AC battles challenges in Q1

Air Canada reported earnings — before interest, taxes, depreciation, amortization and impairment, and aircraft rent (EBITDAR) — of $175 million in the first quarter of 2012 compared to EBITDAR of $207 million in the first quarter of 2011. The carrier indicated that its EBITDAR of $175 million was in line with the range of $170 million to $180 million projected in the airline’s news release dated April 26, 2012. AC reported an operating loss of $93 million in the first quarter of 2012 compared to an operating loss of $66 million in the first quarter of 2011. AC’s president and CEO, Calin Rovinescu commented: “In the first quarter, despite several challenges, Air Canada reported continued progress in a number of key areas. Revenue performance was strong, particularly in the premium cabin driven by traffic growth. We ended the quarter with $2.25 billion in cash and cash equivalents representing an increase of $135 million from the previous year. We improved our balance sheet by reducing adjusted net debt by more than $200 million in the quarter.” However, Rovinescu continued: “The quarter was marked by a challenging environment, with persistently high fuel prices and volatility which resulted in a significant increase in fuel expense of $147 million, or 20% from the previous year’s quarter. In addition, our operations were disrupted by job action by a number of unionized employees, which resulted in a decline in bookings for travel originating in Canada in the immediate aftermath of these incidents. Since then, we have seen an improvement in advance booking trends. We remained focused on maintaining strong liquidity levels and the on-going implementation of cost reduction initiatives, primarily through improved business processes.” AC’s boss noted that the carrier is “currently engaged in a formal process under Bill C-33, Protecting Air Service Act, to conclude the remaining collective agreements, thereby achieving labour stability. On May 2, 2012, Air Canada announced that it had been advised by the Federal Minister of Labour, the Honourable Lisa Raitt, of the appointment of arbitrators in accordance with Bill C-33, Protecting Air Service Act, to resolve the outstanding collective agreements with each of ACPA, representing Air Canada’s pilots, and the IAMAW, representing Air Canada’s mechanics, baggage handlers and cargo agents.” And he concluded: “We are focused on maintaining the confidence of our customers and on continuing to work with all stakeholders to ensure Air Canada is competitively positioned for sustainable, long term growth.” Earlier this week, the carrier reported that its system load factor in April 2012 was 83%, up by 1.1% compared to April of 2011 when it was 81.9%. System traffic grew by 1% on a system-wide capacity decrease of 0.3%. (AC reports its traffic results on a system-wide basis, including regional airlines from which Air Canada purchases capacity). Go to http://www.aircanada.com for more.