Air Canada oper profit falls on labor trouble

Wed Aug 8, 2012 8:23am EDT
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(Reuters) - Air Canada ACb.TO said operating profit fell 14 percent for the second quarter as labor disruptions and closure of its plane maintenance contractor weighed on the results.

Canada's largest airline, which competes with WestJet Airlines (WJA.TO: Quote), recently sealed labor agreements with all its big unions after more than a year of fractious labor relations.

It won key union support for its bid for more relief on payments to erase its pension fund deficit, which doubled to C$4.4 billion in 2011.

Air Canada slightly raised the lower end of the forecast range for full-year system capacity. It now expects system capacity to increase 0.5-1.5 percent.

The operating income in the quarter fell to C$63 million ($63.2 million) from C$73 million a year earlier.

The net loss widened to C$96 million, or 35 Canadian cents per share, from C$46 million, or 17 Canadian cents per share, a year earlier.

On an adjusted basis, the airline reported a net loss of 5 Canadian cents per share.

The carrier estimates the labor disruptions and the closure its plane maintenance contractor have shaved off 12 Canadian cents to 17 Canadian cents from its earnings per share in the quarter.

Aveos Fleet Performance Inc, once the airline's maintenance division, halted operations in March and laid off roughly 2,600 workers, most of whom were employed at maintenance centers in the cities of Montreal, Winnipeg and Vancouver.   Continued...