Air Canada posts record quarter

MONTREAL — Air Canada’s shares got a lift Wednesday after the airline surprised analysts by recording its best second-quarter revenue in its history and dramatically improved its operating income by successfully trimming costs.

On the Toronto Stock Exchange, Air Canada’s B shares soared nearly 24 per cent in heavy trading Wednesday. The stock gained 50 cents to $2.62 but remained short of the 52-week high of $3.40.

Trading volume was higher than average, with more than seven million shares traded on the TSX in the early afternoon.

Air Canada’s adjusted profit of $115 million amounted to 41 cents per share, an improvement from a year-earlier adjusted net loss of $7 million, or two cents per share, the airline said Wednesday in its most recent quarterly report.

Analysts had estimated Air Canada would have 10 cents per share of adjusted net income and $3.02 billion of revenue, according to data compiled by Thomson Reuters.

Walter Spracklin of RBC Capital Markets said Air Canada’s strong performance was driven by “good cost controls and positive yield.”

“Costs [are] coming down quicker than expected,” he wrote in a report, noting the airline is projecting lower costs for the year likely driven by lower maintenance costs.

Air Canada’s operating income increased to $174 million from $63 million, while operating revenue totalled $3.06 billion, a second-quarter record for Air Canada and up from $2.99 billion a year earlier. Passenger revenues increased three per cent to $2.76 billion on a 1.6 per cent growth in traffic and a 1.5 per cent improvement in yield. Premium class revenues increased 3.3 per cent.

Domestic revenues were flat but trans-Atlantic revenues were strong, rising six per cent driven by a 7.7 per cent pricing improvement.