All participants, we are ready to begin. Bonjour and good morning, everyone. I hope you enjoyed that look at our brand new safety video. My name is Arielle Malou Wexler and as Executive Vice President, Chief Human Resources Officer and Public Affairs, I am particularly proud of how it showcases the diversity of our vast country. I will serve as the moderator today, and I would like to now turn the meeting over to Mr.
Von Sorensen.
Thank you, Ariella. Bonjour. Good morning and welcome to the twenty twenty one Annual Meeting of Shareholders of Air Canada. My name is Von Sorensen and I'm pleased to preside over this meeting as Chairman of the Board of Directors. I now call the meeting to order.
Like last year, we are holding the meeting in a virtual format due to the ongoing impact of the COVID-nineteen pandemic and to mitigate risks to the health and safety of our shareholders and employees. Thank you for joining us. We'll shortly go over the procedures of the meeting and how shareholders can vote and ask questions. This morning, I am accompanied on the webcast by Michael Russo, President and Chief Executive Officer Amos Kassas, Executive Vice President and Chief Financial Officer Lucie Grimetz, Executive Vice President and Chief Commercial Officer Ariel Melul Wexler, Executive Vice President, Chief Human Resources Officer and Public Affairs and Carolyn Hatcherwicke, Vice President and Corporate Secretary, who will act as the Secretary of this meeting. Also joining us remotely are our directors and members of senior management.
The business of the meeting will be conducted in English and in French. The proceedings are being translated simultaneously, and you may select English or French at the top right of your screen. Before I begin, I'd ask Carolyn to take us through the procedures of the meeting.
Thank you, Mr. Chairman. Bonjour. Good morning. Voting at today's meeting will be through the online platform only.
Starting now, you can register your vote on all items of business identified in the management proxy circular. The polls will close shortly after the last item submitted to a vote has been considered. As described in the proxy circular, only registered shareholders and duly appointed proxy holders who received a control number from our transfer agent, AST Trust Company Canada, may vote and submit questions during the meeting. Please note that you do not need to vote at the meeting if you have already voted by proxy and do not wish to change your vote. To vote, click on the vote icon at the top of your screen.
Shareholders who wish to address the chair with respect to a formal item of business may submit a question or comment at the relevant time. If your question or comment is not related to an item considered at the meeting, there will be a question and answer session at the end of the meeting, and you may submit your question or comment at any time. To ask a question, click on the question icon at the top of your screen and submit your question. For the good conduct of the meeting, only questions of general interest to all shareholders will be answered. If your question is related to a personal matter, an Air Canada representative will contact you after the meeting.
In addition, questions that cannot be answered during the meeting due to time constraints or technical difficulties will be responded to in writing after the meeting. Mr. Chairman, I now turn the meeting over to you.
Thank you, Carolyn. At today's meeting, our President and CEO, Michael Russo, will present management's report for 2020 and discuss our corporate priorities. This year was an extremely turbulent one. By any measure, despite significant financial losses caused by the pandemic crisis and the travel restrictions imposed, Air Canada continued to come to the forefront in terms of identifying and executing difficult decisions to preserve liquidity, save 15,000 jobs, lead the industry in biosafety protocols, and position itself to remain competitive in the post pandemic world. During a crisis, it is human nature that attention focuses on the immediate issues at hand.
However, prudent management also requires a more expansive view to safeguard the long term interests of shareholders and other stakeholders. This is a responsibility that ultimately falls to the Board of Directors and for an organization like Air Canada, a key long term consideration is the recognition and retention of talented management, including by appropriately rewarding extraordinary achievement. This remains the Board's view. We're very proud of the courage, resilience, and tenacity of our employees who embraced Air Canada's core values and rich culture, that of a nimble, entrepreneurial, and solutions driven company. His deeply embedded culture was enhanced under the strong leadership of Caelin Robinescu, who retired earlier this year.
On behalf of the Board, shareholders and the entire Air Canada family, we wish to extend our sincere gratitude for his outstanding contributions and for the incredible flight path he has set for the company's future. The Board would also like to thank Mike and his strong leadership team and assure him of our full support. While this period will be one of the most challenging in our history, Air Canada is well positioned to manage through this global crisis and ultimately emerge a stronger company. We have a lot of ground to cover today. I'll first proceed with the formal items of business identified in the proxy circular.
