With fuel up 49% in third quarter, Air Canada reports net loss of $132m
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With fuel up 49% in third quarter, Air Canada reports net loss of $132m
November 6, 2008

A 49% increase in fuel expense drove Air Canada to a net loss of $132 million in the normally profitable third quarter compared with a $273 million net income in the same quarter last year.

Fuel expense increased $348 million in the third quarter to $1.1 billion due to record high fuel prices. Partly offsetting this increase was solid operating revenue growth of $121 million or 4% versus the third quarter of 2007.

Passenger revenues increased $106 million or 4% from the third quarter of 2007. Air Canada reduced overall capacity by 3.5% in the third quarter. Traffic decreased 2.2% on this capacity reduction resulting in a 1.0 percentage point improvement in system passenger load factor. Yield grew by 6.2%, mainly reflecting higher fares and fuel surcharges to partially offset the impact of higher fuel prices in the third quarter.

The net loss for the third quarter of $132 million included non-cash mark-to-market net losses of $93 million on financial instruments, consisting primarily of fuel hedge contracts, and net losses on foreign currency monetary items of $87 million. This compared to net income of $273 million in the third quarter of 2007, which included net gains on foreign currency monetary items of $104 million.

'Against a backdrop of unprecedented fuel costs, Air Canada is one of the few North American carriers to report a third quarter operating profit,' said Montie Brewer, president and CEO.

'Looking ahead, forward bookings are tracking in line with announced capacity reductions. With our investments to offer customers an industry-leading product and the youngest, most fuel efficient fleet of any North American network carrier, we are well positioned to manage through the challenging environment.'

During the quarter, 75% of domestic Canada sales or 63% when combined with U.S. sales, were made directly with Air Canada, either online or through call centres.

FlyForLess is not affiliated with any media companies nor does it represent or work for Air Canada. This article is published with the sole purpose of making information available for those who wish to stay informed on Air Canada's actualities.

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