Air Canada Swings To Loss As Fuel Costs Soar

May 5, 2017

Air Canada reported its first quarter 2017 results on Friday showing it dipped into the red with a net loss of CAD$37 million (USD$27.1 million).

The loss compared to a net profit of CAD$101 million in the same period last year as fuel costs rose by 48 percent.

Revenue for the period was up 9 percent on the previous year at CAD$3.64 billion, but with expenses up 15.9 percent to CAD$3.7 billion, the operating loss was CAD$54 million, from a CAD$154 million operating profit in 1Q16.

Fuel costs jumped CAD$213 million to CAD$659 million, with the airline consuming more as it expanded operations, and paying more per litre.

Air Canada carried 10.9 million passengers during the quarter, a 9.7 percent boost from 2016. RPM (revenue passenger miles) traffic rose 14 percent, but ASM (available seat miles) capacity increased faster at 15.4 percent as it expanded international flying. The resulting load factor was down by a percentage point to 80.1 percent.

“This year represents the third year of planned significant capacity growth as we execute our international expansion strategy,” Air Canada’s chief executive Calin Rovinescu said.

Capacity growth will begin to slow in 2018 as the focus shifts to narrow-body fleet replacement with the introduction of Boeing 737 MAX aircraft later in the year, Rovinescu added.

Yield dropped 5.1 percent to 16.5 Canadian cents, with adjusted CASM operating costs falling 6 percent to 11.6 cents.

Looking forward, Air Canada expects adjusted second quarter CASM (cost per available seat mile) to drop by between 1.5 and 2.5 percent. For the full year, adjusted CASM is expected to fall by 3.0 to 5.0 percent.

(Airwise)