Saturday, August 7, 2010

Canadian airlines rebound in second quarter

Canadian airlines rebound in second quarter

Air Canada and WestJet have reported an improvement in their financial performance for the second quarter of financial 2010, as both are boosted by demand for business travel.

Air Canada – the largest airline in the country – recorded a net loss of C$72 million for the three month period. However, this was down from a loss of C$193 for the same period in 2009.

Passenger revenue per available seat mile (RASM), an industry performance benchmark, also increase by 6.6 per cent.

“While there remains much work to do, over the past 15 months, we have met many of the objectives we set out to achieve - namely to build adequate liquidity and achieve strong revenue management and better cost control while expanding our international network,” said Air Canada president Calin Rovinescu.

Passenger revenues at the flag-carrier increased by $256 million, or 12 per cent, from the second quarter of 2009 due to an 8.7 per cent growth in traffic and a 3.3 per cent improvement in yield, the airline confirmed.

A 5.3 per cent increase in capacity growth recorded over the period was driven by demand for international and US transborder flying.

“Asian and European markets in which we added capacity are performing well, led by our Pacific routes which recorded a 37 per cent increase in revenue from the previous year’s quarter on strong traffic and yield growth,” added Mr. Rovinescu.

Air Canada also outlined plans to double its capacity between Toronto and China this autumn with introduction of daily flights year-round to Shanghai, Beijing and Hong Kong.

The closure of European airspace in mid-April due to volcanic ash reduced Air Canada’s operating income by about C$20 million.

Following the release of the results, Air Canada’s shares ebbed four Canadian cents to C$2.26 on the Toronto Stock Exchange.

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An improving picture was also reported by rival WestJet, which said net earnings increased 129.7 per cent from $9.2 million in the second quarter of 2009 to $21 for the same period of 2010.

The Calgary-based airline – which has remained profitable throughout the recession - earned C$21 million, or 14 Canadian cents a share, up from C$9.2 million, or seven Canadian cents, a year earlier.

“We are pleased to deliver our 21st consecutive quarter of profitability,” said WestJet president Gregg Saretsky.

RASM at the airline was up by four per cent to 12.80 cents.

Despite the optimism, WestJet is deferring the delivery of three aircraft from 2011 and 2012, until to 2017. As a result the airline will now be taking delivery of six aircraft in 2011 and five aircraft in 2012.

“Economic uncertainty has caused us to re-think our short-term capacity plan,” explained added Mr Saretsky.

“We have worked closely with our valued partner Boeing to further enhance our fleet plan flexibility.”


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