UPDATE 2-Air Canada profit beats estimates, stocks jumps

Fri Nov 8, 2013 12:53pm EST
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(Updates with market reaction, conference call details, CEO and analyst comments)

By Solarina Ho

TORONTO Nov 8 (Reuters) - Air Canada's third-quarter results handily beat analysts' estimates on Friday as a key measure of costs fell, helping to push its stock to levels not seen since the financial crisis.

Shares of Canada's largest airline jumped more than 9.5 percent at one point after it reported a 59.4 percent surge in adjusted net income. Year-to-date, the stock has soared nearly 250 percent.

Results exceeded analysts' expectations set after Air Canada said last month that cost control measures were having a better-than-expected impact and that adjusted net income and earnings before interest, taxes, depreciation, amortization, impairment and aircraft rent (EBITDAR) were expected to be above 2012 levels.

"The strength was across the board - better revenue, better costs, better yield," RBC Capital Markets analyst Walter Spracklin wrote in a client note.

"Overall, it was a very strong quarter in which (Air Canada) did a solid job in managing controllable costs while shoring up its underlying business."

Apart from launching the low-cost Rouge carrier, which has surpassed the airline's targets, Air Canada beefed up its international network and boosted capacity to fend off intensifying competition.

The company expects its system capacity, as measured by available seat miles, to increase in the range of 3 to 4 percent in the fourth quarter. Next year, system capacity is still expected to increase by 9 to 11 percent compared with 2013.   Continued...