Air Canada has reported a bigger quarterly loss as the airline cut fares to fill seats in long-haul leisure markets.
Load factor, which measures how effectively the airline filled seats, fell to 79.9 per cent in the fourth quarter ended December 31 from 81.1 per cent a year earlier.
The carrier’s fuel cost per litre rose 1.4 per cent.
However, the country’s largest airline said its adjusted cost per available seat mile, excluding fuel costs and unusual items, fell 6.1 per cent.
The company’s net loss widened to C$179 million (Dh502.4m), or 66 Canadian cents per share, in the latest quarter from C$116m, or 41 Canadian cents per share, a year earlier.
The Montreal-based airline’s revenue rose 7.6 per cent to C$3.43 billion.
The carrier said rising fuel costs would cause a key profit measure to fall by half in the first quarter.
The forecast implies earnings before interest, taxes, depreciation and aircraft rent of C$250m in the first quarter, trailing the C$366m estimated by Fadi Chamoun, an analyst at BMO Capital Markets. A margin of 6.9 per cent, half of last year’s level, would fall well short of the 12 per cent predicted by Cowen & Co, which also expected lower non-fuel costs.
While results were “solid,” the company’s 2017 outlook “had elements that caused some trepidation and that was enough to bring the stock back down to week-ago levels”, Walter Spracklin, an analyst at RBC Capital Markets, said in a note to clients.
Air Canada aims to expand its Rouge discount carrier and add more fuel-efficient jets such as Boeing 787 Dreamliners and 737 Max aircraft. It has begun discussions with its pilots about expanding Rouge beyond 50 aircraft.
“There is definitely interest on both sides to look into that, but it’s way to soon to speculate if we’ll be able to come to an agreement,” said Ben Smith, who runs the company’s passenger airline unit.
* Agencies
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