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Air Canada said Friday that president and chief executive Calin Rovinescu will retire in February, a departure that follows a turnaround of the company after the global financial crisis, but one that comes as the coronavirus pandemic continues to hammer airlines.
Rovinescu took the helm of Air Canada in April 2009, his second stint at the airline after previously serving in other roles, including as chief restructuring officer. He had departed in 2004 and co-founded independent investment bank Genuity Capital Markets, which is now part of Canaccord Genuity Group Inc.
“I have enjoyed a unique and very special relationship with Air Canada and our outstanding people for over three decades, on the front lines of many of the company’s defining moments,” Rovinescu said in a press release.
Under Rovinescu’s watch Air Canada went from being an airline considered a candidate to go bust to one that racked up more than $1.4 billion in profit last year. Shares of the company, even after being punished by the pandemic this year, are still up more than 1,200 per cent since Rovinescu became chief executive.
Succeeding him will be deputy CEO and chief financial officer Michael Rousseau, the former president of retailer Hudson’s Bay Co.
“Calin Rovinescu has done an incredible job rebuilding Air Canada from the near-bankrupt state the company was in when he became CEO in 2009,” National Bank Financial analyst Cameron Doerksen wrote in a note to clients Friday morning. “However, Mike Rousseau joined Air Canada as CFO in 2007 and was also instrumental in the turnaround and growth of the company and has been heavily involved in all the strategic decisions over that same timeframe. As such, he is the obvious choice to take over the CEO role, in our view.”
Yet Rovinescu is leaving as the air travel industry is still being shellacked by the coronavirus. The International Air Transport Association estimated recently that airline revenues will fall at least 50 per cent this year, to approximately US$419 billion in 2020 from US$838 billion in 2019.
Canadian airlines haven’t been immune to those forces either, as demonstrated by Air Canada booking a net loss of $1.75 billion for the second quarter. Meanwhile, rival WestJet Airlines Ltd. announced this week that it will cut almost 80 per cent of seat capacity from Atlantic Canada, with its chief executive saying it is “out of runway” to maintain certain routes.
The pressure being put on airlines by the pandemic and travel restrictions meant to curb its spread has in turn prompted company executives to push governments to tweak those measures. Rovinescu has been among those officials calling for an easing of 14-day mandatory quarantines after travel, or for bailout money along the lines of that being provided in the United States and Europe.
That said, Air Canada has been taking steps to shore up its financial position, raising around $6 billion in additional liquidity and cutting costs where it can, its departing chief executive noted. Moreover, the airline recently announced it had amended its proposed transaction of smaller rival Transat A.T. Inc., dropping the value of the deal to around $190 million from $720 million.
“While COVID-19 has decimated the global airline industry, fortunately we entered the pandemic much healthier than almost any other airline in the world as a result of our strong balance sheet, track record and engaged workforce,” Rovinescu said in the release. “Air Canada will be extremely well positioned for the recovery when borders reopen, travel restrictions are lifted and the broader economy is functioning again.”
Copyright Postmedia Network Inc., 2020