Air Canada has reported its third quarter results and it’s a good news story. The carrier performed better-than-expected as it flew more passengers, particularly on new international routes, with a traffic increase of almost 19 per cent over the 3rd quarter from 2015. Lower fuel costs also helped boost profit.
The airline surpassed previous records for EBITDAR, operating revenues, operating income and adjusted net income. Adjusted net income hit a record of$821 million compared to adjusted net income of$734 million in the third quarter of 2015, an increase of$87 millionor 11.9% from the same quarter in 2015.
Q3 2016 EBITDAR(earnings before interest, taxes, depreciation, amortization and aircraft rent) hit$1.248 billion, the highest in its history for any quarter, compared to the previous record of$1.076 billionin the same quarter in 2015.
AC reported record operating income of$896 million, an improvement of$81 millionfrom Q3 2015. The airline also reported net income of$768 million compared to $437 million in the Q3 2015.
"I am very pleased to report record third quarter results, surpassing the previous records for EBITDAR, operating revenues, operating income and adjusted net income," said Calin Rovinescu, President and Chief Executive Officer.
"While the global economy continued to be challenged in some respects, we managed to exceed last year's record quarter EBITDAR performance by 16%, clear evidence of the success of our fleet investment strategy and the profitable expansion of our international network. These strong results underscore the successful execution of Air Canada's strategic plan and the tremendous efforts by the entire Air Canada workforce.”
During the quarter, traffic grew by almost 19% year-over-year, including 27.9% growth in international-to-international passengers connecting via Canada. Rovinescu says changes made by the airline over the past several years have laid the groundwork for this impressive growth.
“The transformative changes we have made in recent years provide us with the cost structure and flexibility to respond to competitive market conditions and grow profitably, as realized this summer with the launch of more than 20 international and U.S. transborder routes.”
Rovinescu says AC continues to use the majority of operating cash flow to finance fleet renewal and reduce net debt levels.
In Q3, record system passenger revenues of$4.106 billionwere up$390 millionor 10.5% from Q3 2015. Traffic growth of 18.9% reflected traffic increases in all of Air Canada's five geographic markets.
AC says a yield decline of 7.0% resulted principally from a 7.2% increase in average stage length as well as from increased market capacity and competitive pricing affecting primarily European services.