Airport revenues drop more than $170 million in first six months of the year
The Montreal Airport authority says it spent $91 million more than it earned in the second quarter, as evidence mounts of the the financial devastation wrought by the global pandemic.
“These second-quarter results reflect the devastating effects of the pandemic on the financial health of our organization and will have a definite impact on ADM’s ability to deliver certain projects at our airport site, which are essential for the good of the community,” said Philippe Rainville, President and CEO of Aéroports de Montréal, in a statement. ADM is the non-profit private corporation that operates both Montreal-Trudeau International Airport and the cargo-focussed Mirabel Airport.
Revenues in April, May, and June – the worst months of the pandemic – were just $28 million. That is down a staggering $40.7 million from the same time last year. Expenses, meanwhile, were almost $119 million, down a modest 11% from 2019. Airports argue that while their revenues are heavily dependent on passenger traffic, their costs are fixed.
Passenger traffic down 97%
Just 156,000 people passed through Montreal-Trudeau in the second quarter, down 96.9% from 2019. Overseas traffic fell 97% in the same period, while traffic from the United States dropped 99%.
While June showed a slight recovery, more than doubling from the previous month, passenger numbers are still well below where they were last year. In July, both of Montreal-Trudeau’s larger tenants – Air Canada and Transat – increased service. Transat made its first outbound flights since March. There are, however, growing concerns that the normally busy summer travel season may not provide the lift the Canadian aviation sector needs.
Montreal International Passenger Traffic
|2019 (thousands of passengers)||2020 (thousands of passengers)||change|
Border restrictions hurt passenger numbers
“Continued border closures with the United States and internationally, as well as the absence of a vaccine to counter the effects of COVID-19, will continue to negatively affect passenger traffic, carrier activities and ADM’s financial results,” the airport said in its quarterly report. Once passenger levels return to normal, the airport said it will focus on maintaining and replacing core assets.
Globally, the International Air Transport Association said Tuesday that traffic in June was down 86.5%. IATA chief executive Alexandre de Juniac predicted Revenue Passenger Kilometres – a key airline metric – would not recover until 2024. That’s one year longer than IATA originally forecast.
“Travel restrictions are the most immediate problem,” said de Juniac. “Our challenge is to learn to live with this virus. But most of the world remains closed with severe restrictions on movement.”
“The aviation sector has been especially affected by the restrictions that have been put in place and will struggle to recover if the situation persists,” said Rainville. “While the country and the province have begun deploying their deconfinement plans in recent weeks and many economic sectors have resumed their activities, it would be timely to discuss a gradual and targeted opening of the borders.”
Montreal has already warned it would have to take on additional debt to weather the pandemic. Airport executives have said their contribution to a regional rail network was at risk without government help.
The non-profit airport authority closed out 2019 with almost $2 billion in debt. Montreal relies on passengers for almost 70% of its revenue, meaning the fall-off will be felt as long as passenger numbers remain depressed.
Canada’s airports expect the pandemic to wipe out $2 billion in revenues, as passengers delay or cancel travel plans.