Air Canada Third-Quarter Profit Beats Estimates on Fuel Costsby
Air Canada reported third-quarter profit that beat analysts’ estimates as fuel costs decreased and revenue rose during the carrier’s busiest travel season.
Adjusted earnings increased to C$2.50 a share from C$1.55 a year earlier, topping the C$2.20 average of 12 analyst estimates compiled by Bloomberg. Revenue of C$4.02 billion ($3.06 billion) exceeded the C$3.95 billion average estimate. Seat capacity this year will rise 9 percent to 10 percent following an increase of 10.5 percent in the quarter, the airline said in a statement.
A 45 percent plunge in jet kerosene prices in the past year is giving a boost to Chief Executive Officer Calin Rovinescu’s plan to cut costs through 2018. His strategy rests on the expansion of the Rouge leisure unit and the addition of new Boeing Co. 787 Dreamliners, which burn less fuel than the older aircraft they’re replacing.
Canada’s largest airline “has begun to add low-cost capacity primarily on international segments,” Walter Spracklin, a RBC Capital Markets analyst, said in a note to clients before the results were released. “Not only has this new international capacity been absorbed, but load factors have actually expanded as the result of what can only be considered an ‘over demand’ environment.”
Air Canada fell 8.5 percent this year through Wednesday, a steeper drop than the 6.6 percent decline for Canada’s benchmark Standard & Poor’s/TSX Composite Index.