Air Canada reports lower profits as fuel prices bite

posted on 31st October 2018 by Justin Burns
Air Canada reports lower profits as fuel prices bite

Air Canada has reported its profit fell to C$645 million (US$491 million) in the third quarter (Q3) of 2018 ending 30 September despite traffic growing as higher fuel costs hit the finances.

Fuel per litre rose 39.7 per cent in Q3 from a year earlier and many airlines are being hit by the increase and are raising ticket prices and baggage fees in response. In Q3 last year, the airline reported a profit of $1.72 billion.

Q3 EBITDAR (earnings before interest, taxes, depreciation, amortization, impairment and aircraft rent) were C$1.265 billion (2017: $1.360 billion) and record Q3 operating revenues came in at $5.415 billion.

Q3 capacity growth was 6.7 per cent, and Air Canada saw record system passenger revenues of $5.018 billion which increased $504 million or 11.2 per cent from Q3 of 2017.

The increase in system passenger revenues was driven by traffic growth of 7.5 per cent and a yield improvement of 3.4 per cent, despite an increase in average stage length of 1.3 per cent which had the effect of reducing system yield by 0.7 percentage points.

Passenger revenue per available seat mile increased 4.2 per cent over the same quarter in 2017.

Air Canada president and chief executive, Calin Rovinescu said: “Strong revenue and cost management substantially offset the challenges we faced in the quarter, principally the significant increase in fuel prices.  Once again, the strength of our brand and of our people shone through in the quarter.”

He added: “Going forward, we expect our revenue momentum to continue in the fourth quarter and into next year. Indeed, with the trends we are seeing now, we expect our PRASM performance, both in the domestic market and throughout the network, to continue to improve in the final quarter of 2018.”