Air Canada shares plunge as oil rises to record

Fri Jul 11, 2008 4:32pm EDT
 
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CALGARY, Alberta (Reuters) - Shares of Air Canada fell to a record low on Friday, dropping 15 percent as oil prices climbed to a new high.

Air Canada's A shares dropped 89 Canadian cents to C$5.01 on the Toronto Stock Exchange. The stock has dropped 64 percent over the past 12 months.

Shares of ACE Aviation Holdings Inc, Air Canada's parent, also plunged. ACE's B shares fell C$1.81, or 13 percent, to C$12.24, also a record low.

The airline, Canada's largest, has struggled to cope with high fuel costs, which are cutting into profits. Air Canada has tacked fuel surcharges on to its ticket prices and announced last month it would cut 2,000 jobs and cull its routes to lower costs.

On Thursday the airline said 632 flight attendants, 9 percent of its in-flight staff, would be let go as part of those cuts.

Fuel is the biggest single expense for airlines, accounting for up to one-third of costs. Oil prices rose to yet another record on Friday, touching $147.27 a barrel, before falling back to $145.08, up $3.43.

(Reporting by Scott Haggett; editing by Rob Wilson)