Air Canada

Thank you, Meryl [Ph]. Good morning, everyone, and thank you for joining us on our first quarter call.

With me this morning are Michael Rousseau, our President and Chief Executive Officer; Amos Kazzaz our Executive Vice President and Chief Financial Officer; Lucie Guillemette, our Executive Vice President and Chief Commercial Officer; and Craig Landry, our Executive Vice President of Operations. On today's call, Michael will begin by providing an overview of the quarter and the impact of the COVID-19 pandemic and government imposed travel restrictions and our positioning for recovery.

Lucie will touch on travel demand, cargo, and loyalty. And Amos will provide you with additional details on our cash, liquidity and financial performance before turning it back to Mike and then opening the call for questions from equity analysts followed by questions from fixed-income analysts.

Before we get started, please note that certain statements made on this call are forward-looking within the meaning of applicable securities laws. This call includes references to non-GAAP measures.

Please refer to our first quarter press release and MD&A for important cautionary statements relating to forward-looking information and for reconciliations of non-GAAP measures to GAAP results. I will now turn it over to Mike.

Great. Thank you Kathy.

And good morning to everyone. Thank you for joining us on our first quarter call.

It’s a pleasure to speak to everyone today. Although this is my first call as President and Chief Executive Officer of Air Canada, I know all of you very well.

Along with Amos and the entire management team I look forward to continuing and further developing the transparent and positive relationship we have. Also, I look forward to our next investor day hopefully before the end of 2021, where we can better showcase both the actions we’ve already taken and the plans we will be implementing to further strengthen our company and our brand.

As all of you know, we have built a resilient airline with a goal of being sustainably profitable over the long term. That resilience is enabling us to rebuild our company and serves as a foundation to realize our ambition to remain a leading global carrier and rise higher than ever in our in the post pandemic world.

All of us have witnessed the strength and evolution of our culture, which has been exceedingly tested and is carrying us through the prices. Our employees have shown unbelievable resourcefulness, courage, and tenacity.

I thank them for their professionalism and all the challenges they could change brilliantly overcome. I assure them the analyst community as well as our investors and other stakeholders that brighter skies are ahead of for us in the near future.

At present however, as with all carriers in Canada, the pandemic continues to weigh heavily on Air Canada results. We reported first quarter negative EBITDA of CAD763 million compared to CAD71 million in the same quarter last year.

For comparison, you may recall that last year COVID did not impact the entire quarter. The pandemic only had a minimal impact in February, that became more pronounced the March before making sell fully felt in April of 2020.

On a GAAP basis, we recorded an operating loss of CAD1.049 billion in the first quarter of 2021. In the quarter, net cash burn amounted to CAD1.274 billion, or approximately CAD14 million per day on average, more than previously projected.

Net cash burn progressively improved throughout the quarter. Although moderately given the on-going impact of the pandemic on travel demand, including advanced ticket sales.

We had almost CAD6.6 billion in liquidity at the end of March. Subsequent to this in April, we finalized a financial package with the Government of Canada primarily comprised of fully repayable loans, which provides access to up to CAD5.9 billion in additional liquidity, if required.

Beyond serving as a layer of insurance, the government package also enabled us to better resolve customer refunds for non-refundable tickets. The refund process with customers is going very well and we are doing regular outreach to ensure everyone has the necessary information to request a refund.

For our customers, safety is our top priority. We were therefore very pleased with our COVID-19 CleanCare+ Biosafety Program earned us at APEX’s Diamond Status Certification.

We were recognized for achieving hospital grade levels of biosecurity across multiple Astra touchpoints. The certification program aims to create a global standard for health and safety measures focused on airline customers.

Prejudice, prejudice and saving extends to the wellness of our employees as well. We have launched a number of workplace testing and tracing initiatives.

We partnered with the [Indiscernible] ADM, which is the Montreal airport and [Indiscernible] to open two vaccination clinics for our Quebec based employees and their immediate family members near our Montreal headquarters. And most recently, we announced that we're partnering with the Ontario government and the region appeal to open a clinic facilitating vaccinations later this month for eligible employees and Peele region residents, including immediate family members.

In the further side of our on-going commitment to employees we were also named one of Montreal's top employer for the eighth time, and one of Canada's best diversity employers for the sixth consecutive year. This shows that despite the severe disruption or other pandemic, we are maintaining our strong employee culture.

Because a collaborative, diverse and inclusive culture is not only right, but it is also essential to our recovery and future success. We continue to pursue various revenue opportunities.

Air Canada cargo has now completed more than 7500 all cargo flights since March of last year. And over 2000 this quarter alone.

We are building our transformed Aeroplan program and Lucie will touch on both of these later on the call. We know ESG is becoming a prime separation and differentiator of companies.

To attain sustainability, we are committing to a very ambitious Climate Action Plan and aiming for a target of net zero greenhouse gas emissions by 2050, which will also support Canada's leadership position on climate change. And to our emission reductions plans is renewal of our narrow body fleet.

To this end, we took delivery of four Airbus 220 aircraft in the first quarter. The A220 is highly fuel efficient, producing significant less greenhouse gas emissions than the older aircraft that replaces.

It is also extremely popular with customers offering unmatched comfort for an aircraft of that size. Our investment in the A220 is also an example of our strategic approach going forward, we intend to remain both diligent on costs, and also plan to take smart risks and make strategic investments to position us for the opportunities we see ahead.

In this way, we will build upon our numerous competitive advantages we already have, including a widely recognized and powerful brand, strong safety culture, renewed fleet, new truck, new core technologies, a growing hardware division, and a newly transformed Aeroplan program to name a few. With these and a renewed and enhanced focus on the customer experience, we are poised to emerge strongly for the pandemic and complete compete successfully with the best in the world.

With that, I'll turn it over to Lucie.

Thank you, Mike. And good morning, everyone.

To start, I would also like to acknowledge the dedication and resilience of our teams across the airline. We've been testing and we've never imagined in our culture and commitment to our customers have been on display throughout the pandemic.

Our people embody our core values and continue to represent the very best of Air Canada. As new demand in the first quarter was significantly impacted by the introduction of new layers of travel restriction, these include requiring all incoming passengers to Canada to provide a negative COVID test prior to boarding and the implementation of mandatory testing upon arrival with an up to three day hotel quarantine at the travelers expense while they wait for their test results.

These are in addition to the travel restrictions and quarantine measures that have been in place in Canada since the pandemic began. Coinciding with the announcement of this new set of restrictions in the quarter, we agreed to immediately suspend all flights to some destinations at the request of and to support the Government of Canada and its efforts to curb the spread of COVID-19.

Combined effects of the additional travel restriction, the cancellation of sun [Ph] flying, the resurgence of COVID cases in Canada and around the world and the emergence of variants of the virus around the globe resulted in an 88% decrease in first quarter passenger revenue, compared to the first quarter of 2020. We upgraded 82% less capacity than the first quarter into 2020 and 84% less when compared to the first quarter of 2019.

Looking to the second quarter, we plan to operate approximately twice the capacity we operated in the same quarter of 2020. This represents a decrease of 84% compared to the second quarter of 2019.

As we've done since the onset of the pandemic, we will continue to dynamically adjust capacity as the situation evolves. Looking ahead, we are optimistic about the continued vaccine rollout in Canada and around the world.

