Air Canada plans more international expansion as it reports record earnings

Air Canada expects about 90 per cent of capacity growth to come from international markets this year, about a third from new routes, as the country’s largest airline repositions assets from Western Canada as a result of the downturn in the oilpatch.

“Air Canada is specifically focused on seeking new international growth opportunities to generate increased profit,” chief executive Calin Rovinescu said during an investor call Wednesday.

Already about two-thirds of the airline’s revenue comes from outside Canada, which Rovinescu said has provided a buffer from the slowdown in markets that rely on the oil industry like Edmonton, Fort McMurray, and Calgary.

“We are better immunized from weaknesses in Canada than ever before, including weakness in Alberta,” said Rovinescu.

He said the company moved fast to respond to the drop in activity caused by low oil prices.

“We reacted very quickly, as you know, to weaknesses that we saw in Western Canada and Alberta. We did it before our other domestic competitors had done likewise, and we moved some capacity out of Alberta last year,” said Rovinescu.

Meanwhile, the low oil prices helped boost the company’s financial results, pushing adjusted annual profit to a record high for the second year in a row.

The airline’s adjusted net income for 2015 was $1.2 billion — more than double the previous record of $531 million in 2014.

Adjusted net income for the full year equalled $4.18 per diluted share. For the fourth quarter, earnings were 40 cents a share, in line with analyst expectations according to Thomson Reuters data.

Without adjustments, Air Canada’s net income for 2015 as a whole was $308 million — up from $105 million in 2014. In the fourth quarter, it had a net loss of $116 million, up from a $100-million loss a year earlier.

Traffic growth of 8.6 per cent in the fourth quarter reflected increases in all of Air Canada’s five geographic markets.

Rovinescu said the low Canadian dollar reduced the number of Canadians flying abroad, but that it had also led to a boost in tourists flying to Canada.

Air Canada also announced Wednesday that it intends to buy up to 75 Bombardier CSeries 300 aircraft, with 45 firm orders and the option to buy 30 more.

The Quebec government has also agreed to drop a lawsuit related to maintenance commitments against the company after Air Canada agreed to have heavy maintenance work for the CSeries planes carried out in the province.

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