Air Canada reports record pax revenues in 2Q2016, 9.3% growth in traffic

Air Canada reported (29-Jul-2016) "record" system passenger revenues increased by 2% year-over-year to CAD3.1 billion (USD2.4 billion) in 2Q2016, alongside a 9.3% increase in its traffic growth across its five geographic markets. A yield decline of 6.8% principally resulted from a 4.2% increase in average stage length, as well as increased market capacity and competitive pricing affecting primarily domestic and European services. Air Canada's network strategy for sustained profitable growth involves higher average stage lengths, an increased number of seats at, on average, lower fares in long-haul leisure markets and a higher proportional growth of international connecting traffic, all of which contributed, as expected, to a decline in yield. Operating expenses increased 3% year-over-year in 2Q2016 to CAD3.2 billion (USD2.5 billion), due to the impact of an 11.0% capacity growth and the unfavourable impact of a weaker Canadian dollar on non-fuel foreign currency denominated operating expenses. These expenses increased operating expenses by CAD51 million (USD39 million) in 2Q2016, but were partly offset by the impact of lower fuel expense of CAD141 million (USD108 million) over the same period. Air Canada's cost per available seat mile (CASM) decreased 7.3% year-over-year in 2Q2016, while adjusted CASM decreased 1.1% year-over-year, better than the 2.0 to 3.0 per cent increase forecast in Apr-2016. The better than forecasted adjusted CASM results were due to lower than previously expected regional airlines expense, aircraft maintenance expense and wages, salaries and benefit expense and to other operating expense reductions. [more - original PR]