Air Canada returns to profitability in Q3
By The Canadian Press
Nov. 8, 2012, Montreal - Air Canada beat expectations as it returned to profitability in the third quarter by flying planes at record levels
and benefiting from lower costs and foreign currency gains.
By The Canadian Press
The Montreal-based company earned $429 million or $1.54 per diluted share. That compared with a net loss of $124 million or 45 cents per diluted share for the same period last year.
Air Canada's adjusted net income was $230 million or 82 cents per share, up from $193 million or 68 cents per share in the third
quarter of 2011.
Analysts had been looking for 70 cents per share of adjusted earnings, according to Thomson Reuters estimates.
"I'm extremely pleased with these results, particularly in view of the challenges we incurred in the first two quarters of the year
and the ongoing challenging economic times worldwide,'' CEO Calin Rovinescu said Thursday during a conference call.
"The record load factor and the strong revenue recovery following the labour disruptions and the Aveos closure earlier in the year are truly a reflection of our brand's resilience, our revenue management capabilities and some excellent work by our leadership team.''
Revenues increased 2.6 per cent to $3.3 billion as passenger revenues grew 3.1 per cent due to higher prices and traffic.
The airline's planes flew at a record 86.3 per cent full in the quarter. Pacific routes, especially to China and Japan were particularly strong in the quarter as revenues increased 13.9 per cent.
Costs, excluding fuel and ground packages at Air Canada Vacations, increased 1.6 per cent, in line with the company's August guidance.
Operating expenses decreased $65 million or two per cent, in part due to $124 million in savings from pension changes after the new
collective agreement with pilots raised the retirement age beyond 60.
Adjusted net debt in the first nine months of the year was cut by $308 million to $4.27 billion and the airline had $2.2 billion of
cash on hand.
Air Canada said it expects its capacity will grow by 1.5 to three per cent next year as it launches a new low-cost carrier that will
add seats to planes. It will also add two Boeing 777 aircraft.
Cameron Doerksen of National Bank Financial said the results were a "modest beat'' even though revenues were below forecast.
"As has been the case in previous quarters, Air Canada noted that it is experiencing yield pressure on short-haul routes in Ontario due to competitive pressure from Porter and on eastern U.S. transborder flights due to Porter and now the introduction by
WestJet of flights to New York,'' he wrote in a report.
The airline is Canada's largest domestic and international full-service airline and the 15th largest in the world, providing scheduled and charter air transportation for more than 32 million passengers a year and cargo to more than 175 destinations on five
It is preparing to launch a low cost carrier next year to service leisure routes to the Caribbean and Europe.
Air Canada also added regional flights in Western Canada to compete with budget carrier WestJet, which is also preparing to launch a regional carrier called Encore.
Chris Murray of PI Financial Corp. boosted his share price target Monday to $2.50 from $1.80 on anticipation of the strong traffic
numbers, fuel estimates and the expiration of some 80 million warrants.