The guidance supporting vaccinated travel from health agencies including the CDC, and the European Medicines Agency and the increased adoption and acceptance of vaccine passports. We're confident that the domestic market will lead our recovery and we have seen relative demand strength in Canada despite interprovincial restrictions and lockdown measures.

Specifically domestic transcontinental long haul markets continue to show the greatest strength followed by gains in key insurance markets. Once a critical mass of Canadians is vaccinated and a number of COVID cases begin to flatten, which the government's modeling predicts could be this summer we anticipate restrictions and lockdown measures will begin to be lifted.

We expect this will result in an increase of domestic travel demand. We of course monitor demand trends very closely in other markets and we believe Canada will observe similar traffic patterns as those of you observed in the U.S.

once restrictions levies. Looking internationally, our transatlantic services have been our strongest performing markets outside of Canada led predominantly by resilience, visiting trends and traveling or VFR traffic, as well as U.S.

traffic connecting to leisure destinations in Europe. We expect these segment to continue to show strength as the health situation improves globally, Air Canada travel becomes more widely accepted and restrictions continue to ease.

We continue to seize VFR market opportunities leveraging strong community and cultural ties between certain countries in Canada. These include markets that we have traditionally served such as France, the UAE, and Morocco, as well as new countries added to our network such as Qatar and Egypt.

Although these markets have been negatively impacted by the mandatory hotel quarantine in Canada, early indications of that demand remains resilient throughout the summer. Our new non-stop service from Toronto to Doha, in partnership with Qatar Airways has allowed us to access additional VFR markets that we do not serve directly and which have a large Canadian community.

Our new non-stop service to Cairo from Montreal launching in June will be supported by the gradual rebuild of our transport network, as we have seen strengthen the U.S. traffic connecting to Egypt.

Similar to our strategy with Doha we will look to capture markets beyond Cairo through our future partnership with Egypt Air. Our network diversity has been on full display over the course of the pandemic.

And through a concerted effort has been one of our competitive advantages. Our ability to tap into U.S.

transit traffic illustrates this and will help accelerate our recovery in the short and medium term. Lately, we suspended our services to India following the government of Canada's balance flight in the country until at least May 23.

We plan on resuming service as soon as it is safe and we're committed to do so. Of course India remains an important and strategic market for us.

Looking further ahead, we are seeing strong leader demand and in some markets through the winter as Canadians begin to eagerly anticipate their first holiday since the onset of the pandemic. Demand from Canada is especially strong to Mexico, The Dominican Republic, Hawaii and Florida.

Now, as part of the government's financial package, we've made several commitments, including customer refunds, and re instating service to regional community. Even before this package was finalized, we had already refunded more than CAD1.2 billion to eligible customers.

In line with our commitment to government and our customers, in May April, we began offering eligible customers who purchase non-refundable fares the option review [Ph] refund. We support our travel agency partners who have also been significantly impacted by this crisis.

We are not recalling agency sales commission for refunding tickets. In addition, we have revised our booking policies for all future travel with more options for customers when a flight is cancelled or rescheduled.

This policy change will provide certainty and flexibility so customers can book their future travel with greater confidence. We're also progressing on our commitment to reinstate access to regional communities, where service was suspended due to COVID-19 pandemic either directly through our network or new interline agreements with third party carriers.

Looking to Aeroplan's performance in the first quarter, member engagement and activity continued to show resiliency. Unsurprisingly, total points sold remained down year-over-year, driven primarily by reduced points issued on air and also partnership.

O'Brien credit cards bank continues to show upside from the 2020 lows, and was approximately 80% of last year's level for the first quarter of 2021. However, card spend performance has not improved from Q4 2020, as the most recent wave of COVID-19 lockdown has stunted the recent spending recovery trend.

Card holders remain engaged overall with card retention rates in line with historical norms. When we designed the program, our members told us they wanted more opportunities to earn and redeem points in their everyday life.

In March, we announced the first of a kind partnership with Starbucks Canada, allowing members to earn and redeem Aeroplan points while enjoying their favorite Starbucks beverages and snacks. This new partnership is another example of our commitment to rewarding all travelers, both frequent and occasional.

And it has been very well received with a number of members linking their Aeroplan and Starbucks account and outperforming our launch target. While we remain highly selective in who we add to our partner roster, we are actively engaged in conversation to bring more opportunities for our members to engage with the program.

As Aeroplan we launch in November, we are seeing strong customer take up of our points plus cash combination payment options, as well as rent fair upsell. These are two new features available when redeeming for flight rewards, and additional evidence that the enhanced program provides more choice and value for our members, while also improving the profitability of flight rewards.

Finally, as part of our on-going commitment to deliver value and flexibility to our most loyal members, we announced that we are automatically extending Aeroplan elite status for an additional year until the end of 2022. As well as extended the validity of prior reward vouchers.

These changes are some of the many ways we're demonstrating our commitment to welcoming our members back on board. Early in the pandemic, we were quick to pivot to cargo operation, which continued to deliver excellent results to the hard work of our current routine.

Our global revenue of CAD281 million in the first quarter represented an increase of CAD133 million, or 89%, compared to the same quarter in 2020, and an increase in 59%, versus the same quarter in 2019. By the end of 2021, we plan to have two Boeing 767 freighters operating on international cargo routes.

The freighters represent an opportunity to continue building on the success of our cargo only flights and are an important part of our recovery in long term growth. Freighter operations will compliment our passenger network and provide long term stability and growth for our large cargo customers, including freight forwarders, who require reliable air freight capacity year round.

We will optimize our capacity in routes using a combination of freighter aircraft, or reconfigured cabin loaded aircraft and embed space in our passenger network. In March, we launched our e-commerce platform Rivo is programming cooperation with local retailers takes advantage of our domestic passenger network, facilitating the end to end distribution of e-commerce goods across Canada, and offers logistics and delivery solutions for online retailers that are simply faster and easy-to-use than what is available to Canadian online shoppers today.

This is exciting for us and illustrates our ability to innovate while also leveraging our existing assets to capture unique revenue opportunity. Our simplified modern and efficiency is well structured to capture network opportunity once we begin to gradually rebuild.

Our Boeing 787 aircraft remains the cornerstone of our international team, serving the hotdog routes in select core markets that make up our current skeleton network. Within North America, we continue to take deliveries of the Airbus 220 and welcome more of our Boeing 737 MAX fleet back into service.

These aircraft represents the backbone of our fleet and will enable the redevelopment of our network effectively serving domestic transporters and international markets from a pretty strong Canadian hub with a consistent on board product. Throughout the pandemic we've demonstrated industry leadership and developing our CleanCare Plus program and are undertaking several medical collaborations to continue advancing biosafety across the customer journey and our business.

This enhanced focus on health and biosafety is going to remain a core component of our customer experience and our efforts throughout the pandemic positions us in the forefront of the industry. In addition, investments we made in technology prior to the pandemic, including our new reservation system and our transport were to correct are now fully implemented.

These announcements are going to transform how we interact with our customers throughout our recovery and well into the future. With the foundational elements in place, including key investments we have made in our fleet, our product and our customer experience, as well as our ability to see unique revenue opportunity to Aeroplan, cargo and a new market, we are primed for recovery.

And all of us at Air Canada look forward to welcoming our customers back on board. With that I will pass it on to Amos.

