August 5, 2010 / 11:19 AM / in 7 years

UPDATE 1-Air Canada posts Q2 loss on higher operating expenses

* Q2 loss C$0.72/shr vs EPS C$1.55 yr ago

* Operating revenue rose 13 pct

* Expects Q3 CASM, excluding fuel expense, to decline

Aug 5 (Reuters) - Air Canada ACa.TOACb.TO on Thursday reported a second-quarter loss, hurt by higher operating expenses, and said it expects third-quarter cost per available seat mile (CASM), excluding fuel expense, to decline.

Canada’s largest airline plans to increase its third-quarter system available seat miles capacity by 7 percent to 8 percent.

It expects CASM, excluding fuel expense, to drop from 2009 levels by 4.5 percent to 5.5 percent. For the second quarter, net loss was C$203 million ($199.6 million), or 72 Canadian cents a share, compared with net income of C$155 million, or C$1.55 a share, a year ago.

On an adjusted basis, the airline reported a loss of 26 Canadian cents a share.

Analysts on average were expecting the airline to post a loss of 16 Canadian cents a share, on revenue of C$2.59 billion, according to Thomson Reuters I/B/E/S.

Operating expenses were up 4 percent, due mainly to capacity growth, higher fuel prices and increases in pension and commission expenses, the airline said in a statement.

Passenger revenues rose 12 percent due partly to traffic growth, the company said in a statement. Passenger revenue per available seat mile increased 7 percent.

Operating revenue rose 13 percent to C$2.63 billion.

Air Canada’s class B shares closed at C$2.30 Wednesday on the Toronto Stock Exchange.

$1=1.017 Canadian Dollar Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Anne Pallivathuckal

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