Then our President and CEO will present management's report. After that, we'll announce the preliminary results of the Scrutineer tabulations of today's vote. Finally, we'll conclude the meeting with a question and answer session. I'd like to point out that the discussion during today's meeting may contain forward looking information about Air Canada's outlook, objectives and our strategies to achieve them. These statements are based on assumptions and are subject to important risks and uncertainties.
The corporation's actual results could differ materially from any expectations discussed. The details of our caution regarding forward looking information can be found in Air Canada's public disclosure file available on SEDAR, including in our first quarter report to shareholders. The Secretary of this meeting has provided me proof of mailing of the notice of the meeting and the 2020 annual report. I direct that a copy of the notice together with the proof of mailing be kept with the minutes of this meeting. Jean Pauline Beausejour and Isabelle Vachon of AST Trust Company Canada, our register and transfer agent, have been appointed to act as scrutineers for this meeting.
The corporation's bylaws provide that for a valid meeting, a quorum shall be not less than 25% of the outstanding shares of the corporation entitled to be voted at meeting. The scrutineers have advised me that we have a quorum today. Notice of this meeting having been duly given, and a quorum of shareholders being present online or by proxy, I declare that the meeting is properly convened and constituted for the transaction of business. I would now like to proceed with the business of the meeting in the order of the items set out in the proxy circulant. Before doing so, I would ask Carolyn to explain the voting procedures at this meeting to ensure that we comply with the regulatory requirements applicable to Air Canada.
Certain regulatory requirements that apply to Air Canada require that we be controlled, in fact, by Canadians, and our incorporating documents require that at least 51% of our voting interests be owned and controlled by Canadians. Under Air Canada's articles, three tests must be met. First, no more than 49% of the votes that attach to the corporation shares can be held by persons that are not Canadians. Second, no more than 25% of the total votes can be held by a single non Canadian, and no more than 25% of the total votes can be held by non Canadian carriers in the aggregate. And third, we must at all times be able to demonstrate to the Canadian Transportation Agency that Air Canada is controlled, in fact, by Canadians.
The corporation's voting structure addresses these requirements. That is why we have class a variable voting shares and class b voting shares. At today's meeting, we must determine how many votes are cast on each motion, how many of those votes are cast by Canadians, and how many of those votes are cast by non Canadians. If the votes cast by non Canadians would otherwise account for more than 49% of the total votes cast, their votes would be prorated to equal 49 of the total votes cast. Similarly, the votes cast by a single non Canadian or non Canadian carriers would be prorated to not exceed 25% of the total votes cast.
I now invite the Chairman to proceed with the business of the meeting.
Thank you, Carolyn. Based on the preliminary tabulation of processes received and of the registered shareholders and proxy holders who will be voting online at today's meeting, the scrutineers have advised that we have approximately 56,600,000 Class A variable voting shares and 80,400,000 Class B voting shares represented at the meeting. The holders of Class A variable voting shares and Class B voting shares will vote together at this meeting and no separate meeting is being held for any such class of shares. I hereby table the minutes of the Annual Meeting of Shareholders held on 06/25/2020, which will be kept with the records of the meeting. So let's move to the first item of business, Canada's 2020 annual financial statements.
The auditors' consolidated financial statements of Air Canada for the year ended 12/31/2020, including the auditors' report, have been sent to shareholders in accordance with applicable requirements. A copy of the financial statements will be filed with the records of the meeting. Attending today is Michael Trudeau, a representative of our auditors, PricewaterhouseCoopers LLP. Mr. Trudeau will take any questions you may have for the auditors.
Ariel, are there any questions relating to this item of business?
Mr. Chairman, there are no questions relating to this item.
Thank you, Ariel. I would like to remind shareholders that the polls are open. You may vote at any time by clicking the vote icon at the top of the screen. The next item of business is the election of directors. The term of office of the directors elected will be from today until the next Annual Meeting of Shareholders.
