Air Canada 'encouraged' by government aid talks, easing quarantines after reporting loss

Air Canada's chief executive said on Friday he sees potential for the easing of crippling travel restrictions for summer travel, along with progress in government aid talks, after the carrier reported its biggest annual loss in at least 19 years due to COVID-19.

Air Canada shares rose 5% in morning trade, after the airline reported a net loss for 2020 of C$4.65 billion ($3.65 billion) compared with a profit of C$1.48 billion a year earlier.

Airlines have been among the hardest hit by the coronavirus crisis that has led people to avoid air travel.

Canadian carriers agreed in January to suspend winter travel to certain sun destinations through April 30 amid government fears that new strains of the virus would spread during spring break.

Air Canada Chief Executive Calin Rovinescu, who retires this month from the helm of the country's largest carrier, told analysts he expects an "improved dynamic" around the end of April over COVID-19 testing replacing some quarantines.

Canada has some of the world's toughest travel rules with a mandatory 14-day quarantine for arrivals and even some domestic restrictions.

"It will not be completely eliminated, but we do see the potential for it to go to a five-to-seven-day quarantine," Rovinescu said.

Asked by reporters about the CEO's comments, Canada's chief medical officer, Theresa Tam, said, "it's probably premature right now to know what is happening at the end of April."

Air Canada, which last year cut more than 50% of its workforce, or 20,000 jobs, is negotiating with the Liberal government for sector aid.

A day after Canada approved the carrier's purchase of rival Transat AT Inc, Rovinescu said discussions with the government have picked up pace and could lead to an outcome, although there were no assurances of a deal.

A government representative was not immediately available for comment.

Air Canada said it was seeking further cost reductions as demand for air travel remains weak.

The company said it plans to reduce its first-quarter capacity by about 85% compared with a year earlier, and projects quarterly net cash burn between C$1.35 billion and C$1.53 billion.