Thank you, Lucie and good morning everyone. I would also like to echo Mike and Lucie’s comments and thank our employees for their dedication and hard work during these extremely challenging times.

I'll start by touching on our costs. Operating expenses were well controlled in the quarter.

On a capacity reduction of 82%, operating expenses decreased almost CAD2.4 billion, or 27% from the same quarter last year. This reflected the lower volume of flying, given the COVID-19 pandemic and the significant progress being made on managing variable costs and reducing fixed expenses.

You may recall that we completed a cost reduction and capital reduction and deferral program in 2020 as part of our COVID-19 mitigation and recovery plan, which reached CAD1.7 billion. Although we are no longer reporting on this program, we continue to seek additional opportunities for cost reduction and cash preservation.

An example of this was a recent revision to our capacity purchase agreement with Jazz. This revised agreement is expected to deliver CAD400 million in cost reductions over 15 years.

As a part of the revised agreement, the operations of the Embraer 175 aircraft are transformed to Jazz and Jazz becomes the exclusive Air Canada Express operator, allowing us to achieve operational efficiencies and reduce operating costs and cash burn. Furthermore, of course we remove all 19-A300 aircraft from the Jazz fleet by the end of this year, which will contribute to reducing operating costs.

Turning to certain major expense categories in the quarter beginning with wages and salaries and benefits, they declined CAD268 million, or 34% in the first quarter on a lower level of employees, following the major management and frontline workforce reductions effective in 2020. Aircraft Maintenance expense decreased CAD120 million or 44% from the first quarter of 2020 on a lower volume of maintenance activity due to reduce flying year-over-year and the retirement of certain older aircraft from the fleet.

A decrease in maintenance provisions resulting from the updated end of leased cost estimates in anticipation of returning aircraft to less stores was also a factor. We recorded special items amounting to a net operating expense reduction of CAD127 million.

This included a net benefit of CAD163 million related to the Canada emergency wage subsidy or CEWS program, which has supported the airline retaining a workforce in excess of capacity levels. We plan to continue to participate in this program, which is expected to be extended to September 2021, subject to meeting eligibility requirements.

Special items also included an impairment charge of CAD20 million pertaining to the ongoing adjustments related to the fleet retirement program, as well as a CAD12.5 million fee related to the termination of Air Canada's arrangement agreement with transact. Turning to liquidity; in the first quarter of 2021 we continue to take actions to support our liquidity position.

In January we announced the partial exercise of an over allotment option in connection with an offering of Air Canada shares completed in December. This resulted in net proceeds of CAD60 million.

In March, we concluded a committed security facility totaling US $475 million to finance the purchase of the remaining 15 Airbus A220 aircraft, scheduled for delivery in 2021 and 2022. We also extended our US $600 million and CAD200 million revolving credit facilities by one year to April 2024 and December 2023, respectively.

At the end of March, unrestricted liquidity amounted to nearly CAD6.6 billion. In April, we substantially increased our reliable [ph] liquidity through a series of debt and equity financing agreements with the Government of Canada.

In addition to the gross proceeds of CAD500 million from an equity investment, the financial package allows us to access up to CAD5.4 billion in debt financing through fully repayable loans that we would draw down if and as required, comprise of a five-year one and a half billion secured revolving credit facility, maturing in April 2026, which is secured on a first lien basis by the assets of Aeroplan Inc, and certain Air Canada assets relating to Aeroplan. Unsecured loans of CAD2.475 billion in the form of three non-revolving credit facilities of CAD825 million each maturing in April 2026, April 2027 and April 2028, respectively, and a seven year CAD1.4 billion unsecured credit facility for refunds of non-refundable tickets.

Note that the refunds will generally be cash neutral to Air Canada's liquidity position. Our unencumbered asset pool amount is approximately CAD1.7 billion at the end of the quarter.

This pool excludes the value of Aeroplan, Air Canada vacations and Air Canada cargo. As part of our on-going efforts to maintain adequate liquidity levels, additional financing arrangements continue to be assessed and may be pursued.

Moving on to cash burn, in the first quarter of 2021, our net cash burn was CAD1.274 billion or approximately CAD14 million per day on average, lower than that what was previously anticipated. This included CAD2 million per day and net capital expenditures, and CAD4 million per day and lease and debt service costs.

The improvement in net cash burn from what we previously projected was attributable to a combination of higher than anticipated operating earnings, favorable timing on working capital and the deferred settlement of aircraft lease returns. Looking ahead at the second quarter, we estimate net cash burn and between CAD13 million to CAD15 million per day on average.

This net cash burn projection includes CAD2 million per day in capital expenditures, net financing, and CAD5 million per day in lease and debt service costs. Compared to the first quarter, second quarter 2021 includes approximately CAD1 million per day and higher scheduled debt principal repayments, an increase in end of lease payments due to more aircraft being returned to lead source and reflect the continuing impact of the pandemic on travel demand.

Given the on-going impact of the pandemic on earnings and advanced ticket sales, we don't expect net cash burn to meaningfully improve until governments communicate and implement a reopening plan for Canada. For the second quarter, our net cash burn projection excludes the amount of expected eligible refunds of non-refundable fares being processed pursuant to the change in the refund policy we announced on April 12.

We estimate that the maximum exposure to cash refunds for all eligible customers holding non-refundable tickets is approximately CAD2 billion. While it’s difficult to predict the number of customers who will request a cash refund for non-refundable tickets, based on past experience and our current observations and the change in refund policy we expect cash refunds to be substantially less than CAD2 billion as certain customers will choose to retain their travel voucher.

Lastly, turning to pensions. The aggregate solvency surplus in our Canadian defined pension plans was CAD3 billion at the beginning of this year, an increase of CAD400 million for the pension solvency surplus in these plans on January 1, 2020.

Before I turn it back to Mike, I would like to offer once again, a heartfelt thank you to our employees for their unwavering efforts. I am confident that better times are ahead of us.

I would also like to acknowledge the upcoming retirements of Kathy Murphy will be leaving us at the end of this month after 39 years of loyal and dedicated service. I know that many of you have had the pleasure of working with Kathy over the last several years.

Please join us in wishing her best in her retirement. I will now turn it over to Mike.

Thank you Amos. As you heard today and have seen in our response to COVID-19 throughout the past year, Air Canada is effectively managing through the pandemic.

We are doing this not only from a defensive perspective, but also making strategic investments that will improve our relative competitiveness. This is largely due to the prudent measures we took long before COVID onset, we spent a decade creating a resilient airline with a strong can do culture.

This included accumulating large liquidity cushion in case of a prolonged business disruption. As well, we acted very quickly early in a pandemic, we took difficult and decisive actions to cut costs and reduce our network.

For those who continue to fly, we put in place effective biosafety measures moving well ahead of government on such things as requirements for passengers to wear a mask and for pre-flight temperature checks. We initiated third party research with McMaster HealthLabs and the GTA to find the most effective use of testing and quarantine to limit COVID spread.

And we have partnered with scientific organizations such as Cleveland Clinic and with the industry through the creative destruction labs to share and apply the most current scientific knowledge. We understand and acknowledge that Canada is in the middle of a very difficult third wave.

However, there is cautious optimism given the increasing vaccination rate, that we are nearing an inflection point in a pandemic. And as a result, we believe Canada must plan next steps.

