MONTREAL -- Air Canada's shares soared to their highest level in more than five years Friday after reporting record summer results as it launched a new low-cost carrier, substantial cost decreases and higher revenues.

Shares of Canada's largest airline hit $6.19 in early morning trading, a high not seen since mid-2008, before the recession. There were up more than six per cent, gaining 34 cents at $5.93 in later trading on the Toronto Stock Exchange.

Investors have warmed up to the Montreal-based airline over the past year as the shares have increased from a low of $1.59.

"While we have lots of work ahead I am particularly pleased with the market's endorsement of our direction," CEO Calin Rovinescu said during a conference call to discuss what analysts described as "impressive results."

The carrier's adjusted net income rose to $365 million, an increase of nearly 60 per cent from last year's third quarter, which coincides with the months of July, August and September.

The adjusted earnings amounted to $1.29 per share, which was 26 cents per share above analyst estimates of $1.03 per share.

Under standard accounting, Air Canada had $299 million or $1.05 per share of net income, also above estimates but down from last year.

Analysts had already been optimistic about Air Canada's prospects for improvement over 2012's third quarter when the airline had $229 million or 82 cents per share of adjusted net income and $359 million of net income before adjustments.

"We are on a path to sustained profitability and positioning Air Canada as a stronger national and global competitor," Rovinescu told analysts.

Air Canada recorded a 4.9 per cent increase in system-wide passenger revenues, compared with the third quarter of last year. Its costs, excluding fuel and Air Canada Vacations, decreased by 3.4 per cent with more the promise of more reductions to come. Costs are expected to fall another two to three per cent in the fourth quarter and 1.5 to two per cent next year.

This year's third quarter included results from Air Canada Rouge, a new discount carrier that began flying in July. With just four planes, the operations are small but exceeded Air Canada's expectations, noted chief financial officer Michael Rousseau.

By the end of the winter season, Rouge is scheduled to have 14 narrowbody aircraft in its fleet jammed with more seats. Rouge will service 23 sun destinations previously operated at a higher cost by the mainline carrier.

Air Canada plans to transfer A319 and Boeing 767 aircraft to Rouge as it begins to receive delivery of fuel-efficient Boeing 787 Dreamliners early next year.

The aircraft and several new large Boeing 777 planes will help Air Canada to continue expanding its global reach. Plans to increase system-wide capacity by nine to 11 per cent next year signals that some international routes could surge by 20 to 30 per cent.

The Atlantic market performed very well in the third quarter but Air Canada is also focused on expanding its reach in Asia.

"Remember this is one of the biggest emerging markets anywhere are in Asia and... you can assume that there are going to be significant growth in the traffic that occurs in the Pacific," Rovinescu said, adding that no new routes to Asia are planned next year, beyond flying to a new airport in Japan.

In Canada, the airline said the start-up of WestJet's (TSX:WJA) regional Encore service hasn't had a "significant impact" to date and will only be about one-third of the size of Air Canada's regional fleet at its maturity.

Walter Spracklin of RBC Capital Markets said cost reductions were core to Air Canada's strong results.

"Overall, it was a very strong quarter in which Air Canada did a solid job in managing controllable costs while shoring up its underlying business. We believe AC's capacity growth plans in international markets make sense and it is encouraging to see the cost controls continuing," he wrote in a report.