(Adds comments from CEO, president passenger airlines)
By Allison Lampert
May 5 Air Canada has the means to
compete with a new ultra low-cost carrier planned by smaller
rival WestJet Airlines and has not ruled out expanding
its own discounted offering, a company executive said on Friday.
Air Canada will use its existing low-cost Rouge service,
among other tools to "compete effectively in the domestic
market," president, passenger airlines Benjamin Smith told
analysts, after the country's largest carrier reported a
quarterly loss that was much smaller than expected.
WestJet said it would launch an ultra low-cost carrier and
buy up to 20 Dreamliner planes from Boeing Co that will
enable it to offer new routes in Asia, South America and Europe.
Smith told analysts Air Canada would watch the evolution of
ultra low-cost service both in Canada and in the United States
when considering a lower-fare label.
"We have that capability. We have not chosen to do that, and
we'll be watching very closely how that plays out in the U.S.
domestic market and whether that ever makes sense to go down
that path in Canada," he said.
Smith also said he does not expect new Canadian passenger
legislation to have "a material impact" on Air Canada's
operations. Canada was planning to announce a "bill of rights"
this spring, even before a U.S. passenger was thrown off a
United Airlines flight in April, generating a flurry of negative
"My expectation is that legislation is not made based on
yesterday's headline in the United States," added Air Canada
Chief Executive Calin Rovinescu on the call.
Passenger revenue at Air Canada rose 8.1 percent to C$3.1
billion ($2.3 billion) in the first quarter ended March 31, as
passenger traffic rose 14 percent.
The company said adjusted cost per available seat mile
(CASM) — a measure of how much an airline spends to fly a
passenger — fell 5.7 percent in the quarter.
Air Canada said it expects adjusted CASM to fall 3-5 percent
Fuel costs jumped 48 percent on comparatively higher oil
Air Canada said its net loss was C$37 million, or 14
Canadian cents per share, in the quarter, compared with net
income of C$101 million, or 35 Canadian cents per share, a year
Excluding one-time items, the company lost 32 Canadian cents
per share. Analysts on average had expected a loss of 61
Canadian cents per share, according to Thomson Reuters I/B/E/S.
($1 = 1.3776 Canadian dollars)
(Reporting by John Benny in Bengaluru; Editing by Sai Sachin
Ravikumar, Bernard Orr)