Brian Dunn/MONTREAL
Air Canada suffered a net loss of C$82 million ($54 million) last year after taking a C$282 million charge relating mainly to its take-over of Canadian Airlines. Former charter operator Canada 3000 is meanwhile planning to buy Royal Airlines to form what will be the country's second-largest carrier.
Air Canada reported a C$86 million operating profit after higher fuel prices added C$233million to costs after tax. It took charges of $178 million for labour expenses relating to the Canadian acquisition, $72 million for the "integration" of Canadian and "customer service costs", and $32 million against a threatened pilot strike. Turnover rose to C$9.28 billion, up from $6.44 billion - the results incorporating Canadian from July.
Despite the impact of the merger, analysts believe Air Canada may have put the worst behind it. James David of UBS Warburg says "recently signed agreements with several unions should deliver labour peace for the next four or five years".
Canada 3000's plans to acquire Royal in an all-stock deal worth C$84 million will form a carrier with C$1 billion in annual sales, 4,000 employees and 34 aircraft, with 10 more on order. Air Canada and affiliates have over 370 aircraft and 46,000 employees.
Canada 3000 focuses on medium- and long-haul flights, and Royal on short-haul. It is keen on Royal's service in the lucrative Montreal-Toronto-Ottawa-Halifax corridor, dominated by Air Canada, but does not plan to challenge the flag-carrier. "We're not trying to recreate Canadian Airlines," says Canada 3000 chief financial officer Don Kennedy. "Their strategy was to fly wingtip-to-wingtip with Air Canada."
Source: Flight International