It is time to develop and communicate a reopening plan for international travel to and from Canada. After over 14 months of restrictions, Canadians who we know are eager to travel, want and deserve clear guidelines.

It wants to know when they will be able to travel internationally again, and under what protocols. They are seeing other countries articulate clear and safe plans, and they want to hear what Canada's plan will be.

For these reasons, we along with others have been consulting regularly with the federal government, as well as expert advisory panels here and worldwide to provide recommendations and advice on how to safely open up travel. For example, the current mandatory hotel quarantine for rivals has proven ineffective, it should be eliminated.

In addition, based on the experience of public health authorities in most G7 countries, we believe that with a vaccination program not now underway nationally, a modified and more relevant approach to testing and quarantine would keep Canadians safe while allowing our country to reopen for international travel. Apart from our company's needs or satisfying the desires of individuals to reconnect with family and friends, the government Canada must act because air transport is a central pillar in the nation's infrastructure.

A multicultural trading nation like Canada needs a healthy aviation sector. Prior to COVID-19, Air Canada by itself had an almost 2% GDP economic footprint.

It directly supported almost 40,000 high paying jobs, plus another 190,000 jobs indirectly in the critical aerospace sector. For all these reasons we just spoke about, Canada needs to develop and communicate and international travel reopening plan.

Air Canada working with many travel partners will continue to provide relevant input and push for these next steps as we safely emerge from the pandemic. Thank you.

And we are now ready for questions.

Thanks very much. And good morning, and congratulations Kathy on your retirement.

I just had a question about the, I guess the cash refunds. And I wonder if you can maybe just talk a little bit about I guess the take up so far what you've seen as far as people asking for cash or for sticking with their vouchers or you've also had a fairly attractive I guess Aeroplan option as well.

So what's the, what's been the, what have you seen so far as far as the actual cash refunds?

Okay, morning, Cameron, its Amos. Thanks for dialing in.

So we're actually bit surprised as take up has been much slower than, than anticipated given, of course, all of the news we have seen and all of the commentary as such. So right now, it's, a slow uptake.

We're continuing to actively reach out to customers proactively reminding them that they have tickets that are eligible for refunds, been working with the trades, working with the travel agency communities and the like. So we continue to push but we're sort of surprised again, that the slow take up on that.

Okay, that's helpful. And just secondly, for me, I just wonder if you can discuss a little bit what you're seeing for bookings maybe later in the year, when I think most people would sort of assume that they might be able to travel internationally again, are you seeing any, you know, significant increases there as far as interest, I guess, later in this year, maybe even into the early part of 2022?

Yes, hi it’s Lucie. We definitely are in fact, on separate graphs, Q4 Q1, from what we're observing in Q3, but certainly for the fourth and first quarter of 2022, we're definitely seeing a strong base for bookings to some destinations.

So the Caribbean, Hawaii, Florida, mainly, for definitely received customers that, assuming that by the time we reach Q4 of the first quarter that travel restrictions will be somewhat eased. So definitely, we're seeing a good appetite there for bookings.

And looking at this third quarter, as you know, much of our effort as we move forward is in the CSR and leisure space. So we are seeing, some good update for our international markets in the summer peak, and also a good base and very encouraging and attractive bookings, as it pertains to our sixth freedom traffic.

So traffic originating out of the U.S. So definitely as we look further down, besides you are targeted and the progress.

Great, I appreciate it. Thanks very much.

Good morning. Lucie, can you I appreciate the comparison you made to your expectation that demand will pick up like it did in the U.S.

once vaccines roll out but how does the seasonal difference or in the timing of that factor into that comment like if restrictions ease as if we’re going back to school, for example, does that just push out that demand recovery, even though the trajectory might be the same as does it push out the timing of it maybe into the early part of next year? If that vaccine progress occurs, later in the summer going into the fall?

I think the first, it's an interesting comment, because obviously we observe trends in other markets, to inform us as well, as in terms of what can happen in Canada with some of the restrictions ease. There's no doubt that our view is the summer peak, as we know, it will probably push out a little bit into September on October, traditionally, July and August, obviously, are peak months, but we do assume that some of that will push out a little bit into September and October.

And then with respect to corporate travel, which is obviously, one, one area that we're watching very, very closely that I think will be probably something that we'll start to see in Q3, late Q3, with this Labor Day. We don't believe that we'll see any of that in the closer term.

But there's no doubt from a seasonal point of view, we'll be well poised to capture the strong ledger demand in the fourth quarter for the sound, the sound roots. But certainly, Europe for sure, will push into September, October, and onward.

I got you. And then and on that point, my follow up is, is there any data points you can share with us, Lucie on corporate?

Obviously at this point, we're all just talking about intentions to travel. But can you give us can you give us any data points that you've quantified through survey work or the like, around how you expect corporate to spool up?

Thank you.

Corporate, yes. So basically, we see some SME demand, in the current environment.

But our assumption is really, that the corporate demand will most likely return in that in the September timeframe, post Labor Day. And obviously, we’ll be largest for us in the domestic sector.

But basically, our assumption is, we’ll be in that end of September window.

And that's, Lucie that’s based on and Honduras based on constant discussions with our largest corporate customers, which we're constantly in contact with.

Okay, thank you both.

Hey, good morning, everyone. I'm just curious.

If summer demand comes back, and if it's strong and the kind of restrictions are lifted? How much could you in a ramp, your capacity backup in the third and fourth quarter kind of relative to 2019 levels?

I think Savi it's Mike, I'll start with that. So we're spending a lot of time running different scenarios as to bringing back aircraft and brings back people to.

And again to Lucie's earlier comment, we are certainly monitoring other markets U.S. is obviously ahead of us as to how fast employments moved up over the last couple of months.

And so we are prepared certainly to, to deal with that type of step function in capacity increases in a fairly short order. We've kept all our pilots recent and with rotation, and they're still on staff.

We're certainly keeping all our planes fully operational, although some of them are parked in the desert as most airlines have. But, but we're certainly ready to add capacity fairly quickly.

And also Savi to a large degree, we're also spending a lot of time with our partners, airports, government agencies to ensure that they can also step up to capacity to ensure that we provide the best possible customer experience for that returning customer.

I mean, theoretically, you could get back to 100% if that was necessary. Was that kind of upper limit?

I don't think so. It depends what timeframe, but I think it's going to take us a little longer to get back to 100%.

We, we would love to have that challenge. We don't think based on based on trends and other countries, like U.S., obviously, which is watching closely.

We don't see that happening.

And then if I might for a second question, just if you look a little bit medium to longer term and kind of going off a little bit on the 100 question on business, but if you look at your fleet requirements and then kind of the configuration of the new aircraft coming in, and perhaps some of the cost enhancements that you've done, like how much of a loss of the premium traffic can the business model handle and still generate, those margins that you were heading towards kind of pre-crisis? And I'm guessing this is more mostly kind of premium business demand that might be might be lost in in terms of the number of trips people take?

It's a fascinating question, something we've been talking about internally quite a bit. And again, I'm not going to debate whether all this traffic comes back over a period of time, and versus x percent.

There are a number of studies out there that indicate, a range of numbers, basically. But, we're reasonable.

And certainly, we've downsized our fleet. And so that does take into consideration that there'll be less traffic overall.

And as we said, before, and on these calls, we know, we've taken a fairly defensive position on our fleet, and we will go search for new planes, whether new or least, to fill gaps, if required. So I think we're well positioned to be flexible on the business side.

