Air Canada posts $8M profit; reverses Q4 and full-year losses
Published Thursday, February 7, 2013 8:27AM EST
Last Updated Thursday, February 7, 2013 11:23AM EST
MONTREAL -- Air Canada is on the runway to achieving its goal of sustained profitability after soaring back into the black in 2012 as it reversed last year's net losses in both the final quarter and full year, the company's chief executive said Thursday.
The country's largest airline earned $131 million last year, a $380-million turnaround from 2011.
In the fourth quarter, net income was $8 million, or three cents per diluted share, reversing a net loss of $60 million, or 22 cents per diluted share, in the same 2011 period.
CEO Calin Rovinescu said the results clearly demonstrate that the carrier's plan launched three years ago to stabilize and grow on a sustained basis is working.
"While we have more work to do, Air Canada today is a stronger and more stable airline and we can now fully turn our attention to the future," he said during a conference call.
Operating revenue in the quarter rose to $2.84 billion from just under $2.7 billion.
On an adjusted basis, the airline beat expectations even though it posted a net loss for the quarter of $6 million, or two cents per share. Although a loss, it was still a big improvement on 2011 when it reported an adjusted net loss of $167 million, or 60 cents per share, for the quarter.
For the full year, net income was $131 million, or 45 cents per diluted share, on revenues of $12.1 billion. That compared with a net loss of $249 million, or 92 cents per diluted share, on revenue of $11.6 billion in 2011, which included a $55-million charge related to Aveos.
Full-year adjusted net income from continuing operations was $53 million, or 19 cents per diluted share, compared with a net loss of $122 million, or 44 cents per diluted, share in 2011.
The Montreal-based carrier was expected to post an adjusted loss of 21 cents per share on $2.8 billion of revenues in the quarter, and five cents on $12.1 billion of revenues for the year, according to analysts polled by Thomson Reuters.
"I am proud of the progress we made in Air Canada's ongoing transform in 2012" despite the challenges of labour disruptions in the first half of last year, Rovinescu said.
"We are mindful that we have much to do to achieve our goal of sustained profitability year after year after year but, as today's results show, we're on the right course."
Rovinescu cited strong revenue performance by the airline's international network, especially its routes to Europe and the Pacific.
Air Canada (TSX:AC.B) reported a 2.6 per cent increase in revenue passenger miles to 12.6 billion from 12.1 billion, while available seat miles increased 1.2 per cent to 15.48 billion from 15.29 billion.
The carrier also announced Thursday that it will introduce premium economy class seating when it takes delivery of five Boeing 777s beginning this summer, two more than previously disclosed. The first plane will be used to service the Montreal-to-Paris route beginning in July. Four aircraft will be delivered this year, with fifth arriving in the first quarter of 2014.
The planes will have more seats, while the premium economy cabin will have larger seats, greater leg room, upgraded meals, complementary bar service and priority check-in.
There are no immediate plans to extend the service to its entire fleet as rival WestJet Airlines (TSX:WJA) is doing.
Air Canada said similar configurations will be used on the 37 Boeing 787 Dreamliner planes expected to begin arriving in 2014.
The carrier said it has received no indication from Boeing that delivery of the cost-efficient planes will be delayed despite the battery problems that have grounded the fleet worldwide.
"We believe the 787 is a great airplane and we have complete confidence in the ability, the desire and indeed the imperative for Boeing now, with the support of the FAA and other regulatory bodies in other jurisdictions, to resolve the lithium-ion battery issues quickly and safely," Rovinescu said.
As it takes delivery of widebody planes, Air Canada planes to transfer existing Boeing 767 and Airbus A319s to its new Air Canada Rouge low-cost carrier.
The carrier will begin flying in July with four aircraft, but said Thursday that it will have 32 planes by the end of 2014 and eventually up to 50 aircraft.
"So Air Canada Rouge has the potential to become quite a substantial player in the leisure market where the economics cannot support our mainline network service."
On the Toronto Stock Exchange, Air Canada's shares were down four cents at $2.41 in morning trading Thursday.