Air Canada Posts Best Full Year Results In 77 Year History
Air Canada’s 2014 profit set a record amid cost-cutting and strong demand, while lower fuel costs are expected to help the airline continue to improve its performance in 2015.
Net income rose to $531 million, compared with $340 million in 2013. Those numbers are before interest, taxes, depreciation, amortization and aircraft rent (EBITDAR). Final profit rose to $105 million from $10 million in 2013.
"In 2014, Air Canada achieved its best full year financial performance in the Corporation's 77 year history," said Calin Rovinescu, President & Chief Executive Officer. “We served almost 3 million more customers in 2014, or a total of 38.5 million including 3 million customers on rouge. We recorded our highest system load factor ever as we continued to expand our wide-body fleet and grow internationally. And Air Canada's share price gained 60% over the year, a more than 6-fold increase in value since the start of 2013,” Rovinescu added.
The CEO says the year ahead looks good. "While fuel prices remain volatile, the recent decrease is expected to drive significant cost savings in 2015 and provides us with an opportunity to increase adjusted net income, reduce adjusted net debt and further strengthen our balance sheet."
In the 4th quarter, EBITDAR of $319 million increased $42 million compared the previous year's quarter, excluding benefit plan amendments. But, operating expenses of $2.998 billion increased $239 million or 9% from the 4th quarter of 2013.The unfavourable impact of a weaker CAD increased operating expenses by approximately $89 million.
In the 4th quarter of 2014, AC recorded operating income of $106 million compared to operating income of $135 million in the 4th quarter of 2013, a decrease of $29 million. In the 4th quarter of 2013, Air Canada had recorded a reduction of $82 million in operating expenses related to benefit plan amendments while no such adjustment was recorded in the 4th quarter of 2014.
A 2nd straight year of record AC financial performance will help employees too - profit sharing will amount to $46 million, up from $15 million in 2013.
Capacity rose 7.8%, but passenger traffic rose 8.5%.
The airline estimates that its pension plans posted a solvency surplus of $780-million as of 01JAN, a sharp turnaround from earlier in the decade, when they were in a solvency deficiency.