Air Canada reports deep loss, shares skid

Fri Feb 13, 2009 4:54pm EST
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - Air Canada reported a worse than expected quarterly loss on Friday on waning passenger revenue and sharply higher costs, and said it aims to wrest more savings from operations to preserve cash.

Shares in Canada's biggest airline fell 45 Canadian cents, or 23 percent, to C$1.50 on the Toronto Stock Exchange as investors fretted over its ability to ride out the recession.

Chief Executive Montie Brewer said the carrier, which announced 2,000 job cuts last year, aims to reduce costs by another C$100 million ($81 million) in 2009, while slicing its capacity by up to 3.5 percent.

It has already targeted up to C$40 million in savings by seeking concessions from its suppliers.

Sky-high fuel costs were a big factor in last year's capacity reduction drive. Now, oil prices have skidded by more than $100 a barrel from the July record above $147.

"Although oil prices have since retreated, our tight-capacity strategy remains valid today as demand weakens given the global economic crisis," Brewer told analysts.

The airline said last month it was laying off another 345 flight attendants.

Air Canada, which has shored up its balance sheet with C$641 million in new financing, also warned that the recession may put more pressure on its revenues in 2009. It said it has up to C$1 billion of assets it could use to increase its liquidity if needed.   Continued...

<p>An Air Canada passenger walks to catch his plane at the Calgary International Airport in Calgary, Alberta, June 17, 2008. REUTERS/Todd Korol</p>