March 16, 2020 / 5:00 PM / 22 days ago

UPDATE 2-Air Canada stock dives 30% as Ottawa closes border on coronavirus fear

(New throughout, adds letter to employees, comment from union, background on Air Canada)

By Allison Lampert

March 16 (Reuters) - Air Canada stock plummeted as much 38.3% on Monday after the carrier withdrew financial forecasts for 2020 and 2021 due to the coronavirus outbreak and the Canadian government closed the border to foreign nationals except for U.S. citizens.

Air Canada, which has lost almost 70% of its value this year, said its second quarter capacity would decline 50% on an annual basis.

Travel restrictions imposed by several governments to slow the spread of the virus has taken a toll on airlines around the world, with many airlines seeking government help as they reel from a plunge in bookings and traffic.

Shares in Canada’s biggest carrier is on course for its biggest one-day percentage fall.

Canada announced on Monday it would close its borders to all foreign nationals, except U.S. citizens, in an effort to contain the spread of virus.

A group representing major U.S. airlines on Monday said the industry was seeking a $50 billion government bailout.

“The crisis facing our industry is worsening as countries around the world adopt increasingly severe measures, national lockdowns and travel restrictions,” Air Canada Chief Executive Officer Calin Rovinescu said in a statement.

“We understand that the governments of the United States and many European countries such as Germany, France, Italy, Norway and others have approved or are considering assistance for their airline industries in one form or another. Under these circumstances, we believe that the Canadian airline industry should also see similar assistance,” he said.

The Canadian government is mulling a multibillion-dollar package for industries most hit by the outbreak, including airlines.

Montreal-based Air Canada said it is initiating a cost reduction and capital deferral program, targeting at least C$500 million ($357.6 million).

The carrier is trying to steer clear of layoffs, it said in a note to employees on Friday seen by Reuters.

“While there can be no guarantees in such circumstances, we would (take) other measures before implementing large-scale layoffs,” the note from Air Canada’s chief human resources and communications officer said.

Hugh Pouliot, a spokesman for the Canadian Union of Public Employees (CUPE) which represents Air Canada flight attendants said on Monday that its members haven’t yet been approached about layoffs.

The carrier said it has drawn down a $600 million revolving credit facility and said it is “working with several parties to raise additional liquidity over the next several weeks.”

$1 = 1.3982 Canadian dollars Reporting by Allison Lampert in Montreal, Jeff Lewis in Toronto and Ankit Ajmera in Bengaluru; Editing by Maju Samuel, Paul Simao and David Gregorio

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