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Air Canada posts loss as demand for high-fare seats wanes

Air Canada President and CEO Calin Rovinescu speaks during a ceremony at Vancouver International Airport in Richmond, B.C., in this file photo.

DARRYL DYCK/THE CANADIAN PRESS

Air Canada confirmed its earlier report of a tough first quarter, as demand for higher fare seats waned.

Having prereleased its quarterly results on April 22, in order to pursue a new form of debt for Canadian airlines known as enhanced equipment trust certificates (or EETCs) to purchase new Boeing 777 jets, the airline confirmed Friday that the first quarter fell below expectations.

The results were better than last year year, however. Air Canada lost $260-million in the quarter, or 95 cent a share, compared with a loss of $274-million, 99 cents a share in the same period a year ago.

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The winter months can typically be tough, with higher costs associated with delays and deicing due to the weather. Yet signs of revenue pressures is a concern, say analysts.

"While the first quarter's loss was narrowed compared to the previous year, the quarter fell short of our expectations, in part due to a decline in premium travel demand. We are encouraged to see an improvement in second-quarter economy and premium-class cabin booking trends which are running above last year's levels, although the yield environment remains challenging," said Air Canada's president and chief executive officer Calin Rovinescu.

"In the quarter we made progress towards the sustainable transformation of Air Canada by narrowing our net loss as compared to the previous year. In addition, we reached an important agreement with the government of Canada on extending Air Canada's pension funding arrangements to January 30, 2021. This was then followed last week by the launch and pricing of a private offering of enhanced equipment trust certificates (EETCs) – a first for a Canadian airline," he added.

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About the Author

Guy Dixon is a feature writer for The Globe and Mail. More

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