news: travel

UPDATE 3-Air Canada tops forecasts as traffic, revenue rise

By Susan Taylor

OTTAWA, Nov 4 (Reuters) - Air Canada (ACa.TO) (ACb.TO) reported a bigger than expected quarterly profit on Thursday, as Canada's No. 1 airline increased its lucrative business travel traffic and continued an aggressive cost-cutting plan.

Riding a recovery in air travel, the Montreal-based airline said the results also reflect gains in international markets, notably on its Pacific flights.

On the ropes last year as it faced a hefty debt and recession-driven downturn in demand, Air Canada said it has already met its C$300 million annual savings target for 2010. It currently projects C$350 million in savings for 2011, toward its C$530 million target.

The airline reported its third-quarter operating income climbed to C$327 million ($327 million), nearly five times year-earlier levels of C$68 million. Closely watched earnings before interest, taxes, depreciation, amortization and aircraft rent, or EBITDAR, rose to C$581 million from C$320 million.

National Bank Financial analyst Cameron Doerksen credited better cost control for the robust operating income and adjusted earnings per share, which "handily" beat his estimates.

"Although the beat relative to consensus was modest on the EPS line, we believe the outperformance on an operating basis could drive positive momentum in this stock this morning," UBS analyst Tasneem Azim said in a note. Azim had forecast EBITDAR of C$554 million.

Net income fell to C$261 million, or 91 Canadian cents a share, from C$277 million, or C$2.44 a share, a year earlier.

Excluding a C$90 million foreign exchange gain in the latest quarter and a C$295 million gain a year earlier, adjusted earnings came to 64 Canadian cents per share, compared with a loss of 19 Canadian cents last year.

Azim expected adjusted earnings of 46 Canadian cents a share, while Doerksen forecast 40 Canadian cents.

Revenue rose to C$3.02 billion from C$2.67 billion, largely in line with analyst estimates.

Air Canada B shares were up 2 percent at C$3.91 on the Toronto Stock Exchange late Thursday morning. The stock has surged about 215 percent so far this year.


http://www.reuters.com/article/idUSSGE6A30H320101104