Declining passenger traffic hits Air Canada bottom line in Q1

Air Canada B 3-month TSX chart

Falling passenger revenue helped send Air Canada to a wider loss in the first quarter, the airline said Friday.

Air Canada posted a net loss of $400 million, which included foreign exchange losses of $101 million. In the same quarter of last year, Air Canada lost $288 million, including a $125 million provision related to cargo investigation and losses on foreign exchange of $89 million.

The airline's operating loss for the first three months of this year was $188 million compared with an operating loss of $12 million in the first quarter of 2008.

Air Canada's operating revenue dropped to $2.39 billion, from $2.73 billion year-over-year. Passenger revenues decreased $300 million or 13 per cent to $2.01 billion.

In the first quarter of 2009, Air Canada cut its overall capacity by 10.3 per cent compared with the previous year's quarter. However, traffic declined by 10.9 per cent in the quarter.

"While fuel prices have declined from last year's record levels to provide some relief from falling demand, the airline industry in general, and certainly Air Canada, continue to face a very difficult economic environment," said Calin Rovinescu, who recently took over as the airline's president and CEO.

Air Canada Class B shares, which had risen sharply since late April, fell 47 cents to $1.33. The 52-week range is 73 cents to $9.35.