* Fuel expense up 49 pct
* Sees 2008 capacity to change between negative 1.0-1.5 pct
Nov 7 (Reuters) - Air Canada ACa.TO flew into the red in the third quarter as fuel expense rose 49 percent, the country’s largest carrier said on Friday.
It expects full year 2008 capacity to change between negative 1.0 and negative 1.5 per cent.
Air Canada, which has launched a round of deep cuts to cope with a drop in travel demand due to the weak global economy, posted a net loss of C$132 million ($110.2 million), or C$1.32 a share, down from net income of C$273 million, or C$2.73 a share, a year ago.
Excluding one-time items, the airline posted a loss of 45 Canadian cents a share. It had been expected to earn 38 Canadian cents a share, according to a Reuters Estimates survey of analysts’ forecasts.
Operating revenue was C$3.08 billion, up 4 percent from C$2.95 billion.
Fuel expense rose to $1.1 billion due to record high fuel prices.
Last spring, Air Canada said it would cut 7 percent of its capacity in its autumn and winter schedules and chop as many as 2,000 jobs to cope with the downturn in the airline sector.
In recent months, however, the airline sector has been the beneficiary of oil prices that have dropped by more than half from record highs set this past summer.
Its shares closed up 6 Canadian cents at C$5.36 on the Toronto Stock Exchange on Thursday. They have dropped more than 50 percent this year.
ACE Aviation Holdings Inc ACEa.TO owns 75 percent of Air Canada.
Some analysts have said ACE could buy the interest it does not already own as a way to end its holding company structure, but so far efforts have been stymied by weak airline and financial industry conditions.
$1=1.198 Canadian Dollar Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Anil D'Silva