Ac Reports Loss Of $60 Million / 4Th Quarter

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MONTREAL—Air Canada is reporting a net loss of $60 million in the fourth quarter of 2011, which included foreign exchange gains of $114 million

That compared to net income of $89 million in the fourth quarter of 2010, which included foreign exchange gains of $136 million and an impairment charge on aircraft of $49 million.

The airline’s adjusted net loss per diluted share in the quarter was 64 cents compared to an adjusted net loss of 17 cents in the same quarter the year before.

Air Canada’s revenues were up slightly in the quarter, to $ 2.7 billion, from $2.6 billion in the same quarter a year earlier.

The airline was expected to lose 50 cents per share on an adjusted basis on $2.7 billion of revenues in the fourth quarter, according to analysts polled by Thomson Reuters.

That compared to a 27 cents per share profit a year earlier on $2.6 billion of revenues.

For the full year, the airline lost 72 cents per adjusted share on $11.6 billion in revenue.

Air Canada was forecast to lose 65 cents per share on $11.6 billion of revenues, compared to a 15-cent profit on $10.8 billion of revenues in 2010.

The Montreal-based carrier’s shares have recovered some of the ground lost last year as it grappled with labour disruptions of flight attendants.

Shares have increased to $1.39 from the low of 95 cents set last month, but that’s down 60 per cent from the 52-week high of $3.50.

Several analysts recently upgraded the company to outperform on the back of growing positive signs, particularly in the U.S.

“While risks still remain longer term, the near term risks are mitigated by the $2.2 billion in cash on the balance sheet,” noted Walter Spracklin of RBC Capital Markets.

The airline faces the threat of a potential work stoppage by its pilots and uncertainty over its plans to start a low-cost carrier.

The city of Montreal has urged the carrier to reverse a decision to relocate 140 jobs to Toronto from the carrier’s base in Montreal.

The jobs involve scheduling pilots and flight attendants.

The airline has said moving the functions to its new operational control centre in Toronto during the next two years will improve customer service because it will be easier and more efficient to have the people in one place.

There are now about 250 people at the facility in Toronto, where Air Canada has its main national and international hub.

The airline is Canada’s largest domestic and international full-service airline providing scheduled and charter air transportation for passengers and cargo to more than 175 destinations on five continents.

It is the world’s 15th largest commercial airline, providing service to more than 32 million passengers a year.

Edited by Kip Powick
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Just listened to the analyst conference call. More LCC smoke and mirrors. There are no details and no guidance. One can only presume that the ultimate corporate goal is to migrate as much traditional mainline flying as possible labelled as 'leisure markets' to some type of LCC operation that would to a large extent reside within the existing operational infrastructure. Clear that the goals are dramatically reduced employee costs with a guarantee that they will not creep back towards traditional mainline costs - ever.

It is more and more obvious that the latest management proposals at the pilot bargaining table regarding stealing away flying at both the low end and the high end are not part of any mature strategic plan but are intended simply to steer the pilots back towards the LCC concept embodied in TA1. Once the pilots start talking LCC again, the scope busting proposals will evaporate.

Pension has already been settled at the other bargaining tables within other processes, the age 60 issue is now ripe and unavoidable, so that does not leave a lot of other matters of significance. Neither party are going to make significant gains from status quo in any other areas.

I am certain that Lisa Raitt's office already has the draft legislation in hand, including the terms of a collective agreement renewal or a narrow process to reach one. I suspect that it will not please either party, although AC is likely to be less disappointed than ACPA. That leaves the parties one more opportunity to settle or submit to the intervention of the Minister.

The strike vote is a joke and a distraction. The result will change nothing. Nor will the current corporate plan solve the underlying problems at AC. Too much drama and not enough vision.

Edited by rudder
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Lets say you borrow $1 billion in USD from a US lender. At the time you borrow, the dollar is at par so the loan costs you $1 billion Canadian. At the end of every quarter, you must calculate the Canadian dollar value of your US dollar loan. So, if 90 days later, the Canadian dollar has declined by 10% against the US dollar, it would cost you $1.1 billion Canadian to pay off your $1 billion USD loan, if you had to. You would then book a foreign exchange loss of $100 million. No money actually changes hands. If the dollar moves the other way then you would report a foreign exchange gain.

In summary, they don't actually "make" or "lose" money in the traditional sense.

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