Air Canada Declines Most Since 2009 on Loss: Montreal Mover

Air Canada fell the most in more than three years after reporting a preliminary loss for the first quarter that was wider than analysts estimated, hurt by impairment costs and flight cancellations caused by bad weather.

Canada’s largest airline dropped 13 percent to C$2.62 at the close of trading in Toronto, the largest single-day decrease since October 2009.

The adjusted net loss was about C$143 million ($139.1 million), Montreal-based Air Canada said today in a statement. That’s bigger than the C$131.4 million average forecast in a Bloomberg survey of five analysts. In the same period a year ago, the adjusted net loss was C$162 million. Air Canada didn’t provide per-share figures in today’s announcement.

“This is a disappointment,” Jacques Kavafian, an analyst at Toll Cross Securities Inc., said in a telephone interview from Toronto. “The trading environment for the airlines now is pretty good, so I thought Air Canada stood a good chance to report one of their best Q1 results in recent history. What they came up with is a surprise.”

Kavafian said he plans to keep his buy rating on the stock, “assuming this Q1 loss is a one-time event.”

Results included an impairment charge of C$24 million related to Airbus A340-300 aircraft, as well as an estimated C$10 million due to flight cancellations caused by “severe” weather conditions and “operational challenges” at Air Canada’s major Canadian airport hubs, the carrier said.

Net Loss

The company said it experienced aircraft deicing service delays at Toronto Pearson International Airport, its main hub, during the period.

Air Canada also said its net loss probably narrowed to C$260 million from C$274 million a year earlier. The operating loss widened to C$106 million from C$91 million, according to the statement.

The company said it released the preliminary figures to comply with Canadian securities regulation as it “explores a range of debt financing activities.”

Isabelle Arthur, a spokeswoman for Air Canada, said today that the company is considering a sale of enhanced equipment trust certificates backed by aircraft leases to finance new planes. Any decision on the issuance of EETCs would be announced in a press release in compliance with disclosure rules, Arthur said in an e-mailed statement.