Our proxy circular sets out the names of 12 nominees for election as directors. The nominees are, in addition to myself, Hammeh Chaud, Chris Clark, Gary Doer, Rob Fife, Michael Green, Jean Marc Yot, Madeline Paken, Michael Russo, Kathleen Taylor, Annette Forschurren and Michael Wilson. Could I please ask Lucy Guimet to move the motion? I
move that the 12 person named be elected directors of Air Canada till the next Annual Meeting of Shareholders.
Assume to a resolution adopted on 05/06/2021, the Board of Directors has determined that the number of Directors be set at 12, effective upon the election of Directors at this meeting today, and 12 eligible candidates have been nominated. Each of the persons nominated has confirmed that he or she is prepared to serve as a Director. Each of the persons qualifies as a Director under the provisions of the Canada Business Corporations Act and the bylaws of the corporations. Ariel, are there any question or comments relating to this item of business?
Mr. Chairman, there are no questions or comments relating to this item. Thank
you, Ariel. The next item of business is the appointment of the auditors. The proxy circular contains the recommendation of our Board of Directors that shareholders reappoint PricewaterhouseCoopers LLP as the corporation's auditors. As previously indicated, a representative of this firm is attending today's meeting. Carolyn, could you please move the motion?
Mr. Chairman, I move that PricewaterhouseCoopers LLP be appointed auditors of the corporation until the next Annual Meeting of Shareholders.
Thank you, Karen. I second the motion. Ariel, are there any questions or comments relating to this item of business?
Mr. Chairman, there are no questions or comments relating to this item.
Thank you, Ariel. The next item of business pertains to the consideration in an advisory non binding capacity of Air Canada's approach to executive compensation. The report of the Human Resources and Compensation Committee and the compensation discussion and analysis section in the proxy circular disclose in detail such approach. The results of the vote will not be binding on the Board of Directors. However, the Board will take into account the results of the vote together with all the comments from shareholders and all the pertinent information when considering Air Canada's approach to executive compensation in the future.
Could I please ask Amos Cassass to move the motion?
I move that the advisory nonbinding resolution on Air Canada's approach to executive compensation reproduced at schedule a of the management proxy circular be approved.
I take the motion. Ariel, are there any questions or comments relating to this item of business?
Mr. Chairman, there are no questions or comments relating to this item.
Thank you, Ariel. Please note that the polls will close in approximately two minutes and the preliminary results will be announced before the question and answer session at the end of the meeting. I would now like to ask Air Canada's President and CEO to present management's report to shareholders. So over to you, Mike.
Thank you, Yvonne, and good morning to everyone. And thank you for taking time to be with us today. It is a great pleasure for me to make my first Annual General Meeting report to you as President and Chief Executive Officer of Air Canada. In fact, I am already looking forward to my second Annual Meeting next year, at which time I am confident COVID-nineteen will be behind us. By then, not only will I have been able to meet with many of you in person, but I expect I will have much better news to share.
Looking back at 2020, COVID-nineteen has severe impact on the global airline industry, especially international airlines like Air Canada. During the year, we endured a 73% decline in passengers carried. As a result, total revenues fell $13,300,000,000 or 70% from the 2019 level of to $5,800,000,000 This in turn led to an operating loss of nearly $3,800,000,000 compared to an operating income of approximately $1,600,000,000 a year earlier. Our share price suffered, too, losing as much as 80% of its value by March 2020. I am happy to report, however, that our stock has since more than doubled from that low.
And as you will hear today, I am confident of further recovery in the future. Although the financial results of 2020 were deeply disappointing, the response of our employees was truly inspirational. COVID-nineteen revealed the depth of our resilience, our resourcefulness and professionalism of the Air Canada team. I thank them for their tireless work and their commitment to our customers, our investors, and to all stakeholders during this very difficult time. As it must always be, the safety of our customers and our people have been the primary consideration throughout the pandemic.
You
can
be assured that Air Canada was an industry leader in this respect. In January 2020, weeks ahead of the federal government's decision to halt flights to China, Air Canada suspended its service to that country. And early on, we also began providing PPE to our employees. In April 2020, we mandated masks be worn by all customers onboard our aircraft, a month before it was recommended that we wear masks in public. And in May 2020, Air Canada instituted pre boarding temperature checks for all customers again a month before Transport Canada ordered the same.
