Air Canada on cusp of finalizing CSeries order as airline swings to Q1 profit

MONTREAL – Air Canada says it is on the cusp of firming up its order for up 75 Bombardier CSeries passenger aircraft.

The country’s largest airline said Friday that its letter of intent announced in February to buy 45 CSeries 300 planes with an option to purchase up to 30 more will be finalized soon, subject to conditions being met.

The Montreal-based carrier applauded Delta Air Lines for ordering up to 125 CSeries 100 planes, making it the largest customer for the new commercial jet.

“(It) is great news for Bombardier and confirms that our confidence in this new next generation technology was well-placed and will benefit us well into the future,” CEO Calin Rovinescu said during a conference call about its first-quarter results.

Bombardier has had trouble selling its signature CSeries, but the aerospace and transportation manufacturer has regained sales momentum for the aircraft in recent weeks.

Air Canada (TSX:AC) said it’s on a path to posting record results this year after beating analyst expectations. It swung to a $101 million profit in the first quarter ended March 31, helped by a 25 per cent drop in fuel costs.

The airline said the profit amounted to 35 cents per diluted share compared with a loss of $309 million or $1.08 per diluted share in the same quarter last year. Operating revenue totalled $3.34 billion, up from $3.25 billion.

On an adjusted basis, Air Canada said it earned a first-quarter profit of $85 million or 30 cents per diluted share, down from an adjusted profit of $122 million or 41 cents per share a year ago.

Air Canada was expected to earn 18 cents per share in adjusted profits on $3.26 billion of revenues, according to analysts polled by Thomson Reuters.

The strong results prompted Air Canada’s shares to gain 13 per cent or $1.08 at $9.36 in morning trading on the Toronto Stock Exchange.

Passenger traffic increased 7.7 per cent compared with the same quarter last year, while capacity increased 8.2 per cent.

The company said it expects full-year pre-tax earnings will increase between four to eight per cent this year despite economic challenges in Western Canada that have prompted the airline industry to boost promotions and lower fares to stimulate demand.

Despite weakness mainly in Alberta, conditions are playing out as expected in the rest of the country, Rovinescu told analysts.

He said the airline has adjusted by using smaller planes and shifting capacity to other markets.

Note to readers: This is a corrected story. An earlier version incorrectly said fuel costs were down 35 per cent.