Air Canada, WestJet post strong 2012 with record load factor for December

Canada’s major airlines enjoyed healthy passenger demand heading into 2013 as they reported record load factors for December, carrying substantially more passengers with modest increases to capacity.

WestJet (TSX:WJA) said its load factor for December hit a record 81.9 per cent while Air Canada (TSX:AC.B) hit record load factors for the month and the year.

Montreal-based Air Canada said its load factor rose to 82.1 per cent last month while the full-year number was 82.7 per cent, up 1.1 points in each case.

Analysts monitor load factor as a measure of how much total fleet capacity is used by an airline to carry passengers.

“These strong results, for both the month and full year, underscore the effectiveness of Air Canada’s disciplined capacity management and our award winning product,” stated CEO Calin Rovinescu.

Air Canada said it had a 3.2 per cent increase in passenger traffic last month over December 2011, with a 6.6 per cent increase to U.S. destinations and a 5.1 per cent increase on transatlantic routes.

That was a strong finish to a generally good year for Canada’s largest airline, which saw 2012 passenger traffic rise 2.6 per cent over 2011.

Air Canada’s traffic increased to nearly 4.4 billion revenue passenger miles (RPMs) in December and nearly 12.6 billion RPMs in 2012 — roughly three times the traffic carried by WestJet.

WestJet’s passenger traffic in December was up 7.2 per cent from a year earlier, rising to 1.6 billion revenue passenger miles from 1.5 billion on a six per cent increase in capacity.

For the full year, WestJet’s passenger traffic was up 7.1 per cent to 4.5 billion RPMs from 4.2 billion RPMs as it flew 17.4 million passengers in 2012, an increase of 8.6 per cent or nearly 1.4 million additional passengers.

WestJet’s December load factor was 81.9 per cent, up one point from a year earlier. Its full-year load factor was also 81.9 per cent, up 3.2 points from 2011.

“We are very pleased to close out the year with six consecutive monthly load factor records and record high loads in all four quarters,” stated president and CEO Gregg Saretsky.

He said the Calgary-based airline’s forward bookings continue to be strong.

Smaller regional rival Porter Airlines said it carried 2.45 million passengers last year, a 15 per cent increase over its 2011 levels.

The regional carrier serves about a dozen cities in eastern Canada and several U.S. destinations from its base at Toronto’s Billy Bishop Toronto City Airport, where it competes directly against Air Canada’s service operated by Sky Regional Airline.

Porter’s load factor for 2012 was 62 per cent, up from 61.7 per cent.

Porter said its December load factor was 64.3 per cent, with 77.8 million revenue passenger miles — an increase of 3.5 per cent a year earlier, on a 2.9 per cent increase in capacity.

“Overall, Porter has finished 2012 by solidifying our gains for passenger numbers and load factor through the year,” said CEO Robert Deluce.

However, Porter faces a looming deadline for finalizing a first contract with the union that represents 22 employees at the airline’s base at the Billy Bishop airport, which is on one of Toronto’s lakeside islands.

Local 343 of the Canadian Office and Professional Employees union will be in a legal strike position at 12:01 a.m. Thursday. COPE says the two sides are scheduled to meet on Wednesday.

“We sincerely hope to be able to prevent a strike and unnecessary inconvenience to the travelling public,” said COPE staff representative Mary Stalteri.

Cameron Doerksen of National Bank Financial said Air Canada’s strong traffic numbers in December resulted from improvements in most travel segments. The only load factor decline was the Pacific, dropping to 85.4 per cent from 87.1 per cent last December.

“The record December results highlight that overall air travel demand remains healthy across the geographic segments,” he stated in a research note.

He added that WestJet’s sixth consecutive monthly load factor record is a “clear indication of healthy air travel demand.”

On the Toronto Stock Exchange, Air Canada’s shares gained five cents, or 2.82 per cent at $1.82 in morning trading, while WestJet’s shares were down two cents at $20.19.