Air Canada (TSX: AC) executives significantly increased their pay packages in 2022, following the expiration of certain management pay clauses related to support received from the Government of Canada amid the pandemic.
Chief Executive Michael Rousseau saw his compensation increase an astounding 233% from 2021 to 2022, with total compensation hitting $12.4 million, up from $3.7 million in the prior year. The compensation increase included a base salary increase of 160% from $500k to $1.3 million, while equity incentives totaled $7.8 million, pension commitments totaled $1.0 million, and his annual bonus came in at $2.3 million.
Rousseau’s bonus was awarded as a result of Air Canada losing $952 million in adjusted pre-tax income, versus the forecasted loss of $1.246 billion.
Company CFO Amos Kazzaz meanwhile saw their total compensation increase 138%, climbing from $1.3 million to $3.1 million, while CCO and Executive Vice President Lucie Guillemette saw her compensation increase from $1.1 million to $2.7 million, an increase of 186%.
The increase was made possible after a pandemic rescue plan for the airline from the federal government, amounting to $5.9 billion and made in early 2021, saw a credit line cancelled in November 2021. The bailout had requirements related to management compensation after a controversial bonus structure in 2020 paid executives $10 million for “pandemic mitigation bonuses.”
The increase in 2022 however follows just a year after the company managed to secure a half billion dollars in wage subsidies from the government just to keep the operation afloat. In 2021, Air Canada received total gross wage subsidies under the Canada Emergency Wage Subsidy and the Hardest Hit Business Recovery Program of $457 million, while total cash payments for the year amounted to $518 million.
No such grants were reportedly received in 2022.
In terms of overall financing performance, Air Canada saw revenues in 2022 grow from $6.4 billion to $16.6 billion, as the impacts of the pandemic on travel continued to dissipate. Operating expenses however amounted to $16.7 billion, which after non-operating expenses, led to a net loss of $1.7 billion for the full fiscal year.
Public opinion of Air Canada takes a beating
The substantial increase in management compensation comes amid what the public likely considers a terrible year of operations. At the end of 2022, Air Canada ranked last in on-time performance in a report published by Cirium Aviation Analytics.
The report analyzed the ten largest airlines in North America, and reported that Air Canada had roughly just 55.6% of its 143,000 flights in 2022 arrive on time. Canadian competitor Westjet faired mildly better, with 60.7% of its flights arriving in time, the second worst among major airlines in North America.
Barely a month later, it was reported that the airline had also been caught donating luggage separated from its owner to charity, despite not technically having the rights to do so. The discovery was made after one customer used an Apple AirTag to track their luggage, which ended up at the warehouse of a charity in Etobicoke, Ontario.
Information for this story was found via Sedar, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.