BNN today Air Canada’s CEO says that a new loyalty program and joint venture with Air China make the company stronger than ever.
The company’s chief executive Calin Rovinescu stopped short of calling the company ‘bankruptcy-proof’ in an interview with BNN Bloomberg on Monday, but hailed the two developments that will help the company’s balance sheet.
“We are much, much, much stronger than we’ve ever been,” Rovinescu told BNN Bloomberg’s Amanda Lang. “We have tremendous liquidity on our balance sheet, much more than $4.5 billion. We’ve solved, for all practical purposes, the pension problem that Air Canada had historically had by now having matched assets and liabilities going forward.”
“You never want to spike the ball in victory too early, but we have become a much more resilient, strong airline with a much stronger balance sheet.”
Rovinescu, who has helmed the company since 2009, was previously the architect of Air Canada’s restructuring and emergence from a 2003 bankruptcy filing.
“We’ve told the marketplace we expect something in the vicinity of $2-2.5 billion of net-present value to Air Canada as a result of the repatriation of our loyalty program,” Rovinescu said. “Our sense is that it puts us more directly in contact with our most valued frequent flyers.”
“The intermediation of it was a value-creation strategy for us nearly 20 years ago when the original discussions took place about the spinning out of the loyalty program. Now we’re in a totally different financial position,” he added.
The airline also plans a greater global footprint with its Air China joint venture, announced June 8. The code share arrangement is expected to increase co-operation on flights between the two countries, as well as connections for domestic flights on both sides.
“What generally these types of joint ventures bring is a tremendous amount of efficiency in the marketplace, making it possible to support other routes,” Rovinescu said.
“There’s also been a lot of competition from foreign carriers - and Chinese carriers in particular, over the last several years – and this joint venture will make us more competitive.”
Rovinescu added that greater access to large global markets like China should help the company’s major Canadian hubs - especially Toronto - reach more of the world’s largest markets.
“Part of our strategy in the last five years has been to evolve our three primary Canadian hubs – Toronto, Vancouver and Montreal - into global hubs and Toronto, in particular is the strongest of all our Canadian hubs. We built that by bringing traffic into Toronto and then out of Toronto globally,” Rovinescu said.
“That, of course, has been a fantastic market for us … That’s been a big source of revenue for us.”
The company’s improved financial position, Rovinescu says, allows the company to unlock significant value with the planned 2020 repatriation of its customer loyalty program from Aeroplan parent, Aimia.
https://www.bnnbloomberg.ca/rovinescu-says-loyalty-program-air-china-pact-make-air-canada-stronger-than-ever-1.1091030