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Air Canada Jumps to Highest Since 2008 on Costs: Montreal Mover

Oct. 4 (Bloomberg) -- Air Canada surged to the highest level in almost five years after the nation’s largest carrier said costs for the third quarter and full year will decline more than anticipated.

Air Canada jumped 13 percent to C$4.47 in Toronto, for the highest closing price since November 2008. The Montreal-based company’s stock has more than doubled this year.

Costs for each seat flown a mile, a measure of airline efficiency, will drop 3 percent to 3.5 percent in the third quarter, Air Canada said in a statement issued yesterday after the close of trading. In August, the company had predicted a decline of 1.5 to 2.5 percent. Expense reductions at the airline include sales and distribution as well as food and beverage.

“Air Canada is in the early stages of a transformational change which will lead to vastly improved operating metrics -- and ultimately a step-function increase in profitability,” Walter Spracklin, an analyst at RBC Capital Markets in Toronto, said in a note to clients today.

Spracklin recommends investors buy the shares.

Costs for 2013 will probably shrink 1.5 percent to 2 percent compared with 2012, Air Canada said yesterday. The company had previously expected a decline of 1 percent to 2 percent.

To contact the reporter on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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