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Air Canada Blames Trade Disputes For Cargo Decline

Air Canada Blames Trade Disputes For Cargo Decline

Air Canada (TSE: AC) reported a 12.1 drop in quarterly cargo revenue on weaker volumes on its Atlantic and Pacific routes stemming from trade disputes. 

Canada's largest airline brought in C$177 million (a Canadian dollar equals US$0.76) from cargo operations during the second quarter of 2019 compared to C$200 million a year earlier. Pacific revenue dropped by 21.1 percent to C$64 million, while Atlantic revenue declined by 17.8 percent to C$75 million. 

"This industry-wide situation reflects the impact of external factors, primarily centered around ongoing trade disputes," the airline said in a statement on July 30.

Cargo represented about 4 percent of Air Canada's C$4.3 billion revenue for the quarter. The airline did not disclose cargo operating income. Air Canada had a net income of C$343 million, compared to a $102 million loss a year ago.

Overall weakness from China continues to weigh on the global air freight market, with strength from Vietnam and elsewhere failing to close the gap.

Air Canada reported growth in its smaller Canadian and U.S. cross-border cargo business. Domestic cargo revenues increased by 20.5 percent to C$29 million, while U.S. revenues rose by 18.4 percent to C$13 million. 

Overall, the airline's cargo traffic dropped by 7 percent.

Air Canada is in the process of buying Transat, the parent company of Canada's third-largest airline. 

In June, Air Canada reached an agreement to market and sell Drone Delivery Canada's (TSXV: FLT) autonomous air cargo services.

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