Air Canada’s Q2 Profit Jumps 33% As Fuel Costs Drop
Air Canada posted Q2 adjusted net income of $250 million,
an improvement of $111 million or approximately
80% over the same period last year, as the airline absorbed significant new
capacity and the negative effects of a weaker CAD were offset by lower-priced
fuel and other factors.
The carrier’s revenue for the 3 mo. ended 30JUN was
$3.414 billion, up $109 million from Q2 2014. Operating expenses rose only $31
million, even though the loonie's decline compared with the USDS increased AC’s
costs for fuel and other items by $134 million.
"I am very pleased to report that Air Canada achieved record EBITDAR
results for a 5th consecutive quarter in addition to record
operating income and adjusted net income results and significant year-over-year
improvements to operating margin and EBITDAR margin," said Calin
Rovinescu, President & CEO. "With our growth this quarter, we have
successfully increased passenger revenue by 3.9%, expanded margins,
significantly increased our adjusted net income and EBITDAR and continued to
improve our return on invested capital.”
“We have delivered on planned cost transformation
initiatives and eliminated our significant pension solvency deficit. We have
strengthened our balance sheet with increased liquidity levels, improved net
cash flows, reduced adjusted net debt, and expect further benefits from our
recent credit rating upgrade,” added Rovinescu.
Looking ahead, the CEO said AC expects to
deliver more record results in the 3rd quarter, with EBITDAR margin
expansion vs. prior year higher than the 350 basis point expansion recorded in
the 2nd quarter. “Demand continues to be robust moving into,
historically, our most important quarter given the travel demands and patterns
of our North American customers. Our capacity additions for the year, which are
largely in our international markets, are important contributors to our
increased profits and remain consistent with our plan established in a higher
fuel price environment.
Rovinescus says the “transformative changes”
made over the past few years” give the airline the cost structure, fleet and
flexibility to respond to increased competition in key markets and also to
weaknesses in the CAD or a downturn in the economy.
“If we see demand weakening, we can adjust
quickly. We are building a resilient airline for the long-term, a sustainably
profitable company and global industry leader," said Rovinescu.