Air Canada Third-Quarter Profit Rises to Record on Cost Cuts

Air Canada (AC/A) reported third-quarter profit that beat analyst estimates as the nation’s largest carrier’s cost-cutting plan continued to bear fruit.

Adjusted earnings were C$365 million ($349 million), or C$1.29 a share, beating the C$1.04 average of nine analyst estimates compiled by Bloomberg. On that basis, profit in the year-earlier quarter was C$229 million, or 82 cents, the Montreal-based airline said today in a statement.

Chief Executive Officer Calin Rovinescu is working to reduce costs at the carrier by about 15 percent in the medium term with the help of higher-density aircraft, new maintenance agreements and the July start of the Rouge leisure unit. Expense reductions include sales and distribution as well as food and beverage, the company said Oct. 3.

“Air Canada should continue to realize the benefits of its fairly sizeable” cost-reduction opportunity in the next several quarters, Fadi Chamoun, a BMO Capital Markets analyst who recommends investors to buy the stock, said in an Oct. 16 note to clients. “Improving operating margins should enable cash from operations to grow, allowing for better funding of large aircraft-related capital investments over the coming few years.”

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