News Column

Air Canada posts better Q4 results but feels chill of December ice storm

February 12, 2014



MONTREAL _ Air Canada (TSX:AC.A) says it had the best financial results in its history last year by several financial measures, despite the impact of severe weather and a weaker dollar in late 2013.

Its full-year adjusted earnings were a company record $340 million, or $1.20 per share _ six-times hither than in 2012.

Under standard accounting, Air Canada's its net income was $10 million or two cents per share last year, compared with a 2012 a net loss of $136 million or 52 cents per share.

"I am extremely pleased to report Air Canada's best full year financial performance in the corporation's history," said Calin Rovinescu, Air Canada's president and chief executive officer.

"Our performance in 2013, especially the last three quarters where adjusted net income improved each quarter versus the prior year, establishes a strong foundation for continued success in 2014."

Still, Rovinescu said that this year's first quarter will continue to feel the impact of weather-related costs and the effect of the dollar's weakness against the U.S. currency.

He said that this quarter's EBITDAR earnings, which exclude items such as aircraft rent, interest and taxes, will be $15 million to $30 million below the first quarter of 2013.

It says severe weather in December reduced the quarter's EBITDAR by $15 million.

Under standard accounting, Air Canada had a $6-million net loss or two cents per share in the fourth quarter, compared with a loss of $60 million or 22 cents per share. For the full year, its $10-million profit compared with a 2012 net loss of $136 million or 51 cents per share.

Air Canada's adjusted net income in the fourth quarter was $3 million or one cent per share, compared with a year-earlier loss of $5 million or two cents per share. Its $320-million full-year adjusted profit compared with a $55 million or 20 cents per diluted share in 2012

Revenue was up slightly to $2.894 billion for the fourth quarter, an increase of $55 million from a year earlier. For the full year, 2013 revenue was $12.38 billion _ up $268 million from a 2012.

The Montreal-based airline reported strong passenger traffic in January on top of a 2.1 per cent gain last year and outpacing a 1.9 per cent increase in capacity. The full-year load factor increased 0.1 percentage point to 82.8 per cent.

The airline followed rival WestJet's (TSX:WJA) lead a couple of weeks ago in hiking fares by two per cent in response to the falling Canadian dollar, a move that later copied by other airlines.

The lower loonie has put significant pressure on airlines because fuel and the cost of airplane purchases and rentals are paid in U.S. dollars, although some of the fuel is hedged to protect against fluctuations. Fuel prices, one of the largest costs for an airline, are up 8.9 per cent over the last three months in U.S. dollars, but up 13.2 per cent in Canadian currency.


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Source: Canadian Press DataFile


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