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Air Canada shares gain after load factor in May rises

Published: 11:08 06 Jun 2013 EDT

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Air Canada (TSE:AC.B) shares rose on Thursday after the Canada's biggest airline reported that its load factor, a measure of the utilization of the airline's total available capacity, in May edged up year-over-year, following news that rival WestJet's same metric fell last month. 

For the month of May, Air Canada's system load factor was 81.8 per cent, versus 81.7 per cent in the same month last year. 

System traffic increased 2.9 per cent on a system-wide capacity increase of 2.8 per cent, the airline said, which includes regional airlines from which Air Canada purchases capacity.

"I am pleased Air Canada is reporting solid traffic results for the month of May, led by strong gains of more than six per cent in the Atlantic market," said president and CEO Calin Rovinescu in the release on Thursday. 

"The increase in our load factor to 81.8 per cent over the prior year indicates we continue to manage our capacity effectively and that our planes are flying fuller as customers keep choosing Air Canada."

The company said in its statement that its initiatives to improve operations have resulted in a 30 per cent year-over-year increase in its on-time performance in May, a measure of how many of an airline's planes take off within 15 minutes of their scheduled departure. 

On Wednesday, WestJet (TSE:WJA) shares declined as the company reported a load factor for May of 78.5 per cent, down from 79.2 per cent in the same month a year ago, even as it reported record traffic. The carrier's on-time performance had dropped 14 percentage points to 64 percent in the fourth quarter. It anticipates its revenue per available seat mile, or RASM, to drop in the second quarter, after climbing 2.4 percent in the first quarter, according to a statement released in May. 

Shares of Air Canada were up 2.7 per cent late Thursday morning at $2.29, stretching year-to-date gains to 32 per cent, while shares of WestJet edged up 0.3 per cent to $22.25. WestJet's shares have risen just over 12 per cent so far this year. 

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