Air Canada posts net profit, sees recovery signs
By Susan Taylor
OTTAWA (Reuters) - Air Canada reported a quarterly net profit on Friday and said it sees signs the bottom of the recession is behind it although it does not expect a full recovery for another 12 to 18 months.
The country's biggest airline said its results continue to be bruised by economic weakness and declines in passenger and cargo revenue, but conditions are no longer deteriorating.
"The worst of the worst seems to be behind us," Chief Executive Calin Rovinescu said on a conference call with analysts. "Sprouts of green are coming up from the earth."
Air Canada said its cautious outlook reflects the company's reliance on premium, business-class travel over leisure travel to drive revenue.
Premium cabin yield sank nearly 20 percent in the third quarter from the same period in 2008 on waning corporate demand, while economy cabin yield fell 10.4 percent.
"An airline that is more reliant on business travel will take a longer time in the cycle to recovery," Rovinescu said. "When we talk about 12 to 18 months, we are looking at a cycle of recovery for the corporate customers."
The Montreal-based company said it still faces an "extremely challenging environment", but a cash balance of close to C$1.5 billion ($1.4 billion) gives it the financial flexibility needed to mitigate the effects of a weak economy.
"The real focus for Air Canada is trying to ride out the storm," said Salman Partners analyst Jayson Moss in an interview. Continued...