(Reuters) - Air Canada beat estimates, helped by third-quarter yields and lower costs, with executives from the country’s largest airline optimistic about travel heading into the busy winter season.
“We’re feeling good about what we’re seeing with future bookings,” Benjamin Smith, the carrier’s President, Passenger Airlines, told analysts on Wednesday without giving more specifics.
Yield grew by 0.4 percent on an annual basis, the first reported absolute yield growth in a quarter since the first three months of 2014, Smith said.
Montreal-based Air Canada, which has been adding more destinations in Europe and Asia, sees opportunities from service vacated by carriers like insolvent Air Berlin and struggling Alitalia.
“What we are seeing ... is the elimination in service from the weaker carriers such as Air Berlin and Alitalia into North America which definitely is providing opportunities for us,” Smith said, without elaborating.
Air Canada expects initial expressions of interest from bidders before year’s end for a previously announced plan to launch its own loyalty program with partners, Chief Executive Calin Rovinescu said.
Air Canada said it expects costs to go up slightly in the rest of the year due to higher wages.
The carrier said adjusted cost per available seat mile
for the full year would decrease 3 percent to 4 percent in 2017, compared with the 3 percent to 5 percent drop it estimated earlier.
Air Canada said passenger revenue rose 9.1 percent to C$4.48 billion ($3.53 billion) in the third quarter, while traffic increased 9 percent. That helped operating revenue jump nearly 10 percent.
Cost per available seat mile — a key measure of how much an airline spends to fly a passenger – fell 2.1 percent, on an adjusted basis, Air Canada said.
The airline’s profit in the latest quarter more than doubled to C$1.79 billion, or C$6.44 per share, from C$768 million, or C$2.74 per share, a year earlier.
That was largely due to a net income tax recovery of C$793 million in the latest quarter.
Excluding items, Air Canada earned C$3.43 per share in the latest quarter, beating analysts average estimate of C$3.28, according to Thomson Reuters I/B/E/S.
Operating revenue rose to C$4.88 billion in the three months ended Sept. 30 from C$4.45 billion a year earlier.
Air Canada stock was down 4 percent in afternoon trade.
Reporting by Allison Lampert in Montreal and John Benny in Bengaluru; Editing by Savio D'Souza and Phil Berlowitz