(RTTNews) - Airline Air Canada (AC-A.TO, AC-B.TO) reported Friday a profit for the third quarter compared to a loss in the year-ago quarter, reflecting a significant gain on foreign exchange as well as a decrease in operating expenses on lower fuel expenses. Air Canada said traffic declined 2.1% on a 3.3% cut in capacity, which resulted in a decrease in passenger load factor of 1.0 percentage point.

The airline noted that operating results continued to be adversely impacted by ongoing weak economic conditions resulting in declines in passenger and cargo revenues, partially offset by the impact of lower fuel prices year-over-year.

In a statement, president and chief executive officer, Calin Rovinescu said, "The third quarter of 2009 was of pivotal significance for Air Canada. During the quarter, we finalized a series of transactions that stabilized the company and strengthened our position to manage through the challenges brought on by ongoing weak economic conditions."

Third Quarter Results

The Montreal, Canada-based company reported net income of C$277 million or C$2.44 per share for the third quarter, compared to a net loss of C$132 million or C$1.32 per share in the prior-year quarter.

The results for the latest quarter include gains on foreign exchange of C$295 million, and a gain on assets of $1 million, while the year-ago quarter results included losses on foreign exchange of C$87 million. Adjusted to these items, Air Canada reported a loss of C$0.19 per share for the latest quarter.
Operating revenues for the quarter decreased to C$2.67 billion from C$3.08 billion in the prior-year quarter. Passenger revenues declined 13% to C$2.4 billion from the previous year, reflecting a decline in yield of 11.2 % on a drop in traffic of 2.1% and competitive pricing initiatives to stimulate demand. Premium cabin revenues declined 16% from a year ago, while it improved from a 30% year-over-year drop in the second quarter of 2009.

The airline noted that it was successful in mitigating some of the revenue decline with initiatives to stimulate traffic, generate revenues and re-engage customers. These initiatives, along with the right-sizing of its operation through capacity reductions and on-going disciplined capacity management, helped the company achieve a one percentage point improvement in system passenger load factor in the quarter.

Quarterly Traffic Results

During the third quarter, the company's traffic measured in revenue passenger miles or RPM decreased 2.1% to 14.15 billion from 14.58 billion in the same quarter last year. Passenger revenue per RPM were 16.9 cents, down 11.2% from 19 cents a year ago.

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