Air Canada posts smaller-than-expected loss on higher traffic

(Reuters) - Air Canada AC.TO reported a smaller-than-expected quarterly loss on Monday as the carrier flew more passengers and fares were higher on average.

FILE PHOTO: An Air Canada Airbus A330-300 aircraft is seen at Zurich Airport January 9, 2018. REUTERS/Arnd Wiegmann/File Photo

Canada’s largest airline said traffic rose 11.4 percent and passenger revenue per available seat mile, a key revenue measure for airlines, rose 3 percent in the first quarter.

“The demand environment continues to show strength, and our advance bookings are in line with expectations,” Chief Executive Calin Rovinescu said in a statement.

The Montreal-based carrier is expanding its lower-cost carrier, Rouge, as passengers seek cheaper ways to fly. Like rival WestJet Airlines WJA.TO, the company is also raising fares to combat rising jet fuel costs.

Air Canada trimmed the top end of its full-year forecast for adjusted cost per available seat mile to 1 percent from 1.5 percent. It maintained the low end of the forecast, which projects a drop of 0.5 percent.

The carrier’s fuel costs per liter jumped 16 percent in the quarter. Rising costs are an ongoing concern for airlines, as high fuel prices have swelled operating expenses.

Air Canada’s operating expenses rose 11 percent and cost per available seat mile (CASM) - a measure of how much an airline spends to fly a passenger - rose 2.4 percent.

The airline’s net loss widened to C$170 million ($132 million), or 62 Canadian cents per share, in the quarter, from C$13 million, or 5 Canadian cents per share, a year earlier.

On an adjusted basis, the company lost 19 Canadian cents per share, smaller than analysts’ average estimate of a loss of 44 Canadian cents, according to Thomson Reuters I/B/E/S.

Operating revenue rose to C$4.07 billion from C$3.64 billion.

($1 = C$1.29)

Reporting By Taenaz Shakir and Allison Lampert; Editing by Shounak Dasgupta and Maju Samuel