(Adds quote from CEO, analyst's commentary)
By Allison Lampert
MONTREAL, Nov 5 (Reuters) - Air Canada AC.TO , the
country's biggest airline, reported a better-than-expected
quarterly profit on Thursday, helped by lower fuel costs and
higher-than-anticipated demand.
Lower costs boosted the company's operating margin by 6.5
percentage points during the third quarter ended Sept. 30.
Montreal-based Air Canada said it now expected its adjusted
cost per available seat mile, which excludes fuel expenses, to
decline by up to 1 percent in 2015 as a weaker Canadian dollar
increases some expenses. The carrier had previously forecast a 1
percent to 2 percent decrease.
Air Canada chief executive Calin Rovinescu said Canadians
continued to travel in the quarter despite a weaker economy, and
the carrier received a boost from its U.S. operations.
"Even if we were in what the Bank of Canada deemed a
recessionary environment, people were still traveling,"
Rovinescu told analysts on a conference call.
Rovinescu said "it's too early to say" what action Air
Canada will take following Tuesday's Quebec Court of Appeal
decision, which ordered the carrier to keep heavy maintenance
operations in Montreal.
Air Canada stock rose 4.3 percent to C$11.33 in morning
trading.
In 2013, Air Canada appealed the case first brought to court
by the province of Quebec, which argued the carrier breached its
legal obligations to keep heavy maintenance operations in
Quebec, Manitoba and Ontario. urn:newsml:reuters.com:*:nL1N12Z03L
In a note to clients BMO analyst Fadi Chamoun said the main
driver of Air Canada's performance was a more moderate decline
than expected in the key performance measure passenger RASM, or
revenue per available seat mile. Generally, the higher the RASM,
the more profitable the airline.
"Air Canada continues to deliver record results amid a
demand environment that continues to surprise to the upside,"
Chamoun wrote.
On an adjusted basis, the company earned C$2.50 per share in
the quarter, higher than the average analyst estimate of C$2.21,
according to Thomson Reuters I/B/E/S.
The company's net income rose 35 percent to C$437 million
($332 million), or C$1.48 per share.
Operating revenue rose nearly 6 percent to C$4.02 billion,
above analysts' estimate of C$3.94 billion.
($1 = C$1.31)