We also implemented Air Canada Clean Care Plus. This is a comprehensive biosafety program for customers and employees, covering all parts of the customer journey. So successful has this program been that earlier this year, we received APEX s Diamond Status Certification. We are the only airline in Canada and one of the first in the world to attain the highest possible ranking in recognition of our health and safety measures. We also took care of the financial health of our company.
During 2020, we raised nearly $6,800,000,000 in additional liquidity. This strengthened what was already one of the strongest balance sheets in the industry relative to our size. Among other measures, we drew upon existing credit lines, sold equity, and issued debt at attractive rates, placed several tranches of WTCs and securitized aircraft to end the year with $8,000,000,000 in unrestricted liquidity. Even then, we still had a minimum of $1,700,000,000 in unencumbered assets available to raise more funds if necessary. Subsequent to the year end, we obtained what I term additional insurance by negotiating a support package with the Government of Canada.
It makes approximately $3,975,000,000 available to us should we require it. Combined with these steps were significant cost saving measures. Operating expenses decreased by nearly $7,900,000,000 or 45% from 2019, reflecting our significant success managing variable costs and reducing fixed expenses. For example, we moved quickly to take 79 aircraft out of our passenger fleet permanently. Apart from immediate savings and operational costs, this decision has a secondary benefit in that the aircraft grounded are older, so the overall fleet efficiency and carbon footprint will improve.
We also undertook a companywide cost and capital reduction and deferral program that reached $1,700,000,000 in savings. Regrettably, one element of our cost savings program was a necessary workforce reduction. Nearly 20,000 employees were furloughed or let go during the year, painfully reversing a remarkable decade of job creation at our company. We did preserve 15,000 jobs, or about 40% of our workforce, even though our capacity fell 67%. Now we have recently begun to recall workers, with some 2,600 expected to return in June and July.
We look forward to welcoming our colleagues back as we start to rebuild our network and our company. That is it is time to rebuild as evident. Everywhere we see signs of renewal. COVID-nineteen case counts are dropping across Canada, and vaccination programs are advancing. Governments around the globe have begun relaxing quarantine and other travel restrictions.
For our part, we know our customers are eager to fly again. In regular frequent flyer surveys, nine of 10 respondents indicate they are now planning future travel, with 46% planning to go somewhere between now and September. In anticipation of demand returning, we have begun making preparations, recalling employees, and resuming flights to certain destinations. We are reopening Maple Leaf Lounges and reintroducing onboard services, such as our Bistro Buy On Board, which will be available on most flights within North America by the end of the summer. Some COVID-nineteen measures will become permanent.
This includes touchless check-in, baggage drop, and lounge services. And we will look to expand the use of facial recognition biometrics for boarding after a successful test in San Francisco. This will make the airport experience easier to navigate and quicker for customers. From a growth perspective, we will continue to build out our Air Canada cargo operations. ACC came into its own during the pandemic by moving swiftly to capitalize on increased demand for air cargo capacity at a time when such capacity was at a premium due to the grounding of so many flights.
We were one of the first airlines to convert cabin space to accommodate cargo, and we operated over 4,000 all cargo flights in 2020. Based on this success, we are fully converting a number of Boeing 767s into dedicated freighters, with the first two arriving this year. The expansion of Air Canada cargo is expected to play an important role in Air Canada's recovery. As part of this initiative, we intend to generate incremental cargo revenue by entering the e commerce business. Our goal is to drive end to end value through enhanced technology, dynamic pricing, and transparency across the delivery supply chain over the next year or so in Canada.
Finally, understanding COVID-nineteen was only temporary. We completed long term foundational programs started prior to the pandemic with the objective of positioning us well for the future. First, as mentioned, we have made substantial changes to our fleet, grounding older Boeing seven sixty seven, Airbus three nineteen, and Embraer 190 aircraft. Their retirement will reduce Air Canada's cost structure, simplify our fleet, and shrink our carbon footprint. And currently, we carried on with our narrow body fleet renewal program.