We do although believe business will come back, and we are seeing indications in out of the U.S., and certainly speaking to our corporate customers, that there is a pent up demand for business as well, frankly, and, and that we do see it recovering maybe certainly a little bit later than VFR. But certainly we do see strong indications that it will recover.

I'll turn it over Lucie to provide some more color.

Yes. When you look at it from our fleet perspective, we're actually in a in a better position, given the LOPA that we have.

So if you look at the size of our cabin, not only just on the narrow body fleet, but on our wide body fleet, we actually have the best load, but to be able to deal with the fact that this demand might take a little bit longer to recover. In fact, in your, if we go back to 2018, 2019 in the peak of the strength we were actually looking at scenarios where, perhaps we would need to relook at our LOPA in the premium cabins on our wide body airplanes.

So the fact that we are sitting with the fleet, we are now looking at what they had for us, we're actually in a pretty good position. And, needless to say, in some of these VFR markets that we talked about, there is opportunity as well for premium traffic for leisure demand.

And, things that we have been really focused on in the past that we are certainly going to focus on in the future. So there may be a different mix.

But certainly the LOPA we have, we're actually a very good position. And that's, both narrow body and wide-body fleet.

That's a good point. Thank you.

Thanks, folks. And Kathy, let me echo my congratulations on your on your retirement.

I guess moving on, just thinking about the tourism and leisure business now that the transaction is gone. When you think about Rouge, when it was originally created, there was a lot of thoughts around, creating a standalone, dedicated travel arm.

But you've also pulled down a lot of capacity there. How do we think about the future of rouge with trends that probably still as a competitor?

And how do you integrate that with the rest of the company?

Well, certainly, there's definitely a future for rouge here. As it stands, our plans are on the narrow body seats.

So basically, for the leisure markets to reinstate service in September. And of course, the fact that we retired or that, should the move the 767 to cargo, we don't have the 767 plan for rouge on the international market.

But there are definitely in the current network. And certainly when we look at the future, that type of traffic that we're going to look to capture, there's definitely an opportunity for rouge and it's fully our intention to keep it as part of our of our mix.

And Chris just to add to that, again, the focus will be on the narrow body into the Caribbean and some markets, but we will also continue to move passengers through major hubs in Europe and working with our partners as well. So we think we can capture both of those customer elements without the six seven program in place.

Okay, then there's maybe a little bit of a longer term question but you know, looking at your CapEx forecast, it's kind of interesting to see kind of 2425 it's essentially maintenance capital with that. But, going back and thinking about fleet and where you may want to go, I think about, I was looking at the traffic data from around SARS, back in 2000, to 2003, and 2004, and the capacity came back really, really fast with the demand.

So how do we think about your ability or your thought process around adding additional capacity? And I'm thinking about this from, maybe having the reset, and the thoughts around free cash flow and the balance on, what you can do with the existing fleet?

And what would what would be some of the indicators that we should be thinking about before you want to start adding additional aircraft?

Well, another very interesting question on long term planning. And like I said before, I think we've got a fair amount of flexibility.

We have, we're basically through our leafleting program, both for wide bodies and narrow bodies, we're not that far away from getting the 220s in place and the MAXs in place, and we will have a unbelievably efficient fleet to access the pandemic. We have options available on MAX and on 220s.

We have, and certainly we can go source plains, once we see indicators of growth beyond our expectations. I mean our current fleet does have does have certainly have the ability to cover the majority of ASMs.

We moved in 2019, as you saw, probably from the fleet table, Chris, that we will probably keep our 390s a little bit longer than we expect. That's kind of our swing fleet as well, that provides us again, additional flexibility, because most of those planes are owned.

And so we can continue with those for several years and take advantage of, of capacity growing faster than what we've anticipated, which again, like I said earlier is very nice problem to have. So I think we've done a pretty good job covering ourselves for growth beyond our expectations, but certainly also for even further fine tuning and potentially getting rid of the 319s if the market doesn't come back as fast as we want it to.

That gives us the opportunity, Chris, to then step into potentially a new types of aircraft like the 321LRs, for example, that we that we that we like that have certainly have a potentially have a place in the Air Canada's fleet as we go forward. So I think positioning for that flexibility was critical from our perspective.

And it gives us a little bit of time to look carefully as to what plane type best fits the evolving business model that we will, that we'll experience over the next couple years.

Just a quick update. If we're thinking about, kind of getting back to call it, 80% to 90% of 2019 levels, what should we be thinking about this maintenance CapEx for the company?

I think, maintenance CapEx, and this would include everything non aircraft, start with non-aircraft, $500 $600 million a year, a lot of that to do with technology, we certainly see technology as a critical enabler in improving our customer experience as we go forward. And, and our efficiencies as we go forward.

And then, from a playing perspective, assuming growth of a couple percent or improvements in ESG, another $500 $600 million on top of that, basically, either through leased or through acquisition.

Allright. That's helpful.

Thanks, folks.

Thank you. Good morning.

I'm just want to ask a question regarding and Mike your commentary on sort of hopes, I guess for government communication. I think we're quite interesting.

And I'm just wondering, have you got any sense from the government on what level of new cases what vaccination percentage hospital capacity or any other factors would allow for changes to travel restrictions? Are you kind of literally going to show up one day and find out they're about to change or can you kind of look out, make your own projections on some of these factors and then say, okay, we think we're going to get to this point, at this time and therefore here is when we kind of start ramping.

The short answer to that is we don't have a direct sign from the Canadian government as to what triggers are reopening. Then I think you've read in the media recently, some indications of vaccination levels, for example, being critical, honestly.

And our discussions with Canadian government are also discussing, exploring that situation, but also making sure that we can communicate well before that to customers, that those restrictions are coming off, basically, so customers can book and we can call back employees, and we can bring back aircraft, so we're ready for that type of situation. And we looked at other countries, like, for example, the U.K.

issued a reopening plan back in mid-April, which has a number of dates, which could move depending on the situation, depending on a third wave or, or increases in, in case loads. But we're advocating with our Canadian government, that's something that we should look at, to provide clarity as we go forward, basically.

We saw, we just saw recently with, with Saskatchewan that provided some, some step process. And although that doesn't deal directly with travel, I think that's a good first step from our perspective.

And so we are spending along with, with other key travel partners, a fair amount of time with the Canadian government having positive discussions on that topic, and how to move forward.

Okay, thank you. My next question is around pricing.

Maybe for Lucie here I guess, how are you thinking about the pricing decision going forward, as demand comes back, and I'm thinking about how desperate some people may be to travel and willing to pay virtually any fare, versus the need for stimulating some confidence in maybe other travellers with lower fares?

I think it’s a magical question, but there's a couple of things here. There's no doubt that as we start our recovery here, the general elements, that we work with.

For example, how we have potential to yield up based on load factors, that kind of thing, those, this is a little bit more difficult than this in this kind of environment. From a pricing standpoint, you're right, in some markets, we will definitely see a surge in demand where this demand is perhaps less price sensitive.

And, we will definitely do what we need to do there to hold to hold the pricing. But in the leisure space, we expect that the environment will be far more competitive.

And also, given the fact that the load factors will, will build over time. What gives me confidence is that, number one we have the right tools to be able to manage that.

