CALGARY – Air Canada is flying high as a result of its new low-cost carrier, substantial cost cuts and higher revenues, but the airline’s CEO was sounding a cautionary note during a business speech in Calgary on Tuesday.
“Air Canada has come a long way in only a few short years,” CEO Calin Rovinescu in a speech to the Van Horne Institute in which he noted that last week the airline posted the best quarterly results in its history.
“Still our transformation into a sustainability profitable global carrier continues apace and my intention today was not to spike the ball and declare victory,” he said.
“We will not allow complacency to sink in.”
Shares in Air Canada are currently trading at their highest level in more than five years after a strong third quarter where the carrier’s adjusted net income rose to $365 million, an increase of nearly 60 per cent from last year’s third quarter, which coincides with the months of July, August and September.
The adjusted earnings amounted to $1.29 per share, 26 cents per share above analyst estimates.
Rovinescu said Air Canada’s next “great leap” will stem from the arrival of its fuel-efficient Boeing 787 Dreamliners next March, which will allow the airline to become a bigger player in international markets.
The aircraft and several new large Boeing 777 planes will help Air Canada to continue expanding its global reach. Plans to increase system-wide capacity by nine to 11 per cent next year signals that some international routes could surge by 20 to 30 per cent.
“Although we have not yet announced any new routes for the 787, the aircraft’s ability to efficiently carry a mid-sized passenger load transoceanic distances, make it ideal for a market such as Calgary-Beijing,” said Rovinescu.
Air Canada currently has only a 0.3 per cent share of the traffic from Europe and Asia to the United States that flies on non-U.S. carriers. Rovinescu thinks that figure would be more “reasonable” at a 1.5 per cent share, which would account for an extra $400 million a year in revenue.
Rovinescu was also positive about the success of Air Canada Rouge, the new discount carrier that began flying in July with just four planes.
By the end of the winter season, Rouge is scheduled to have 14 narrowbody aircraft in its fleet jammed with more seats. Rouge will service 23 sun destinations previously operated at a higher cost by the mainline carrier.
