It will be the end of 2004 before Canadian air traffic returns to pre-2001 levels, according to Transport Canada. But airlines there are recovering faster than their US counterparts.
Air Canada's unexpectedly strong third quarter proves that its positive but tiny second quarter net income signalled the start of a comeback rather than a fluke. The carrier's C$124 million ($80 million) third quarter net profit on C$2.75 billion operating revenue exceeds analysts' forecasts and puts the airline on course for a possible full year profit - its first since 1999.
One big difference between the Canadian and US markets is the small number of airlines north of the border. The demise of Canada 3000 a year ago left the country with only Air Canada and its discount rival WestJet. Since then several startups have launched, but they are still too small to make much difference. WestJet turned in a predictably strong third quarter with C$23 million net profit on revenues of C$203 million. This was the Calgary-based carrier's 23rd consecutive quarterly profit.
Transatlantic and transpacific routes were Air Canada's most productive, with revenue up 17%. Tango and mainline domestic routes also showed a 7% boost in revenue and 5% boost in yield. Trans-border US routes are still weak, even though they account for 21% of Air Canada's revenue. The other soft spot is short-haul routes operated by regional subsidiary Jazz.
Jazz' traffic has fallen 30% in the past year, largely due to a C$24 security tax imposed on all round trip flights. As a result, Jazz plans to lay off about 9% of its workforce, cutting 391 jobs by January.
UK investment fund Marathon Asset Management has shown its confidence in Air Canada's cost-cutting and spinoff strategy, becoming Air Canada's second-largest institutional shareholder.
DAVID KNIBB SEATTLE
Source: Airline Business