News
Air Canada misses forecast with $60 million Q4 loss

The loss compared to net income of $89 million in the year-ago period, which included foreign exchange gains of $136 million and an impairment charge on aircraft of $49 million.

The airline's stock fell 13 cents, nearly 10 per cent, to $1.18 in early trading on the Toronto Stock Exchange, a day after Air Canada Pilots Association Capt. Gary Tarves said in a memo to the union's membership that it will hold a five-day vote to seek a mandate to strike.

The vote comes after mediated contract talks with the airline stalled and Tarves said the union believes Air Canada is asking for too many concessions from the pilots.

The airline's adjusted net loss per diluted share in the quarter was 64 cents compared to an adjusted net loss of 17 cents in the same quarter the year before.

Air Canada's revenues were up slightly in the quarter, to $2.7 billion, from $2.6 billion in the same quarter a year
earlier.

The airline was expected to lose 50 cents per share on an adjusted basis on $2.7 billion of revenues in the fourth quarter, according to analysts polled by Thomson Reuters.

That compared to a 27 cents per share profit a year earlier on $2.6 billion of revenues.

For the full year, the airline lost 72 cents per adjusted share on $11.6 billion in revenue.

Air Canada was forecast to lose 65 cents per share on $11.6 billion of revenues, compared to a 15-cent profit on $10.8 billion of revenues in 2010.

"We again experienced a strong revenue performance in our fourth quarter. However, the revenue growth did not keep pace with the increase in operating costs given the higher price of fuel,'' CEO Calin Rovinescu said in a conference call.

He said the airline faced numerous challenges in the past year, including significantly higher fuel prices, a sluggish economy and difficult labour negotiation.

"Despite the challenges in 2011, we did many things right in advance progress on our priorities,'' he told analysts.

The Montreal-based carrier's shares have recovered some of the ground lost last year as it grappled with labour disruptions of flight attendants.

Shares have increased from the low of 95 cents set last month, but that's down 60 per cent from the 52-week high of $3.50.

Several analysts recently upgraded the company to outperform on the back of growing positive signs, particularly in the U.S.

Cameron Doerksen of National Bank Financial said the loss in the quarter was better than he had expected unit revenues were weaker and costs were better than forecast.

Revenues were particularly weak on flights to Europe, falling four per cent, due to a weak European economic climate and increased competition.

Premium cabin traffic increased 8.2 per cent in the quarter while yields or pricing declined 2.2 per cent.

"While these results were ahead of our expectations and Air Canada has exceeded its cost transformation run-rate goals, the company still faces several headwinds, notably still unresolved labour issues, higher fuel costs, and higher maintenance costs,'' he said in a report.

The airline said it wants to achieve a negotiated settlement despite the threat of a potential work stoppage by its pilots and uncertainty over its plans to start a low-cost carrier.

The city of Montreal has urged the carrier to reverse a decision to relocate 140 jobs to Toronto from the carrier's base in Montreal.

The jobs involve scheduling pilots and flight attendants.

The airline has said moving the functions to its new operational control centre in Toronto during the next two years will improve customer service because it will be easier and more efficient to have the people in one place.

There are now about 250 people at the facility in Toronto, where Air Canada has its main national and international hub.

The airline is Canada's largest domestic and international full-service airline providing scheduled and charter air
transportation for passengers and cargo to more than 175 destinations on five continents.