'Colossal opportunity' ahead in aerospace investing: Former Air Canada CEO
Former Air Canada Chief Executive Officer Calin Rovinescu thinks there’s some unprecedented investment opportunities shaping up in the aviation sector as the world emerges from the worst of the COVID-19 crisis.
In an interview Monday, Rovinescu, who was named as a senior advisor within Brookfield Asset Management’s global private equity group to advise the conglomerate on potential deals, said the pandemic-ravaged industry was rife with opportunity for deep-pocketed, patient investors looking to capitalize on a return to normal.
“Brookfield has had a long history of investing for the long-term, and that’s what really attracted me, because that’s what’s going to be needed here to really benefit from some of the fairly fundamental transformational things that are going on in both conventional aerospace and aviation and all of the aviation services business,” he said.
“Between the two so-called sectors, this is a colossal opportunity in the many, many billions of dollars, trillions of dollars, and so I think that there will be some interesting dynamics that will come out of it.”
Rovinescu is no stranger to steering through turbulent times in the aerospace industry, having guided Air Canada out of bankruptcy proceedings and helming the flagship carrier for a dozen years before his retirement last month.
While Rovinescu navigated a number of crises during his time at the top of Air Canada, he warned that the current aviation market conditions are unlike anything the industry has seen before, necessitating prudent decision making when it comes to any investment in the sector.
“This is a unique moment in time … when you look at the industries that were affected post-9/11, the industries that were affected post-global financial crisis, you now are sitting on a different dynamic with similar kinds of opportunities, but you need to be able to have staying power for the longer term, no question about that,” he said.
According to the International Air Transport Association, 2020 was the worst year on record for the commercial aviation industry, with demand as measured by revenue passenger kilometers, an industry standard, plunging 65.9 per cent year-over-year due to the demand destruction for both business and leisure travel.
In spite of that dire year and concerns over the spread of new COVID-19 variants, Rovinescu is holding out hope a travel-starved population will be eager to return to the skies once vaccination rates ramp up, the virus is truly under control and stay-at-home restrictions are eased.
“I think that you’re going to see, after this pandemic is adequately out of the way, you will see some pent-up demand coming back for leisure, for people going to concerts and seeing things like that, that will happen and there will be price stimulation,” he said. “Fares, I would think coming out of the pandemic, will actually be low in the early phases for stimulation of demand.”