Most importantly, we brought the Boeing seven thirty seven MAX eight safely back into service, which took a tremendous effort by our technical and flight operations teams. As well, we continued to take delivery of our Airbus two twenty aircraft. At year end, we had 24 of a firm order of 40 MAX and 15 of a planned 33 Airbus two twenty in our fleet. The capacity, range and versatility of these aircraft make them ideal for Air Canada, both from a customer and economic perspective. Two other major projects that will be fundamental to our long term success are our new passenger service system, or reservation system, and our new loyalty program.
PSS was a complex multiyear project that was completed early last year. It gives us greater ability to serve customers, manage our inventory, and work with partner carriers. The second project, the Transformed Aeroplan, was launched last fall. Although we have yet to see its full potential due to COVID-nineteen travel restrictions, it has been extremely well received. Members will find improved value on flight rewards, more options such as family sharing to pool points, and it has replaced the Altitude program to better reward our best customers.
We have started to add important new relationships like Starbucks, and we expect to add more in the near future to further enhance the utility of the overall program. Additionally, we have strong relationships with major credit partners, including TD, CIBC and American Express, and in The U. S, Chase and MasterCard. Apart from providing wide accumulation of opportunities for members, these strategic partnerships give our program incredible exposure and enhance our ability to attract new members. Another area where we have not relented is sustainability and social responsibility.
We know we have an obligation to the communities we serve and to the places where our employees live and work. For this reason, we continue throughout the year to promote through various programs the well-being of our people and customers, including an emphasis on diversity and inclusion. As well, the Air Canada Foundation continued to support ill and disadvantaged children. A key component of social responsibility is the environment. Apart from our desire to do good, to be good corporate citizens by behaving responsibly, it is increasingly important to investors, customers, and employees.
Throughout the year, we undertook a number of environmental initiatives. This included installing electric chargers for airport vehicles, reducing waste, including by diverting more than 800 tons of waste from landfills, and working with third party groups such as we did with IATA to obtain illegal wildlife trade certification for our cargo operations. Earlier this year, we took another major step forward by setting an ambitious climate target of net zero greenhouse gas emissions throughout our global operations by 02/1950. This included establishing interim goals so that our progress can be tracked. We also committed to invest $50,000,000 in sustainable aviation fuel and other measures for carbon reduction and removal.
These are very substantive, yet very achievable goals. After a decade of incredible success, growth and profitability at Air Canada, the onset of COVID-nineteen and its disastrous impact on the global airline industry has been a severe blow. However, the worst of the pandemic appears to be behind us, and our attention is now upon a safe restart. Our vision for recovery rests on leveraging the solid foundation we have built to reestablish ourselves as a Canadian global champion. This will involve rebuilding a strong global network with a focus on hub to hub flying, providing seamless connectivity with Air Canada's partners, delivering consistent and superior customer service, and diversifying our revenue base, such as through Aeroplan and Air Canada cargo.
It will also require that we remain diligent in finding and implementing measures to reduce costs and increase revenues. Supporting all of this will be key investments in technology. Technology will play a central role in our business processes. It is the primary way to cost effectively ensure consistency while staying flexible. It is only through technology that airlines can provide a satisfying individualized experience to tens of millions of customers each year.
This is why we're devoting considerable resources to such things as AI, machine learning and analytics, as well as mobile and digital technologies. That being said, while customers like the convenience technology can provide, there will always be a need for positive human interaction. At the end of the day, airlines are in the customer service business. Nothing can replace the warm greeting, the friendly smile, or the added assurance that comes from personal attention. For this reason, we are committed to enabling our people and encouraging them to create meaningful personal connections through the customer experience.
For these and many other reasons, I am extremely optimistic about the future. This is also why, as I said at the beginning, I am looking forward to our next Annual General Meeting where I will update you on the progress we are making. Finally, I wish to call out our talented leadership team I have the pleasure of working with through these unbelievably challenging times. I would also like to thank the Board of Directors of Air Canada for their staunch backing, their leadership and thoughtful input during these difficult times. As well, I wish to thank our shareholders for their ongoing support.
