Air Canada reverses its fortunes, firms Boeing order
Thursday November 3, 2005

ACE Aviation Holdings, parent of Air Canada, reported third-quarter net income of C$270 million ($229.6 million) compared to an C$81 million loss in the year-ago period."Our ongoing efforts to reposition this company are clearly paying off," ACE Chairman and CEO Robert Milton said in a conference call. "These results for the third quarter, traditionally our best, are the strongest results reported by any North American carrier for the period and reflect our ability to now achieve North American industry-leading levels of profitability versus low-cost carriers as well as legacy carriers."

ACE's third-quarter 2004 results included C$313 million in pre-tax restructuring and reorganization costs. The company emerged from bankruptcy protection on Sept. 30, 2004.

Operating income in the 2005 quarter climbed 31.7% to C$320 million from C$243 million last year. Revenues were up 13.5% to C$2.83 billion as the carrier raised fares and boosted load factor 2 points to a company record 82.4%. RPM growth outpaced ASM growth 9% to 6% and passenger yield rose 7% to C17.6 cents. Operating RASM was C16.7 cents, also a hike of 7%.

An 11.5% increase in operating expenses to C$2.51 billion was driven almost entirely by a 46.1% surge in fuel costs. Unit cost was reduced 3% excluding fuel, while CASM including fuel rose just 5% to 14.8 cents.

ACE's net income through the first nine months was C$361 million compared to an C$895 million loss at the same point last year. Operating income was up 305.8% to C$487 million, operating revenue climbed 9.2% to C$7.47 billion and expenses rose just 3.9% to C$6.98 billion. Reorganization and restructuring items cost the company C$871 million last year.

Following resolution of its disagreement with the Air Canada Pilots Assn. through binding arbitration, AC also revived its order for 32 777s and 787s and expects the first 777 deliveries in January. It will begin taking delivery of 45 Embraer 190s this month.

The carrier also said it postponed the planned public sale of a minority stake in AC Jazz, its Regional affiliate, until market conditions improve.


by Brian Straus
ATWOnline