And because, a lot of these flows will come from different points of sales, different countries. So we'll fill out, really good tools to help us do that.

So we can actually manage the yield to the best of our ability. And we also have different levers at our disposal, like branded fares, for example, even some opportunities with the Aeroplan program to be able to hold on to the pricing where we can.

So the fact that we have different levers gives me confidence that we're going to be able to manage the different market segments. But there's no doubt in this kind of environment that we tried to rebuild all carriers.

So particularly Canadian carriers have a lower load factor that you can expect the environment to be competitive. But certainly when there are peak travel periods, and we have the ability to do that, we will absolutely do that.

Okay, thank you. And then just my final question, and I'm sure you can't quantify this too, too, specifically, but I'm just wondering if you could characterize your booking assumption that's embedded in your cash burn guidance for the second quarter.

I don't know whether it's relative to Q1 used directionally or if you expect much of an improvement as the quarter progresses, just any kind of color you could provide on the booking assumption?

Yes, Tim it’s Amos. It’s pretty much the same, not much improvement, given the third wave that we've seen here.

The additional lock downs and certainly when you look at the stoppage of service to India, so all those played a factor in in looking at the cash flow numbers.

Okay, thank you very much.

Thank you. Good morning, and congrats on your retirement, Kathy and all the best.

So a couple of questions first, how much of capacity can you ramp up? You know, given potentially snap back and demand zones restriction or ease?

How much capacity can you ramp up quickly with the current resources that you have, especially in them, the crews and pilots? And then if you can give us kind of an idea of how you manage a bottleneck, like how much ahead of time when you need to start recalling and retraining in order to kind of ramp up the demand after that.

So that is Mike. Good morning.

Let's start with what we currently have in place. As you can see from our financial statements, we're running up, load factors that are fairly low.

So right away, there's a hedge in place on existing on the existing infrastructure that we could increase the load factor. So without recalling anybody, frankly, they are, or without bringing back any more planes.

That provides as a cushion to some degree to then manage next step to what it steps upto. And as I was saying earlier, we've been closely following how the U.S.

employments have been increasing by 10% to 20%, over a month or two months, basically. And certainly within that timeframe, we're very, very comfortable in bringing back people and bring back planes to satisfy the booking curve, that would step up at that point in time.

So again, kind of a two-step process at a very high level. We have existing capacity right now.

And then that provides us adequate time to bring back based on the booking curves, people and in planes, basically. To the earlier question, no way, we could probably read back 100% over that period of time.

But certainly, we do not expect that to happen. And if the U.S.

is an example, we can easily bring back capacity in those increments.

Okay. And how do you kind of think about the time advanced time you need to bring back resources like codes and pilots with you?

Yes, I mean, pilots right now we have laid off pilots or furlough pilots, so they're still on our payroll and, and being going through training, basically, and rotating. So that is not a constraint, from our perspective.

They can bring back flight attendants, is a fairly straightforward process, you recall them, and you put them through a couple of days of training to reacquaint them with the rule. So those are two quick, critical roles.

And then of course, as I said earlier, the planes are being well maintained in there, where they're being parked right now. And so bringing them back is not going to be a constraining factor either.

Okay, my second question on the liquidity and the balance sheet side. So you've ended March at 6.5.

And you ultimately have this agreement with the government have got kind of 500 million of equity and then CAD1.5 billion with low interest loans. Going immediately I mean, it looks like with potentially demand starting to recover a little bit later this year and into 2022.

That should be kind of good liquidity cushion. I just wanted to get your thoughts on two things.

One, is the kind of financing going forward more towards mean kind of thee debt maturity management, and are you comfortable with the kind of split that if equity that you did was the most recent financing was the Canadian government?

Yes, Fadi, morning, it's Amos. Yes, we're certainly the government liquidity package provides, good liquidity and, and insurance for us as we go forward.

But, we'll continue to look at our capital structure from managing the debt maturities and trying to continue to push those out as the opportunities arise. And then I think, as we continue to look at managing liquidity and balance sheet going forward.

At this point, as we look at any other opportunities you know we’ll continue to assess and monitor the market and if there's something that makes sense to step into or to take advantage of that would help the structure we will do some.

Fadi, certainly our focus will be more on debt. We have to step into the equity markets a couple of times over the last 12 months.

That was a conscious effort to manage our long term balance sheet. But certainly, the debt markets are available to us for future financing if required.

Great, thank you. That’s helpful.

Thanks. And good morning, everyone.

And I echo my congrats for Kathy. So maybe first to begin with perhaps going out, at this time, if you were to rank your five segments in terms of capacity recovery, whenever that happens to later this year, where would you put them?

I heard some destinations and leisure markets being the top but I guess if we were to look at the segments, how would you rank those please?

On the five different segments, in terms of first to recover. I think certainly domestic is number one.

You know, it wasn't really depends on restrictions. But we -- U.S.

maybe number two along with some markets transatlantic roughly the same time. I think last probably Asia.

Okay, that makes sense. Fine.

Thanks. And then on the Q2, cash burn.

So the guidance is kind of steady versus Q1. And I think you guys are calling for debt lease service clause to being up as well as I think end of lease payment results going up in Q2.

However, CapEx themes were up capacity going up slightly versus Q1, how should we think about revenue and costs, and the rate subsidy? I'm like, do they do you kind of assume them as relatively steady versus Q1, which is kind of the underlying assumption for flattish cash burn in Q1?

And then do you also assume that the $400 million debt maturity that is due was due in April, that is excluded from the cash?

So a couple of points there. Good morning Konark.

Yes, for the most part, it is really steady for what we see here in the first quarter is we don't see much in terms of demand given again, the third wave that we're experiencing in Canada, and the other capacity reduction has been taken into account. So all that sort of is factored into the cash burn.

Same with the the Q's subsidy and also essentially more of the same through the third quarter. As you know, the Q's program was extended, not yet fully approved through September, but subject to eligibility requirements, we'll be protecting through that through the quarter.

The debt that we paid back in mid-April is excluded from the cash burn, now to the $400 million, unsecured U.S. that we just paid back.

Okay, thanks. Thanks, and then, I think though it's kind of a long picture.

And it's, again, kind of beating the dead horse on the long term outlook, which, it's very hard to predict. I guess, at this point, but based on what you know, Mike, today including the scheduled lifting off of restrictions across various markets be it India or some destinations or U.S.

transporter. What is your stance on the timing of cash breakeven?

I know it's a hard question. But just, if you were to pinpoint to a time frame, where would you put that and assuming you're, you're excluding lump sum maturities and refunds that will be funded the government loan?

Listen, Konark it’s a fair question. And we have spent an incredible amount of time just not planning from an operational perspective to bring back capacity, but also from a financial perspective.

We've done an incredible job, taking out costs and lowering that breakeven point as we talked about before. Again, a lot it all depends on the government lifting restrictions and which markets they open up.

Certainly the U.S. and Transatlantic are very, very important to us, given our exposure to those markets, that those markets open up, towards the summer or later the summer, than the breakeven point will happen quicker, basically.

But in I hate to answer your question with a conditional, but it has to be that way, frankly, is that we do know and certainly we will let the market know once restrictions are, are open as to when we believe we can, we can breakeven. But it's, again, depending on how fast market comes back, and kind of what type what are the reductions and restrictions, and was speaking to the Canadian government about different protocols for vaccinated passengers versus unvaccinated passengers.

