Air Canada looks to raise cash as profit falls
By Jeffrey Jones
TORONTO (Reuters) - Air Canada may raise up to C$800 million ($750 million) selling and leasing back aircraft and other inventory, it said on Friday after reporting its second-quarter profit fell 21 percent due to surging fuel costs.
Air Canada, the country's largest airline, has tallied the worth of numerous assets and will focus efforts in the coming months on determining how much cash to extract amid tough times in the industry, Chief Financial Officer Michael Rousseau said.
The move comes as Air Canada prepares to cut 2,000 jobs and reduce its capacity by 7 percent in the autumn and winter to cope with sky-high fuel costs and a drop in air travel, especially in the United States.
"We are planning to spend a great deal of time looking at that over the next couple of months," Rousseau told analysts.
He gave no details about the timing or structure of any transactions.
"But we obviously have done a lot of homework determining what is available and what the market conditions are, and we will take opportunity when it presents itself," he said.
At the end of the second quarter, the airline had nearly C$1.5 billion in cash and short-term investments to draw on, down from C$1.8 billion a year earlier. Sales and lease-backs and other transactions could be used to bolster that position as operating costs rise.
In the quarter, Air Canada earned C$122 million, or C$1.22 a share, down from a year-earlier profit of C$155 million, or C$1.55 a share. Continued...