We know better times are ahead and that Air Canada will rise higher than ever. Thank you very much.
Thank you very much, Mike. I would now ask Carolyn to provide the preliminary results of the scrutineers tabulations of today's votes.
Thank you, mister chairman. The scrutineers have confirmed the following. All director nominees identified in the proxy circular have been elected with the requisite majority of votes, and the auditors, PricewaterhouseCoopers LLP, have been reappointed. In addition, the advisory resolution on Air Canada's approach to executive compensation has been approved by a majority of votes. The Scrutineers' final report will be available shortly after the meeting, and the voting results will be reported on SEDAR.
Thank you, Carolyn. I adopt this report and ask that it be filed with the records of the meeting. We've come to the point where some of you may wish to ask questions. Mike or I shall be happy to take your questions and may ask other members of Air Canada's executive team to respond to some of them as appropriate. Carolyn, can you please remind us of the procedure to ask questions?
To ask a question, click on the question icon at the top of your screen and submit your question. For the good conduct of the meeting, only questions of general interest to all shareholders will be answered. Questions which were which may be already answered during the session will not be addressed. If your question is related to a personal matter, an Air Canada representative will contact you after the meeting. In addition, questions that cannot be answered during the meeting due to time constraints will be responded to in writing after the meeting.
We will limit each shareholder to one question and ask that it be succinct. Thank you.
We'll now give shareholders a brief moment to type in their questions or comments. As you're doing that, I'd like to take advantage of the moment to show you one more video. As part of Air Canada's leadership in biosafety, we were one of the first industries to partner with provincial governments to establish and operate vaccination centers in Ontario, Quebec, and British Columbia. We're very proud of the care and class featured in this video shot at the third largest clinic in British Columbia, where our employees are leveraging their formidable customer service skills to provide expertise and logistical support as non clinical staff, helping to move people through the clinic efficiently, comfortably, and safely.
I'm the person who always loves to help people and my community. This gives me the amazing opportunity to do almost what I do at the airport, but with different people, different environments. And I think for me, it's a blessing to be here. Morning. How are you?
Good. How are you?
Good. My name is Maddox. I'm Air Canada customer service agent in Vancouver. For the past three months, I've worked in the vaccination community.
Good morning. Today, we have 2,500 appointments. Can I please have my predraw team go right ahead?
Any questions, concerns? Perfect. Have a
good day. Woo hoo. Bye bye.
Canada is in partnership with Fraser Health, and we're doing this job together to just help people vaccinated as fast as possible. With the skill we have and the jobs they do, we're gonna be a really good match.
Good morning. How are you doing today? I'm great.
So you gotta follow my colleague with the orange vest over there. One of those we have it at the front. So when people walked in, they see it. And right away, they're just asking us, where are we flying today? Or what meal do you have on board?
Keep it alive. Okay? The nurse needs that. And you're gonna take that to the gentleman in the orange. He's gonna guide you forward.
I'm very grateful to be here, and I feel very privileged to be part of an ongoing change that's gonna be beneficial to society. Hi, guys. I'm doctor Mall. How are you? Having been off work since last June, it certainly is a rewarding experience, and it's amazing to see everybody coming in and getting vaccinated.
You have your ears pierced, so it's not gonna hurt as bad as that.
Air Canada staff are really valuable in helping to escalate any type of situation where people might be anxious.
I have to do it. Is this your first dose today, sir? Yes.
Have a friendly face and to be reassured that someone is going to be able to help them, it's just really been fantastic.
The experience has been really amazing. You're gonna go to number seven, please. I never thought I could do something for public health, and now I'm just, like, part of it, and I just, like, happier because we are going towards a normal life.
Fascinating, isn't it? I would now ask Ariel to please read the questions and comments that were submitted, if any.
Mr. Chairman, there are no questions.
Thank you, Ariel. We will then be concluding the question and answer session of this meeting. We have now completed the business of the meeting. And I'm therefore declaring this meeting concluded. I'd like to thank you all for attending today, and thank you for your ongoing support to Air Canada.
Thank you very much, and have a good day.