And so there's so many different components involved with this, that we've factored in. But again, we're comfortable that once restrictions are open, and countries are also open up to Canada, which is the other situation that we'll be able to express the market fairly quickly when we should breakeven?

Yes, that's fair point, Mike. And just to that point, if I can clarify, if you have any sense as to a lot of people and for the younger people between 18 and 40, they are about to get their first vaccine dose shortly and probably the second dose in September or so.

So, like, is it fair to expect that, like, the late Q4 timeframe is the first period when you might be the beginning of the start of the recovery in Asian markets, at least based on this nation so are Europe, International or India or wherever?

We think we'll see a little bit earlier than that. As Lucie said, I think probably late summer.

We're not going to probably get the summer peak this year, in July, August, as Lucie said, we're probably going to be pushed to the right a bit. But we will start seeing and again, as you know in this business events, bookings are critical.

And so as we, as these restrictions get lifted, and a plan is put in place by the Canadian government and communicated to the Canadians, we will see bookings go up. And that will be our first indication of our ability to break even.

And what point we will break even frankly. And so, again, as we've said today, Q1 was Q1 and Q2 is not going to be much different.

But we've got a lot of work to do in Q2 to work with the Canadian government to ensure that we can communicate a reopening plan and so that we can start seeing event bookings come in. And then we can provide better clarity to the market as to where the breakeven point is.

Appreciate the time, thank you.

Yes. Good morning, everybody.

And thanks for taking my questions. Two quick ones for me.

First off, now that the trends that acquisition is off the table, have you seen sort of any adjustments in competitors body language?

No, I mean, Trent that’s still shut down. For the most part, I don't think they're opening up until a month from now roughly late June.

So we have really not all of you, they're still open for bookings. But we have not seen any change in behavior.

Okay, great. And just one other quick question.

I know, as part of the agreement with the Canadian government that, you'll be servicing some specific routes, but with respect to domestic route openings or closings, because of the agreement, is there any extra layer of consideration or any sort of approval you might need beyond just Canadian aviation regulators for other domestic capacity adjustments?

No, no, Stephen. No, we're fully able to operate whichever way we feel best that suits our objectives.

We did commit to the Canadian government that we would reopen number of small regional routes, either through interline or direct, and we'll put those in place in due course, basically, but other than that, there is no other limitation or obligation for us on our operations.

Okay, appreciate it. And congrats to you, Kathy.

And Amos, thank you again for your time. I'm looking forward to Tuesday.

Hi, good morning. Thanks for taking my question.

And congrats Kathy on your retirement, all the best. I know I personally just thank you for all the help through the years here.

Maybe Mike, is the If I can ask the question on corporate customers. I know you don't want to debate know how much comes back if it all comes back, but I'm interested in knowing, maybe how your conversations have evolved over the past six to nine months, in terms of, conversations would have had maybe middle of last year in terms of maybe how much permanent decline in demand, some of your corporate customers, customers might have thought, nine months ago versus maybe what they're thinking, today, as you know, as we've been locked at home for the better part of 14 months here in Canada.

In the India discussions, in fact that we've had with corporate, corporate Canada, and probably one of the biggest indicators for them was, how they approached work from home. And many corporations, in their corporate travel policies basically indicated that as long as their employees were working from home, they were, really restricted in terms of in terms of their ability to travel, for purposes of business.

What we're seeing now, though, is there's definitely not the type for corporate Canada to return to travel. The biggest deterrent, of course, as we know, in my talks about, easing and restrictions, but from a corporate perspective, it's really the quarantine requirements.

That obviously is the biggest, the biggest deterrent. But I think, based on the indications that we're getting from corporate Canada, the only thing that may be a little bit different in the future than what we've known in the past, is same day travel.

So, some are thinking that perhaps this is one area, we should expect to see a little bit less of corporate travel, but certainly from an international standpoint, trying to order, the intention is to return. But basically, it has to come with, it has to come with the easing of restrictions, and also obviously has to come with their own, internal policies in terms of work.

This is why Kevin Air Canada has been a leader in at home testing, as well, which we think will is part of the solution as well. I mean, with the rapid testing now being authorized for at home use in Ontario, for example, one of our largest markets, we're using that ourselves, for people to come into work, come into our warehouses, come into our distribution centers.

And it's proving to be very, very effective, and more and more companies are stepping into that protocol to try and get. And again, this is a, we can debate this for a while on the hybrid office environment as we go forward.

But most believe that there will be a hybrid office, that people will come back to work, and there'll be, there'll be some protocols for some period of time. And the rapid testing at home is, is a very, very inexpensive and an appropriate way to, to get people back into their offices for some period some part of the week.

That makes sense. And that's helpful color.

Related to my second question, it feels like the Canadian airline industry and yourselves included, obviously have been, have been asking the Canadian government for some time now to kind of, I guess, remove these blanket travel restrictions and replace them with – space testing. I don't get the sense we've made any real progress there be interesting to know, if you think this is something or are you hearing anything from the government that suggests that they're looking at transitioning these restrictions towards more of a sign typic based one?

Or does this just come down to vaccines and the faster we get vaccinated, these restrictions get eliminated?

Yes, I think there's a couple elements to that. Kevin.

I mean, I think there's no doubt the Canadian government is very focused on this. They know how important travel is to the economic environment.

I know, certainly, the third wave has made it more difficult to do anything at this point in time. But there is tremendous work being done behind the scenes to prepare.

There is an expert panel coming out potentially with some recommendations on borders, and quarantines in the next several weeks, which we think will be important as well. As also, again, there is a fair amount of work being done to prepare.

And all we're saying today is that we will continue to push to for the Canadian government to communicate that plan as we go forward. But again, I can assure you, I'm sure everyone on the call that there is a fair amount of work being done behind the scenes.

Just on your net zero plan by 2050. Can you remind me are you evaluating sustainable aviation fuels right now?

Is that something you'll be looking at?

Kevin, absolutely. I mean, we'll be more transparent with our plan but again SAF will be a big piece of the solution to get to net zero.

And also 20% by 2030, as well, well, it's all theirs, we have an interim target as well, for emissions. And so technology is a big issue.

And we're speaking to many companies, including Airbus, and Boeing and GE, about new technology coming down the pipe. SAF, we're speaking to several companies in Canada and, and in the U.S.

market. And we're all speaking to the Canadian government about help and supporting SAFs investment, we think that is a critical element going forward.

And so those two components are going to be very, very important. And once we announced our, our climate goals, back in mid-March, our team here, we're in the data with a number of phone calls from potential partners.

And it's opened up the opened up our eyes as to what potential, what’s potentially available, just not in Canada, but around the world. And so we've been a leader in this area, and will continue to be a leader in this area.

And I think there's some very exciting things that will be developed over the next couple of years, both from SAF and from a technology perspective, that will certainly allow us to get to our net zero by 2050.

Excellent. That's that's great color.

Again, congrats, Kathy. And have a great weekend, everybody.

And thanks very much operator. I just have one question with respect to the cargo business as you think about the future of that when passenger business sort of gets back up to speed?

How are you thinking about cargo at that point in time. I know you've got the two 767s that'll be coming in from ATSC, later this year after the conversion.

But is that, is that going to be a big part of the business going forward? Is there like a new target for that?

