Air Canada posts $37-million loss

MONTREAL — Air Canada executives say the country’s biggest airline is better positioned than it has been in more than a decade to respond to WestJet’s plan for a new low-cost service.

“We actually have many more tools at our disposal, which gives us a much better feeling and confidence that we are well-positioned to respond to whatever gets put in front of us,” said Ben Smith, Air Canada’s president of passenger airlines.

The Montreal-based company (TSX:AC) has tested the use of its Rouge subsidiary on some domestic routes and could deploy its planes, as appropriate, to compete with a new WestJet basic service that is set to launch next year.

In addition, premium seats could be removed from its Rouge and Air Canada planes to match the number of economy seats that WestJet’s venture will have.

Air Canada also has more flexibility because of the industry’s move to charge lower fares but higher fees for checked bags, reserved seats and other things.

WestJet (TSX:WJA) has estimated ultra-low-cost airlines could grow to account for five per cent of the Canadian market.

However, Air Canada says the country faces impediments such as higher costs, including taxes, airport fees and security charges, that are different from the United States and Europe.

CEO Calin Rovinescu explained Air Canada will have no problem with WestJet’s plans to expand its main service on international routes by adding at least 10 Boeing 787 Dreamliners beginning in 2019.

“The addition of incremental competition is something that at this stage is not troubling to us,” Rovinescu told analysts Friday on the company’s first-quarter conference call.

Meanwhile, Air Canada expects the federal government’s planned passenger bill of rights will address the issue of people being forcibly removed from aircraft because of overbooking, a problem that has given U.S. carriers a black eye in recent weeks.

“All in all, we expect to have a reasonable and measured dynamic which should not materially impact our operations,” he added.

Air Canada swung to a $37-million loss in the first quarter as higher fuel prices contributed to increased operating costs.

The loss was equal to 14 cents per share and contrasted with a $101 million profit in last year’s first quarter, when crude oil prices were near 13-year lows.

Excluding one-time items, its adjusted loss was $87 million or 32 cents per share, much better than the 61 cents per share loss forecast by analysts polled by Thomson Reuters.

Revenue were up $299 million from last year to $3.64 billion, but its operating expenses were up by $507 million.

The airline said fuel prices were about 48 per cent higher than in the first quarter of 2016, adding $244 million in costs. In addition, Air Canada recorded a $30 million provision related to a fine imposed in March on several cargo carriers.

The European Commission alleges the 11 airlines colluded to fix cargo prices between 1999 and 2006. Air Canada says it followed the law and will fight the allegations.

On the Toronto Stock Exchange, Air Canada’s shares closed up nine per cent or $1.15 to $13.94 in Friday trading.

Just Posted

Relatives of murdered family critical of killers’ sentences

Open letter to sentencing judge criticizes ruling allowing killers to apply for parole in 25 years

City rolling out Green Carts

Green Carts used for organics, such as yard waste, food scraps and pet waste

New teaching standards applauded

New code of standards affecting teachers, principals and superintendents to kick in Sept. 1, 2019

Updated: Red Deer gets WHL Bantam Draft and Awards Banquet

WHL will holds its draft and awards ceremony in Red Deer for next three years

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

Ottawa vows legislation allowing firms to settle corporate corruption

OTTAWA — The Canadian government is vowing to introduce legislation for corporate… Continue reading

‘Lost Tapes’ series examines Malcolm X through rare footage

ALBUQUERQUE, N.M. — Malcolm X was reviled and adored during his lifetime… Continue reading

Woe, Canada: Germany ousts Canada 4-3

GANGNEUNG, Korea, Republic Of — Germany has knocked Canada out of the… Continue reading

Twenty years later, figure skating’s most famous backflip remains amazing (and illegal)

Figure skating involves spins, jumps, twizzles and a whole host of other… Continue reading

You don’t need to chop like a TV chef to get the job done

Standing in line at the emergency room, makeshift bandage around my finger,… Continue reading

Seychelles swaps debt for groundbreaking marine protection

CURIEUSE ISLAND, Seychelles — With deep blue waters, white sand beaches and… Continue reading

Trump endorses raising minimum age to 21 for more weapons

WASHINGTON — President Donald Trump endorsed stricter gun-control measures Thursday, including raising… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month