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February Load Factors Drop at Air Canada, WestJet

11 Mar 03(5:56 PM)

By Robert Melnbardis

MONTREAL (Reuters) - Passenger load factors at Air Canada and WestJet Airlines Ltd. fell more than three percentage points in February as Canada's top two airlines were buffeted by a turbulent travel market, the companies said on Tuesday.

Air Canada, the dominant airline in Canada and world No. 11, said its passenger load factor fell 3.1 percentage points to 73.7 percent in February from 76.8 percent in the year earlier month.

"Our international markets, very robust for close to a year, were negatively impacted this month by depressed demand reflecting the threat of war," Rob Peterson, Air Canada's chief financial officer, said in a statement.

At Calgary-based WestJet, the load factor fell 3.4 percentage points to 65.1 percent from 68.5 percent a year earlier.

A key measure of an airline's financial performance, passenger load factor represents the average number of seats sold as a proportion of those available on flights.

Over the past several months, Air Canada, WestJet and newcomer Jetsgo have been battling for bargain-hunting customers with an escalating fare war.

No-frills WestJet is in the midst of an expansion taking it into eastern Canadian markets and is adding jets, routes and flights.

The company said its February traffic, expressed as revenue passenger miles -- the number of paying passengers multiplied by the distance they flew -- rose 48.9 percent from a year earlier, while available seat miles grew 56.7 percent.

But at Air Canada, which is seeking concessions from its key unions to cut annual labor costs by C$650 million ($442 million) or 23 percent, February traffic for the mainline carrier fell 7.9 percent from a year earlier, the airline said. Air Canada's capacity decreased by 4.1 percent.

"The North American markets for February again saw much higher competitive capacity, particularly from low cost carriers," Peterson said.

"We reduced our domestic capacity significantly, primarily on high frequency routes, limiting the decline in load factor at the mainline," he added.

Traffic rose 9.5 percent at Jazz, Air Canada's money-losing regional airline, as capacity fell 2 percent. The load factor at Jazz for February was 63.2 percent, a 6.6 percentage point increase from 56.6 percent a year earlier.

Air Canada is looking to sell Jazz.

In a separate announcement on Tuesday, closely held no-frills carrier Jetsgo said its February load factor was 72 percent. A year-earlier figure was not available as the airline only began flying last June.

Montreal-based Jetsgo is adding flights to Western Canada over the next several weeks and is set to move to an expanded summer schedule in May.

The airline has been aggressively discounting ticket prices in recent months, periodically offering two-for-one seat sales. Air Canada and WestJet have been dueling with matching sales.

Air Canada shares fell 14 Canadian cents to C$2.79, or 4.8 percent, on the Toronto Stock Exchange on Tuesday. WestJet shares rose 21 Canadian cents, or 1.3 percent, to C$15.90.

($1=$1.47 Canadian)

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