Could you maybe, put some meat on that bone.

Hi, Helane. So, first, if you look at the progress here in the cargo front, so from now until year end, of course, we have the 777 and the 330s, which, of course, are enabling us to take on all this -- only capacity, then we move to bringing in the 767 and we should have two of them converted by year-end.

And as we revamped we ramp up the passenger demand, of course, we'll have access to, incremental deadly space that's going to come from that, we started some of our some of our network. In addition to that, we also launched the Rivo, the e-commerce platform.

So as we progressed over time, certainly we're going to continue to explore the opportunities that are open, for us here on the cargo front. But certainly, as we ramp up the 767 freighters, there's no doubt that over the course of the next few years, cargo will become a more meaningful business for us.

Absolutely, no doubt.

Great. Thanks very much, Lucie.

And actually congratulations to everybody, Kathy on your retirement and Amos and Mike on your first conference call as you're in your new respective roles.

Thank you, Helane.

Have a nice weekend.

Yes, all the best to everyone as well. I'd like to go forward again, into the future here and, and go under the premise that, vaccines result in a very significant surge in travel in the early days.

And my question is, what can you do in the event that that happens, and it outpaces the capacity that you have in the timeline that you're able to bring it on? And I know there was talk on price.

And I think Lucie said yet though that that is your market dependent on what other what your competitors are doing. So I'm wondering if there's anything else that you could do and in one particular area, could you for example, and how difficult is it if demand is very high and you reconfigure your aircraft either to add more seats or take out some business class seats and replace with Premium Economy just curious as to what else there might be that you could do in the near term to be able to handle if we do get a surge in, in leisure driven demand, not business demand, but leisure driven demand?

Yes, like I said, a nice problem to have. We really can't change LOPA, it takes a year, year and a half to change LOPA baseline, plane.

But what we could do, frankly, is, again, we've got planes sitting in the desert, we can bring those back fairly quickly, as I spoke about before, but that wasn't enough. We could certainly take the 11 planes we've converted to cargo, all cargo, the 330s and the 777s and convert them back.

And that would take a little bit of time. But certainly, we could do that fairly, fairly quickly.

Again, Walter we’ll certainly see this coming in bookings. And like I said earlier, it gives us adequate time to bring back the number of planes and certain number of people, and given the fact that we've kept our pilots recent, and is the advantage to us, as the market comes back.

And Mike, if indeed the business segment, as you see it through your forward bookings, and industry studies is not coming back, particularly intra company travel, and that kind of thing. You could though look at a even though it's a longer period to put into place reconfiguring for the new normal.

I mean, is that a fair…

[Indiscernible] Lucie's earlier point, we think we're configured fairly nicely for business class right now. But taking out a row of business allows the third row of business class and making that into, four or six economy seats or premium economy, we can do that fairly quickly, as well.

And we spoke about the premium cabin a bit earlier when we talked about the LOPA, but we got to get on here that we also have a very low buffer for premium economies around. So if we were to see, some longer term recovery, let's say, in international premium markets, we were still very well equipped with, the investments we've made from a PY perspective.

So from that, from that point of view, and even within North America, if you look at this 737 for example, we have the ideal product for us to be able to grow into this business demand, and the ability to, to recover pretty quickly, know, within the diverse fleet that we have. And needless to say, in this environment, we have a multitude of scenarios in terms of what the demand might look like.

There’s the one obviously, that we that we rolled into the schedule, closer to departure. But we are looking at the future and have many scenarios, that we share with that with Greg and his team to make sure that if the demand was to perform a little bit different than what our initial assumptions were, that we wouldn't be able to react.

So…

That's why we can say with confidence to you and others that in virtually every scenario, we think we've got the flexibility to ramp up fairly quickly, basically.

And on that note, with the aircraft that the preferred aircraft that you mentioned, that you have your eye on in that, in that rebounding environment, is there any risk at all here that, your competitors are going to have the same eye on the same aircraft? That prices maybe bid up on those?

Either, straight from the OEM or otherwise? And is there anything I know you're obviously a more in a financial constraints capacity?

But is there anything that you can do through leveraging your relationship with the OEMs right now to kind of ready yourself for that potential opportunity, so that you're not left, kind of facing with significantly higher equipment costs or lack of availability of new ones?

The quick answer to that is yes. I mean, we've got very strong relationships with the OEMs and with many less ORS as well.

So as you know, our fleet always been about half leased and have owned and so we maintain very strong relationships with both OEMs unless or so. I -- know, Walter, without getting into what we're, what we're contemplating.

Certainly we can leverage those relationships.

Okay, that's encouraging. My last question is just a flat out CASM question in the new normal when you're back to 2019 levels, when you have a fleet, that the new fleet that would bring you there.

Right, so when you've added aircraft to bring yourself up to 2019 levels, how materially lower do you think your CASM will be? Compared to..?

Like I said, Walter, in my opening comments, we hope to have an investor day before the end of the year. And we'll provide that – we’ll provide that visibility at that point in time.

Okay. Fair enough.

Good luck, everyone.

Hey, good morning, everybody. You addressed before that your demand trends may follow the U.S.

precedent subject to seasonality, which actually makes me wonder, as it relates to U.S. President if it extends to how you treat the government credit facilities as well.

What we're seeing here is airlines are issuing capital market deals in order to extricate themselves from, the government handcuffs. You talked about markets being open before, is this an option for Air Canada?

Or are the terms you'd get not necessarily better also anything with the government fine print that would preclude you from doing a loyalty deal? You mentioned that the programs encumbered?

Yes. We did.

We did pledge Aeroplan to the government as part of this secured package. But there is no deterrent for us to take that to market later this year.

Or next year if we sold [Indiscernible]. And, and there's no doubt like, like we said, in the press release, Jamie, we government financing Xero for insurance purposes.

We'd like to eventually replace it with capital markets, if required. And as Amos, I think hinted we'll be exploring that later this year, basically.

Okay, just wanted to confirm. And then a longer term question.

It's an obvious question these days, how to post COVID management's behave differently. How do they think about the ATL and minimum liquidity and so forth?

My question actually relates to labor though, post COVID. And I realize you have long term contracts in place.

It's why I wanted to ask you as opposed to somebody with an amendable contract? Do you have any guess as to how labor's priorities may change as a result of the downturn, just thinking about, the balance between work rule, job protection, profit sharing that sort of thing?

Apologies that it's not an Air Canada's specific question, but it's something we've been thinking about internally. And if it's too early to answer that, that that's fine, you can cut me off.

It's an interesting dimension Jamie, as to, we haven't received any feedback yet. We're very close to our labor groups or our labor leaders.

We've already got alignment of interest on reopening the economy and reopening travel here. So we speak to them at length.

And like you said, in our case, we've got longer term contracts, but there's no doubt that they're going to think through this, all of us are going to think through this and what changes we have to make, obviously, to liquidity and to, to birth, preservation of jobs and everything. So I suspect, they'll be thinking over the over as a pandemic, as we recover from the pandemic, and they'll have those conversations with airline leaders over the next couple of years.

Again, they've got fairly strong job protection to begin with, frankly. But there's no reason why they may not ask for more as we go forward.

Okay. Appreciate your views.

Take care, everybody.

Okay. Thanks, Jamie.

Again, thank you everyone for joining us on the call today. Thank you very much.