Air Canada - President & CEO, Calin Rovinescu
President & CEO, Calin Rovinescu
Source: Bloomberg
  • Shares in embattled flight operator Air Canada (AC) fell more than 8 per cent this morning as COVID-19 continues its rampage on the aviation sector
  • The company has outlined a projected increase in net cash burn, from C$12 million to $14 million per day in the third quarter of 2020 to between $14 million and $16 million in the fourth
  • In an effort to maintain stability, the company is looking to raise $850 million by issuing 35.42 million Class A Variable Voting Shares at a price of $24.00 each
  • The COVID-19 pandemic has dealt a hefty blow over the course of this year, culminating in an 86 per cent decline in revenue for the third quarter
  • Air Canada is currently down 8.01 per cent to $24.23 per share

Shares in embattled flight operator Air Canada (AC) fell 8 per cent this morning as COVID-19 continues its rampage on the aviation sector.

The Montreal-based company warned yesterday of a projected increase in net cash burn, from C$12 million to $14 million per day in the third quarter of 2020 to between $14 million and $16 million per day in the fourth.

Air Canada said the increase comes from both lower than expected travel bookings in the first quarter of 2021 as well as the timing of cash receipts, which are now expected to be seen some time in the first half of next year.

The projection includes roughly $4 million per day in capital expenditures and $5 million per day in lease and debt service costs, but does not include cash proceeds from aircraft financing activities.

In an effort to maintain stability, the company is now looking to raise up to $850 million by issuing 35.42 million Class A Variable Voting Shares at a price of $24.00 each.

TD Securities, JP Morgan Securities Canada, Citigroup Global Markets Canada and Morgan Stanley Canada will act as joint book-running managers, and have been granted an option to purchase an additional 15 per cent of the shares on offer.

Air Canada says the proceeds will be used to increase its cash position, “thereby allowing for additional flexibility both from an operational standpoint and in the implementation of its planned mitigation and recovery measures in response to the COVID-19 pandemic.”

Like almost all aviation companies worldwide, the pandemic has dealt a hefty blow to Air Canada, driving an 86 per cent – or $4.7 billion – drop in revenue for the third quarter of the year.

The company’s shares were trading at a price of $50.00 at the start of the year, but have since fallen more than 50 per cent.

Air Canada is currently down 8.01 per cent to $24.23 per share at 10:34am EST.

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