Not Bad For A Company Fresh Out Of Bankruptcy...
In its first full year
of operations since emerging from bankruptcy, Air Canada finds
itself with an enviable problem: what to do with the $300 million
net profit the airline took in for 2005?
A profit of any kind for a full-service airline like Air Canada
has been nearly unheard of lately, as other North American carriers
struggle with high fuel prices and either the reality -- or looming
threat -- of bankruptcy.
In fact, having cash on hand for the year is an anomaly usually
reserved only for low-cost carriers such as Southwest Airlines --
so how did Air Canada do it?
According to the London Free Press, a lot of it had to do with
the airline's parent company, ACE Aviation Holding, selling off
over 14 percent of its Aeroplan customer loyalty program in a
June IPO -- that alone raised almost $288 million.
It's also of note that
profits aren't unheard of for Canadian carriers. One of Air
Canada's main competitors, Calgary-based WestJet Airlines, also
posted healthy profits for 2005 -- but that's not unusual, as the
low-cost carrier has been a consistent money-maker.
Still, a profit is a profit, especially in a year that saw
soaring fuel prices and not one, but two new bankruptcies among the
other major carriers.
Having tasted solvency, Air Canada understandably wants to keep
the streak going -- through spinning off more of its operations,
according to the Free Press, while lowering its cost base to keep
up with the LCCs.
Last month, the carrier announced it would turn its low-cost
subsidiary, Air Canada Jazz, into an income trust. The airline's
maintenance arm, Air Canada Technical Services (ACTS) -- which has
also captured third-party contracts -- is also due for an initial
public offering.
"The year kicks off
with the efforts on Jazz," ACE Aviation chairperson Robert Milton
said. "ACTS remains a focus which looks to be about a year away as
it develops its own independent financial statements."
"The other key focus obviously is Air Canada," Milton added.
Pointing out the airline's new Embraer aircraft -- including, as was reported in Aero-News,
Air Canada's first E190s (right) -- as well as onboard amenities
such as seats that convert to beds for overseas flights and
in-flight entertainment screens on the back of every seat, Milton
even bragged to the Free Press that discounts carriers such as
WestJet and Southwest need to watch out for Air Canada, as well as
for other mainline carriers emerging from bankruptcy healthier than
they were before.