Wings Magazine

Air Canada posts larger Q2 loss, revenue rises slightly

Aug. 8, 2012, Montreal - Air Canada Inc. says it was pushed into the red during the second quarter by the impact of labour disruptions, which affected passenger traffic, and the closure of the company that did major overhauls of its aircraft.

August 8, 2012  By The Canadian Press

The Montreal-based airline reported a $96-million net loss in the three-month period, more than double the $46 million loss a year earlier. The loss was deeper than analysts had expected.

"As previously reported, Air Canada's operations were adversely impacted by labour disruptions in March and April of 2012 which resulted in a decline in bookings for travel originating in Canada in the immediate aftermath," Air Canada chief executive Calin Rovinescu said in a release.

"We estimate that the combined impact of the labour disruptions and the slight reduction in capacity stemming from the Aveos closure resulted in a reduction of $0.12 to $0.17 to earnings per diluted share in the second quarter 2012."

The loss was equal to 35 cents per share, up from 17 cents per share.


On an adjusted basis, the Montreal-based airline had a loss of five cents per share, up from a loss of one cent per share a year

The adjusted loss was four cents per share higher than a consensus estimate compiled by Thomson Reuters. Such estimates often exclude unusual items.

The Montreal-based carrier ended protracted battles with its employees after arbitrators selected Air Canada's contract proposals for mechanics and pilots.

Both disputes were sent to binding arbitration ordered by the federal government, which brought in back-to-work legislation after Air Canada locked out the pilots and the Machinists announced they would go on strike earlier this year.

Air Canada said Wednesday that it would have made an adjusted profit without the impact of the labour disruptions and the
bankruptcy of Aveos Fleet Performance, which had done major overhauls of the airline's planes.

Revenue for the April to June period ahead of the main summer travel period was little-changed year-to-year, rising $71 million to $2.99 billion.

Air Canada has been beset by labour problems for most of the last year with all of its major unions, which has hurt both its
reputation and its share price.

The union representing pilots voiced concerns that the launch of a low-cost carrier could threaten their job security and working conditions.

A federal arbitrator imposed a five-year collective agreement that includes, among other things, provisions allowing the airline
to create a budget carrier.

The airline said the agreement, effective until April 2016, will give it the flexibility it needs to compete with budget carrier WestJet, which operates mostly domestic flights and doesn't have Air Canada's issues with union and pension woes.

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.

It is the world's 15th largest commercial airline, providing service to more than 32 million passengers a year.


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