot set to close on August 22, will be in a legal strike position as soon as September 17, 2024.

“We want to reach an agreement with Air Canada to avert a strike. However, management continues to force us closer to a strike position by not listening to our needs at the negotiating table regarding fair compensation, respectable retirement benefits, and quality-of-life improvements,” said F/O Charlene Hudy, chair of the Air Canada ALPA Master Executive Council, in a statement.

“Air Canada pilots continue to fall behind our industry peers in total compensation who make significantly more for flying the same aircraft on the same routes. This disparity is unacceptable and needs to be addressed. Failing to improve our pilots’ wages and working conditions will negatively impact management’s ability to attract and retain pilots, which will negatively impact Air Canada’s future growth plans.”

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