Air Canada Inc. (AC_A.TO, AC_B.TO, AIDIF.PK) reported Wednesday a wider net loss for its second quarter hurt mainly by labour disruptions and capacity reduction due to Aveos closure. Revenues increased on higher passenger traffic and capacity. Further, the Canadian airliner lifted its fiscal 2012 forecast for capacity growth.
Second-quarter net loss was C$96 million or C$0.35 per share, wider than last year's loss of C$46 million or C$0.17 per share. Adjusted net loss, which excluded certain items, was C$0.05 per share, compared to a net loss per share of C$0.01 in the prior year.
In the quarter, the company's capacity and, as a result, passenger revenues were negatively affected by aircraft scheduling changes due to the closure by Aveos of its maintenance, repair and overhaul facilities in Canada.
The company estimates that the combined impact of the labour disruptions and the slight reduction in capacity stemming from the Aveos closure resulted in a reduction of C$0.12 to C$0.17 to second-quarter earnings per share.
Excluding these, adjusted income per share would have been C$0.07 to C$0.12, an improvement over the same quarter in 2011, the company said.
Operating revenues grew to C$2.99 billion from C$2.92 billion in the comparable period a year ago.
Air Canada recorded earnings before interest, taxes, depreciation, amortization and impairment, and aircraft rent or EBITDAR of C$314 million, lower than prior year's C$338 million. EBITDAR margin fell to 10.5 percent from 11.6 percent a year ago. Operating income also declined from last year.
In the quarter, passenger revenue grew 3.3 percent on traffic growth and an overall yield improvement. Revenue passenger miles or traffic increased 1.4 percent and ASM capacity, as measured by available seat miles, edged up 0.6 percent. Revenue passengers carried grew 1.2 percent to 8.6 million.
Passenger load factor was 83.5 percent, higher than last year's 82.8 percent. The company said its Pacific performance was especially strong, with a revenue increase of 18.5 percent.
President and Chief Executive Officer Calin Rovinescu said, "As previously reported, Air Canada's operations were adversely impacted by labour disruptions in March and April of 2012 which resulted in a decline in bookings for travel originating in Canada in the immediate aftermath. Our brand is resilient and we were encouraged to see booking trends return to normal levels by the end of the second quarter of 2012."
Looking ahead, for the third quarter, Air Canada expects its system ASM capacity to increase in the range of 0 to 1.0 percent from last year. Air Canada expects CASM, excluding fuel expense and excluding the cost of ground packages at Air Canada Vacations, to increase by 1 percent to 2 percent.
Further, the company lifted its forecast for fiscal 2012 system capacity and now expects to increase in the range of 0.5 to 1.5 percent, compared to previous estimate of 0 to 1.5 percent increase. Domestic capacity is expected to increase in the range of 0.5 to 1.5 percent, as opposed to previous estimate of 0 to 1.5 percent increase. Air Canada continues to expect adjusted CASM to increase by 0.5 percent to 1.5 percent.
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