Air Canada loss grows on cargo probe charge

Air Canada A 3-month TSX chart

Air Canada, the country's biggest airline, reported a deeper first-quarter loss on Thursday, partly due to a $125-million charge to cover a cargo price-fixing investigation.

The airline said it lost $288 million, or $2.88 a share, including the cost of the investigation, coupled with $89 million in foreign exchange losses. In the first quarter of 2007, Air Canada lost $34 million, including a foreign exchange gain of $33 million.

The company's operating loss was $12 million for the first quarter, excluding the provision for cargo investigation, compared with a loss of $78 million in the same quarter of last year. The airline said the reduced loss came despite a $130 million increase in its fuel expenses.

Passenger revenues increased $174 million or eight per cent from the first quarter of 2007.

"I am extremely proud of our employees who delivered an outstanding quarterly performance in what is traditionally the industry's weakest travel demand period," said Montie Brewer, Air Canada president and CEO, in a release.

Cargo charge

The airline said the charge for the price-fixing probe stems from an investigation by the European Commission, the United States Department of Justice and the Competition Bureau in Canada into alleged anti-competitive cargo pricing by some airlines and cargo operators, including Air Canada.

Air Canada said it is also named as a defendant in a number of class action lawsuits that have been filed before the United States District Court and in Canada in connection with these allegations.

"This provision does not address the proceedings in all jurisdictions, but only where there is sufficient information to do so, the airline said.

Air Canada class A shares rose 15 cents to close at $8.20 on the TSX, while the class B stock rose fve cents to $8.09.

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