(Reuters) -Air Canada said it would redeploy capacity to Asia Pacific routes on softer European demand, after reporting a lower second-quarter profit that came in ahead of analysts' estimates on Wednesday.
North American carriers are trying to control costs while protecting pricing power, as a rush to cash in on booming demand for summer travel left them with excess capacity and softer fares in certain markets. Air Canada (TSX:AC) shares opened down 2%.
Mark Galardo, Air Canada's executive vice president, revenue & network planning, told analysts he expects stronger demand for Pacific routes in the back half of 2024.
"We're very happy with the margins that we're driving," Galardo said. "I think you can expect the Pacific to continue to be relatively robust all into the end of the year."
Canada's largest carrier is also reviewing the impact of its network schedules on lucrative corporate travel which is showing momentum, but still up to 30% below 2019 levels.
Last month, the carrier cut its full-year core profit forecast, citing a lower-yield environment and competition in international markets.
Montreal-based Air Canada said it plans to increase its available seat mile capacity during the third quarter to between 4% and 4.5%, compared with the same three months in 2023.
Airlines are also facing heightened labor and maintenance costs. Air Canada is negotiating with pilots who want to narrow a pay gap with higher-paid aviators at major U.S. airlines.
Air Canada CEO Mike Rousseau told analysts that agreements have to be “cost-competitive in the Canadian environment for us to be successful.”
The carrier's adjusted profit fell to C$369 million ($268.52 million) or C$0.98 adjusted earnings per diluted share, from C$664 million, or C$1.85 per share, a year earlier.
Analysts on average were estimating adjusted earnings per diluted share of C$0.92 per share, according to LSEG data.
The carrier is also part of a larger consortium bidding on high-frequency rail services in Canada. Its presence generated criticism from a transportation advocacy group over a possible conflict of interest. Air Canada declined to comment on the project.
($1 = 1.3742 Canadian dollars)