Air Canada rebounds from tough 1H2012 but competitive pressure remains intense

Air Canada is welcoming a change in its fortunes during 3Q2012 after a turbulent 1H2012 characterised by high-profile labour strife and the collapse of its major maintenance provider both of which significantly pressured its financial performance as profits for the first six months of the year tumbled CAD241 million (USD241 million) to CAD306 million (USD306 million). But with the government stepping in to resolve labour disputes and the busy high season ushered in by 3Q2012, the carrier has received a reprieve from the stinging losses recorded earlier in the year.

Canadian Government-appointed arbitrators imposed Air Canada's preferred contracts on the carrier's pilots and mechanics in mid-2012 after certain employee groups engaged in work stoppages that significantly disrupted the airline's operations in Mar-2012 and Apr-2012, and pressured the carrier's earnings during 1Q2012 and 2Q2012.

Air Canada management has often remarked the deals are a necessary element of its transformation from an airline bogged down by a legacy cost structure to a carrier more capable of competing with airlines operating with lower costs.