Air Canada’s cargo gains help offset losses

Air Canada topped expectations as it bled less cash in its latest quarter, a sign the airline’s underlying recovery remains on course despite the blow to holiday travel caused by the Omicron variant.

Fourth-quarter adjusted earnings were “modest” but positive for the first time in seven quarters, Rousseau noted. The company reduced its net loss by 60 percent year over year. And passenger revenues climbed by $1.6 billion to more than four times the year-earlier period as flight volume soared in October and November relative to 2020.

Cargo revenues also helped offset Air Canada’s losses, jumping 163 percent to $490 million compared with the same period a year earlier.

“Air Canada Cargo has just concluded a year that saw it grow exponentially, solidifying our position as a market leader in growth over the last 24 months,” said Jason Berry, the airline’s vice-president, cargo.

“For the full year 2021, Air Canada Cargo reported revenue of $1.495 billion, an all-time high for the division. And we continue to invest in key areas for Air Canada Cargo, expanding our footprint in Frankfurt, completing the first phase of enhancements to our cold chain facilities in Toronto and the continued development of Rivo in the e-commerce space.”

As e-commerce sales and demand for delivery services continued to surge, the airline in December launched its first Boeing 767 dedicated freighter, with three more expected to hit the skies this year.

Chief executive Michael Rousseau said robust advance ticket sales, which grew almost $400 million in the quarter, give the company confidence that passengers will return and that Omicron has deferred, not cancelled, travel.

Jet fuel marked one threat to profit margins. The expense rose more than threefold compared to the end of 2020 due to more trips as well as a 67 per cent increase in the price of jet fuel, said chief financial officer Amos Kazzaz.

Despite pricier hydrocarbons and expected interest rate hikes, the rollback of travel restrictions in Canada and across the globe bodes well for Air Canada.

“The overall Canadian airline and travel sector will truly turn the corner this year, bolstered by rapidly strengthening demand for air travel,” Robert Kokonis, president of consulting firm AirTrav Inc., said in an email.

On Friday Air Canada reported a fourth-quarter net loss of $493 million or $1.38 per diluted share, compared with a net loss of $1.16 billion or $3.91 per diluted share a year before.

The Montreal-based company’s operating revenues for the quarter ended Dec. 31 were $2.73 billion, more than triple the $827 million recorded in the same period of 2020.

Analysts polled by financial data firm Refinitiv expected Air Canada to record revenue of $2.43 billion and a $539 million loss.