June 3, 2010 / 2:43 PM / 7 years ago

UPDATE 2-Canadian flights more crowded in May, airlines say

* Air Canada, WestJet loads rise in May

* Both carriers see traffic outpace capacity gains

* Shares in the airlines post gains (Recasts to add Air Canada results)

OTTAWA, June 3 (Reuters) - Air Canada ACa.TO and WestJet Airlines Ltd (WJA.TO), the country’s two largest airlines, said on Thursday passengers levels rose last month as the economic recovery gained steam, sending shares of both rising.

Air Canada, the largest Canadian air carrier, said its load factor, or the percentage of available seats filled with paying customers, rose 2.5 percentage points from May 2009 to 82 percent, posting gains on domestic, transborder and international flights.

“Traffic grew faster than capacity in every segment, resulting in higher load factors in all markets,” Calin Rovinescu, Air Canada’s chief executive, said in a statement. “This is the sixth consecutive month in which we have reported a monthly traffic increase.”

The airline’s traffic, a measure of its paying passengers, rose 9.7 percent last month, to 4.24 billion revenue passenger miles, while capacity rose 6.4 percent to 5.17 billion available seat miles.

WestJet, the No. 2 carrier, reported a bigger May load factor and 13.4 percent boost in capacity.

The Calgary, Alberta-based carrier said its May load factor rose to 77.7 percent last month from 74.1 percent in May 2009.

Virtually all of the increase came on flights to southern markets. WestJet recently introduced year-round service to a number of vacation spots in the United States, Mexico and the Caribbean.

“The 13.4 percent growth in capacity is higher than WestJet’s guidance for Q2 capacity growth of 10 percent and may hint that demand is coming back stronger than expected, or that it is gaining market share in the package vacation business,” RBC Capital Markets analyst Walter Spracklin said in a report.

The airline industry is recovering from a sharp downturn in travel demand resulting from the recession.

Higher yields have a big impact on financial performance. For WestJet, a 1 percentage point change in yield adds C$26 million ($25 million) to its earnings before interest, tax, depreciation, amortization, and rent, the analyst calculated.

WestJet said its May traffic, which is measured by revenue passenger miles, increased 18.9 percent over last year, and it flew an additional 125,000 passengers compared to May, 2009.

Shares of WestJet rose 36 Canadian cents, or 3 percent, to C$12.35 on the Toronto Stock Exchange while Air Canada’s class-A shares climbed 3 Canadian cents, or 1.7 percent, to $1.84. ($1=$1.04 Canadian) (Additional reporting by Scott Haggett) (Reporting by Susan Taylor; Editing by Frank McGurty)

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