MONTREAL — Air Canada plans to achieve sustainable profits by continuing to attract more travellers to its Canadian hubs on the way to international destinations.
The number of U.S. passengers connecting through its main hub in Toronto to international destinations more than doubled last year.
The country’s largest airline plans to add more than 450,000 seats out of the country’s busiest airport this summer by adding frequency to several routes.
It will offer daily service to Copenhagen, Madrid, Dublin and Santiago, Chile and plans to increase the number of flights to Barcelona, Spain and Athens.
“We will continue to remain disciplined in our approach to growth in 2011 but we remain focused on increasing global connecting traffic via our three main hubs (Toronto, Montreal and Vancouver),” CEO Calin Rovinescu said.
Air Canada plans to aggressively expand its international capacity, which attracts higher-paying business travellers.
Overall capacity is expected to increase by 7.5 to 8.5 per cent in the first quarter, and by 5.5 to 6.5 per cent for the full year as Air Canada adds two planes for part of the year. Domestic capacity growth will be constrained to less than 1.5 per cent.
In 2010, traffic to Asia, Europe and the U.S. increased by 11 per cent, largely due to a more than 22 per cent increase to the Pacific region.
Air Canada (TSX:AC.B) said profits rose to $134 million in the fourth quarter, well above a loss of $56 million booked a year ago.
The latest quarterly results included foreign exchange gains of $111 million.
Earnings per share came in at 42 cents compared with a loss of 25 cents per share a year ago.
Passenger revenues increased by $226 million, or 11.2 per cent, due to an eight per cent growth in traffic. About 40 per cent of the increase came from premium and business travellers.
“The results reported today confirm that we are indeed headed in the right direction,” Rovinescu told analysts.
For the full fiscal year, Air Canada reported a net profit of $107 million, compared with a loss of $24 million in 2009.
Analysts had expected Air Canada’s adjusted net loss would decrease to five cents per share on $2.58 billion of revenues in the fourth quarter, according to analysts polled by Thomson Reuters.
For the fiscal year, the net loss had been expected to increase one cent to 19 cents per share as revenues increase to $10.74 billion from $9.74 billion.
“2010 was a great year…and I believe that the progress achieved thus far positions us closer to our goal of sustained profitability,” Rovinescu added.
The Montreal-based airline recorded its highest EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) in the company’s history at $1.39 billion, up $707 million from 2009.
The full-year results took into account a load factor of 81.7 per cent, which the company said is also the highest in its history.
Air Canada will combat rising fuel costs by continuing to reduce costs and is considering additional fare increases and fuel surcharges.