Air Canada progresses on cost cuts

Washington DC
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Air Canada made progress on its programme to reduce costs with gains from its new pilots agreement during the third quarter.

Michael Rousseau, chief financial officer of Air Canada, says that the airline recorded a C$124 million ($124 million) reduction in costs due to an amendment to its pilots contract that allows cockpit crew members to work past age 60, during an earnings call on 8 November.

Operating expenses fell by 2% to C$2.9 billion during the period compared to a year earlier.

Air Canada anticipates additional cost savings as it shifts its Embraer 175 fleet to its contract carrier Sky Regional Airlines from February 2013 and launches a new wholly-owned low-cost carrier in June 2013.

Adjusted cost per available seat mile (CASM) rose 1.6% to 10.7 Canadian cents in the third quarter compared to 2011. This was an improvement on the 3.6% year-on-year increase in CASM excluding fuel and ground packages at Air Canada Vacations during the prior quarter.

Fuel costs also rose during the period. Air Canada paid an average of 87.8 Canadian cents per litre for jet fuel, which was up 2.3% from 85.8 Canadian cents in 2011.

The airline paid 90.8 Canadian cents per litre of jet fuel during the quarter ending 30 June.