Reuters: Regulatory News: UPDATE 1-Air Canada moves on plans to trim costs, boost capacity

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UPDATE 1-Air Canada moves on plans to trim costs, boost capacity Jun 10th 2013, 14:00 Mon Jun 10, 2013 10:00am EDT TORONTO, June 10 (Reuters) - Air Canada said on Monday that it would trim costs by up to 15 percent over the medium term even as it adds capacity, reflecting new fuel-efficient planes, the launch of a low-cost carrier and other cost-cutting measures. Canada's largest airline said it expected 2014 capacity to jump between 9 percent and 11 percent over 2013 levels as it adds five new Boeing 777-300ER and seven Boeing 787 aircraft to its fleet and introduces its Rouge discount carrier in July. The bulk of the additional capacity will be on international routes, where the company is keen to expand its business. Air Canada said its transfer of Embraer 175 aircraft to privately held airline Sky Regional would also help lower its overall cost per available seat mile by up to 15 percent. "We will continue to attack costs, continue to develop new sources of revenue, improve the customer experience and adapt to the competitive environment," Chief Executive Officer Calin Rovinescu said on a webcast investor presentation. "In other words, we do have a plan to transform Air Canada into a sustainably profitable airline." The company targets an improvement of its balance sheet and a return on invested capital that exceeds its weighted average cost of capital by 2015. After forging new labor deals with its unions and winning a government extension of the cap on special payments to its pension fund, Air Canada said it may eliminate the fund's deficit by 2020. The Montreal-based airline said it expected second-quarter costs per available seat miles to fall between 0.5 percent and 1.5 percent, excluding fuel and unusual items. It previously forecast a range between a 0.5 percent decrease and 0.5 percent increase. Air Canada shares rose 0.8 percent to C$2.29 on the Toronto Stock Exchange in early trading. Link this Share this Digg this Email Reprints

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