UPDATE 3-Air Canada unveils new seat class, recovery on track

Thu Feb 7, 2013 1:23pm EST
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* Makes first full-year profit in five years

* To launch premium economy seat class in July

* Says Dreamliner delivery schedule on track

* Fourth-qtr oper profit C$46 mln vs loss of C$98 mln year ago

By Nicole Mordant and Bhaswati Mukhopadhyay

Feb 7 Reuters) - Helped by tighter cost controls and fuller flights, Air Canada's operations returned to profit in the fourth quarter, and the airline said it would launch premium economy services on overseas flights to try to woo more higher-paying travelers.

Canada's biggest carrier also posted a net profit for 2012, its first annual profit in five years, in what analysts saw as a sign that management's 3-year-old plan to stabilize the high-cost, debt-laden airline is bearing fruit.

"Everything that you want to see from a fundamental standpoint was trending well," RBC Capital Markets analyst Walter Spracklin said of the results, pointing to higher load factors, traffic and yields at the airline.

Emboldened by new labor contracts with all its unions, Air Canada launched a number of initiatives to cut costs and boost revenue over the past year, outsourcing more regional flights, adding international routes and revising maintenance contracts. It plans to launch a lower-cost carrier, Rouge, in July.   Continued...