Air Canada cuts routes on fuel price spike

Fri Mar 18, 2011 12:25am EDT
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TORONTO (Reuters) - Air Canada, the nation's largest carrier, said late on Wednesday it is suspending unprofitable routes and cutting the frequency of others as it wrestles with high fuel prices.

The company, which earlier this month reported a lower load factor for February, said that effective May 1 it would suspend its Ottawa-Thunder Bay, Ottawa-Washington Dulles, Montreal-Washington Dulles, Calgary-Chicago, Calgary-San Francisco and Calgary-London, Ontario routes.

It said the routes were no longer profitable in the current high fuel price environment.

The airline also reduced its forecast for system capacity growth from the previous target of between 5.5 percent and 6.5 percent over 2010.

"In response to higher fuel prices, Air Canada now expects 2011 system wide capacity growth of 4.5 percent to 5.5 percent versus 2010," the airline said in a statement late on Wednesday.

The company said it would continue to adjust fares and fuel surcharges in response to market conditions and make adjustments to capacity as required.

($1=$0.98 Canadian)

(Reporting by Pav Jordan; editing by Jeffrey Hodgson)