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Air Canada climbs on highest ever load factor as traffic increases nearly 11%

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Air Canada (TSE:AC.B), Canada's largest carrier, rose on Friday after the company reported an all-time record for its load factor, a measure of how full its planes are, as capacity increased and traffic surged 10.8 percent in August. 

Shares climbed 2.6 percent early today, to C$9.06 in Toronto, stretching year-to-date gains to almost 22 percent.

The Canadian airline reported a system load factor of 89.8 percent, up from 89.5 percent in August 2013, representing an all-time high for any month in the company's history. 

System-wide capacity increased 10.4 percent and traffic rose 10.8 percent over the same period.

The news, announced late Thursday, follows rival WestJet's (TSE:WJA) results, which also reported an all-time record load factor in August of 89.3 percent. 

Air Canada's results are system wide, which means they include Air Canada rougeTM, which began operations in July last year, and regional airlines from which the company purchases capacity.

"I am extremely pleased to report a record load factor of 89.8 per cent for the month of August during which we served more than four million customers, more than in any month in Air Canada's 77-year history," said president and chief executive officer, Calin Rovinescu. 

The company said that growth in capacity and traffic were led by significant increases in traffic in Atlantic and US transborder markets. 

"These strong traffic results demonstrate that we continue to effectively execute both our international growth plan and Air Canada rouge leisure strategy," said Rovinescu. 

Last month, the company's stock took a hit after saying yields will continue to decline this year as it packs fuller planes. Yield, or average fare per mile, declined 2.1 percent in the April-to-June period. Rovinescu said yields will continue to fall this year as the airline adds more economy class seats and operates longer flights with a view to boosting profit.

The average length of flights increased 2.5 percent in the second quarter from the same period a year earlier, reducing yield by 1.5 percentage point, Air Canada said.

But net income was C$223 million, or 75 Canadian cents per share, in the April-to-June period, compared with a net loss of C$23 million, or 9 Canadian cents per share, a year earlier.

 The company says its Air Canada Rouge carrier has exceeded its expectations, and has allowed it to compete more effectively in leisure markets on a more cost effective basis. Indeed, its adjusted cost per available seat mile, a key metric in the airline industry, dropped by 4.7 per cent in the second quarter. That was slightly more than it projected three months ago.

Air Canada is Canada's largest domestic and international airline serving more than 180 destinations on five continents. It provides scheduled passenger service directly to 60 Canadian cities, 49 destinations in the United States and 73 cities in Europe, the Middle East, Asia, Australia, the Caribbean, Mexico and South America.

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