Montreal — The Canadian Press Published on Friday, Nov. 06, 2009 6:47AM EST Last updated on Friday, Nov. 06, 2009 7:35AM EST
In spite of lower passenger and cargo revenue, Air Canada AC.B-T turned reported a profit in the third quarter – thanks to lower fuel prices and foreign exchange gains.
Canada's largest airline reported profit of $277-million or $2.44 per share for the quarter ended Sept. 30.
That was an improvement from a year-ago net loss of $132-million or $1.32 per share.
The airline pointed out that the quarter's profit included $295-million in gains on foreign exchange of $295-million, in contrast to an $87-million foreign exchange loss in the third quarter of 2008.
On an adjusted basis, the airline reported a loss of 19 cents a share. The earnings were adjusted to remove gains of foreign exchange and a gain on assets of $1-million during the quarter.
Air Canada's operating revenue totalled $2.7-billion for the quarter, down from $3.1-billion last year.
Analysts had pegged Air Canada's earnings per share at 38 cents and revenue at $2.6-billion, according to estimates compiled by Thomson Reuters.
“The third quarter of 2009 was of pivotal significance for Air Canada,” said Calin Rovinescu, the company's president and chief executive officer.
Air Canada CEO Calin Rovinescu
“During the quarter, we finalized a series of transactions that stabilized the company and strengthened our position to manage through the challenges brought on by ongoing weak economic conditions.”
Air Canada posted operating income of $68-million for the quarter, a drop from $112-million recorded a year ago. The airline said its operating results continued to be affected by weak economic conditions.
The Montreal-based airline said passenger revenue fell by 13 per cent in the July-September quarter from the previous year to $366-million.
Air Canada saw a 2.1-per-cent drop in passenger traffic and cut capacity by 3.3 per cent.
These were however partly offset by the positive impact of lower fuel prices.
The airline also said it succeeded in improving its passenger load factor by one percentage point compared to the previous quarter thanks to new capacity management approach.
Mr. Rovinescu added that the airline industry continued to face a challenging revenue environment and did not expect to see a full recovery for another 12 to 18 months.
“Although passenger revenue performance reflects the challenges that all airlines are facing, we were successful in mitigating some of the revenue decline with initiatives to stimulate traffic, generate revenues and re-engage customers,” he said.
Air Canada said its Cost Transformation Program was on track to achieve an expected annual revenue and cost reduction initiatives of $50-million in 2009 and $250 by 2010.
The airline said international growth was also a priority in the coming quarters.
In October, Air Canada announced a code share agreement with Continental Airlines, and said it also plans to introduce new non-stop services to destinations across Europe.
The airline said it is also pushing for a culture change within its operations which will incorporate simplified processes and a “just-do-it” mentality.
Air Canada shares closed at $1.14 Thursday on the Toronto Stock Exchange.
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