* EBITDAR estimate well above analyst estimates
* Cash position also exceeds analyst views
* C$120 mln charge expected for Aveos collapse
* Shares rise as much as 16 pct in Toronto
TORONTO, April 27 (Reuters) – Shares of Air Canada
climbed as much as 16 percent on Friday after it offered a
stronger-than-expected first-quarter profit estimate, bringing a
ray of optimism to the country’s largest airline after months
with labor strife.
The carrier, which also reported a bigger cash position than
some analysts had expected, said it would take charges of C$120
million ($120 million) related to the collapse of Aveos Fleet
Performance Inc, its plane maintenance contractor.
Shares touched a high of 96 Canadian cents on Friday before
drifting down to 94 Canadian cents on the TSX, a gain of 13
percent. It is still a far cry from the C$21 initial public
offering price in November 2006.
The airline, which reports its financial results May 4, said
late on Thursday it expected first-quarter earnings before
interest, taxes, depreciation, amortization and aircraft rent to
come in at between C$170 million and C$180 million.
That is well above Canaccord Genuity analyst David Tyerman’s
forecast of C$75 million and a C$101 million estimate by PI
Financial analyst Chris Murray.
Tyerman raised his stock target to C$6.50 from C$5.25 on the
news, which he said may reflect higher ticket prices.
The Montreal-based company also said it had C$2.25 billion
in cash and short-term investments as of March 31, up about
C$135 million from a year earlier.
“The company’s liquidity position remains very strong, as we
believe it only requires about C$1 billion to operate,” Tyerman
said in a note.
The results may also get a boost from the deferral of heavy
maintenance expenses to future quarters, due to the shutdown of
Aveos, which filed for creditor protection on March 19.
Air Canada had previously forecast a 10 percent increase in
maintenance costs in 2012, with much of the impact felt in the
first quarter, Murray said.
“We expect some costs to shift to future periods, although
we anticipate maintenance expenses to be lower than prior
forecasts given more competitive pricing obtained from alternate
vendors,” he wrote in a note.
“Initial reporting from a number of comparable airlines has
also shown some improvement over our previous assumptions for
passenger yields, particularly on a number of international
routes.”
Air Canada expects it will have sent about 50 planes to two
Quebec maintenance, repair and overhaul companies – Avianor and
Premier Aviation – from Aveos’ closure to the start of peak
summer travel in June.
Constraints in Canadian capacity and capability means the
airline must send about 60 planes out of Canada for maintenance
work, said Air Canada spokesman Peter Fitzpatrick.
Those facilities include Premier’s New York operation,
Aeroframe and TIMCO in the United States, ST Aerospace in
Singapore, Lufthansa Technik in Ireland and HAECO in Hong Kong,
he said.
“We said from the beginning work might have to go outside
Canada, but that we would give priority to Canadian providers,”
Fitzpatrick said.
