Paraphrase each treat of Air Canada.

Threats

1. Increasing Labor Shortage in Canada

The company's operations may suffer as a result of labor shortage in Canada. According to the Canadian Chamber of Commerce, one of the biggest challenges to be faced by the Canadian economy, once the global recession eases, will be shortage of labor. The problem of shortage of labor is going to become more severe in the long-run, with birth rates declining and the population aging. According to The Conference Board of Canada, the country will witness a labor shortage of more than one million people by 2020. Quebec will face a shortage of 292,000 workers by 2025, which may increase to 363,000 by 2030. Alberta and Ontario may witness a shortage of 332,000 and 360,000 respectively by 2025. As a result, Canada is expected to face severe labor demand-supply imbalance in the coming years, and the government needs to take action to address this problem. Since the company operates in construction sector, which is highly labor intensive, its operations may face disruptions in operations as a result of labor shortage in the country.

2. WestJet's long-haul aspirations and its airline partnerships

WestJetis addingGlasgowto its stop-over service toDublinfor the summer 2015 season. It launched seasonal flights fromTorontovia St John's toDublinin 2014, and now is addingGlasgowthrough a stop-over inHalifaxto its trans-Atlantic seasonal roster. The airline is also acquiring fourBoeing767-300ERs for new long-haul operations set to debut in late 2015.

InitiallyWestJetis operating the aircraft on flights from Alberta to Hawaii, but the one-stop trans-Atlantic flights have no doubt givenWestJetinsight into that particular market, and it is only a matter of time beforeAir CanadaencountersWestJeton direct long-haul flights, somethingAir Canadahas obviously anticipated, evidenced by management's aggressiveness with unions in creatingrouge.Air Canadahas estimated that theAirbusA319s operated byrougehave a 21% lower unit costs than similar mainline jets.

The unit cost differential betweenrouge's767and mainline 767s is 29%. But even with the stridesAir Canadahas made with its unit costs and the operation ofrouge,WestJetremains focussed on maintaining its long-held cost advantage overAir Canada. Its unit costs excluding fuel and profit share fell 1.6% for the 9M ending 30-Sep-2015, butWestJetis working off a still lower cost base than its rival.

Similar toUShybrid airlineJetBlue,WestJetopts to leverage its strength asCanada's second largest airline with numerous airline partners rather than becoming boxed in an alliance. It as roughly 11 airline codeshares and nearly 30 interline agreements. Its codeshare partners outsideNorth AmericaincludeAir France,British Airways,Cathay Pacific,China Eastern,China Southern,Japan AirlinesKLM,Korean AirandQantas. OnceWestJetstarts its long-haul international expansion in full force, those partnerships, particularly with Asian airlines, will allow the airline to offer passengers a level of network breadth that may not reach the level ofAir Canada, but will certainly create new competitive threats forCanada's largest airlines.

3. Currency Fluctuations

Unfavorable changes in foreign currency exchange rates are likely to increase the company's expenses. Air Canada has operations in various countries in Asia Pacific, Europe and the US and recorded 70.3% of its sales from international customers during FY2020. The appreciation of non-reporting currencies such as Pound sterling, Euro, Japanese yen and Renminbi over Canadian dollar vice versa could incur increase costs to the company, and increase capital expenditure in Canadian dollar terms. The company also reported a loss of CAD48 due to foreign exchange effects.

4. Coronavirus (COVID19)

The impact of Covid-19 on airline industry is expected to be very severe due to the curtailment of international and domestic air travel in 2020. Country-specific regulations on international flights, longdistance travel bans, and cancellation of trips affected the global airline industry and resulted in huge losses to the aviation industry. Governments in various countries imposed several restrictions to contain the spread of the virus such as US-Canada border closure for non-essential traffic, EU's 30-day ban on non-essential travel to about 26 countries in Europe from the rest of the world, the US's 30-day ban on Schengen travellers, and lockdown in Italy, the UK, Australia, India and other countries. As a result of these travel restrictions, the global air traffic declined in the short-term.

5. New upstart ULCCs may rattle the currently stable domestic market

Two aspiring ULCCs -JetlinesandJet Naked- have declared their intent to operate an ultra low cost model within the Canadian market place.Jetlinesseems further along in the process, making a splash in late 2014 with an order forBoeing737Max aircraft. Until deliveries begin in 2012 the airline plans to operate leasedBoeingnarrowbodies.

The airline through its merger partner Inovent Capital has filed paperwork to raise funding for launch, which is targeted for some time in 2015.Jetlines' debut will not result in a flooding of capacity in the market, but it could create some price disruption for bothAir CanadaandWestJetin certain markets.