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MONTREAL — Air Canada says its first quarter is expected to be hurt by the suspension of flights to mainland China and from Toronto to Hong Kong due to the novel coronavirus, the continued grounding of its fleet of Boeing 737 MAX aircraft and increased maintenance and pension costs.
The airline says it expects its first-quarter earnings before interest, taxes, depreciation and amortization to be about $200 million lower than the first quarter of 2019.
The outlook came as Air Canada reported a fourth-quarter profit of $152 million or 56 per diluted share compared with a net loss of $360 million or $1.33 per diluted share in the fourth quarter of 2018.
Despite the airline’s challenges, Calin Rovinescu, President and Chief Executive Officer, remains optimistic following a strong fourth quarter last year.
“These results underscore the airline’s ability to overcome major challenges as well as the deep commitment of Air Canada’s 37,000 strong team, which took care of our customers under extremely complicated operational circumstances,” he said. “Our discipline was rewarded by an 87 per cent return on our shares in 2019, which, when added to our returns over the previous nine years, made Air Canada the top performing stock on the TSX for the past decade with a 3,575 per cent return.
“We start 2020 with uncertainty from the on-going Boeing 737 MAX grounding and the constraints it imposes, as well as emerging economic and geopolitical risks and route suspensions resulting from the COVID-19 virus. However, our strong balance sheet, globe-spanning network that diversifies our revenue sources, brand strength as North America’s Best Airline as rated by Skytrax, young fleet, dedicated and talented employees and nimble management team equip us to respond effectively to any challenges that come our way.”
The fourth quarter of 2019 included foreign exchange gains of $92 million while the last three months of 2018 included foreign exchange losses of $444 million.
On an adjusted basis, Air Canada says it earned $47 million or 17 per diluted share in the fourth quarter of 2019 compared with an adjusted profit of $55 million or 20 cents per diluted share in the fourth quarter of 2018.
Analysts on average had expected an adjusted profit of 38 cents per share for the quarter, according to financial markets data firm Refinitiv.
Operating revenue totalled nearly $4.43 billion, up from nearly $4.23 in the same quarter a year earlier.
With file from The Canadian Press