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MONTREAL - Air Canada (TSX:AC.B) is seeing small signs of improvement in air travel but says a full recovery in its key business class could be least a year away, the airline's chief executive said Friday.
"The worst of the worst seems to be behind us. Sprouts of green are coming up from the earth," Calin Rovinescu said during a conference call about the airline's third-quarter results.
However, an airline such as Air Canada that is more reliant on business travel will take longer to recover, he warned analysts, noting a full recovery to 2007 revenue levels could be 12 to 18 months away.
The Montreal-based airline is Canada's largest passenger carrier. Its largest domestic rivals are Calgary-based WestJet Airlines Ltd. (TSX:WJA), which also operates a scheduled service, and Air Transat (TSX:TRZ.B), a Montreal-based charter airline.
While this recession is marked by its long duration, Rovinescu said he's not witnessing any permanent change in travel patterns.
In spite of lower passenger and cargo revenue, Air Canada reported a profit in the third quarter - thanks to lower fuel prices and foreign exchange gains.
The airline reported net income of $277 million or $2.44 per share for the quarter ended Sept. 30. That was an improvement from a year-ago net loss of $132 million or $1.32 per share.
The quarter's profit included $295 million in foreign exchange gains, in contrast to an $87-million foreign exchange loss in the third quarter of 2008, Air Canada said.
On an adjusted basis, the airline beat expectations by reporting a loss of 19 cents a share. The earnings were adjusted to remove gains of foreign exchange and a gain on assets of $1 million during the quarter.
Air Canada's operating revenues totalled $2.7 billion for the quarter, down from $3.1 billion last year.
"We continue to perform well in comparison to other North American carriers, with one of, if not the smallest, reductions in third-quarter unit revenues," Rovinescu said.
Analysts had pegged Air Canada's earnings per share at 38 cents and revenue at $2.6 billion, according to estimates compiled by Thomson Reuters.
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