NEWS
03/10/2020 15:11 EDT | Updated 03/10/2020 16:36 EDT

Air Canada Halts All Flights To Italy Amid Coronavirus Outbreak

Affected customers will be notified and offered full refunds, the company says.

Jetlinerimages via Getty Images
 Boeing 787 Dreamliner of Air Canada departing Zurich airport. 

MONTREAL — Air Canada is suspending flights to and from Italy, saying the decision was prompted by Italian regulations and “ongoing health and safety concerns″ related to the outbreak of a novel coronavirus.

The airline’s last flight to Rome is scheduled to take off from Toronto Tuesday, with the final return flight departing Rome for Montreal on Wednesday.

Air Canada says plans to restart service on May 1. Meanwhile, affected customers will be notified and offered full refunds, a spokesman said.

In January, Canada’s largest airline halted all direct flights to China _ the epicentre of the virus— as it braced for a hit to revenues.

The COVID-19 has spelled difficulty for global airlines as companies suspend non-essential business travel and conventions and other events are cancelled amid increasing travel restrictions from governments.

The outbreak is taking a toll on Air Canada, whose shares have fallen 40 per cent since Jan. 20.

The federal government is considering measures to offset the dent to airline earnings, said Economic Development Minister Melanie Joly.

“What we’re looking at is how can we mitigate the impacts while making sure that we can have still a strong summer season, and also that we can really bounce back,” she said.

Joly said she met Monday with the CEOs of Air Canada and WestJet Airlines Ltd. — Calin Rovinescu and Ed Sims — “to understand a little more about the impact of what is happening now.”

“Our baseline assumption is that Air Canada will see severe demand disruption in Q2 with the impact lingering through the remainder of 2020. Whereas previously we forecasted 2020,” National Bank analyst Cameron Doerksen said in a research note.

Last month Air Canada forecast a “small increase” in adjusted earnings for 2020, based on the assumption that its cancelled routes to mainland China and Hong Kong will be fully recovered by the third quarter, along with a gradual return to service of its grounded Boeing 737 Max jets starting late in the same quarter.

But Doerksen predicted Tuesday that annual adjusted earnings would come in at $2.2 billion, or about 40 per cent below Air Canada’s outlook of $3.6 billion _ which would also mark a 40 per cent decline from 2019 EBITDA (earnings before interest, taxes, depreciation and amortization).

On Thursday, Air Canada announced it would waive rebooking fees in light of concerns about the coronavirus, allowing a one-time change for tickets purchased between March 4 and March 31 for travel within 12 months.

The move falls short of those by United Airlines, Delta Air Lines and American Airlines this week, which are allowing passengers to rebook tickets to any destination through April 30 without paying fees.

This report by The Canadian Press was first published March 10, 2020.