10 September 2009

At least one country's airline is flying high

After suffering through one of its most grueling years in its history, there might finally be some "light at the end of the tunnel" for Canadian airlines, says the Financial Post.

Analysts reacting to traffic results are saying they may indicate that the third quarter could prove to be the bottom not only to their declines in demand but also to the softness in pricing.

"Air Canada said its traffic fell less than a percentage point in August, compared to the 3.3 percent decline it experienced in July and the 9.1 percent drop in June," said the newspaper report.

WestJet Airlines Ltd.'s results were not as strong, with traffic falling 4.7 percent during the month, but that was in line with the drop experienced in July and ahead of the 7.1 percent decline in traffic it experienced in June.

"While both carriers have been cutting prices in order to fill their planes, WestJet said its revenue per available seat mile -- an important gauge of how much money it collects per passenger -- were also tracking in line with the second quarter, down between 16 percent and 18 percent, suggesting that pricing may have stabilized as well," the newspaper said,

"While we are encouraged by the talk of an economic upturn, and are not seeing further declines in demand, we remain cautious about a recovery," said Sean Durfy, WestJet chief executive, announcing the results.

Cameron Doerksen, Versant Partners analyst, said with demand stabilizing it "may be a sign that the bottom has been reached."

By David Wilkening

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Your Comments (1)

BUT?

While WestJet's yield is reported, there is no similar statistic for Air Canada. Simply stemming traffic declines does not make for profitability if the income from those passengers fails to cover expenses. Viability is based on revenue, not the number of butts on seats.

By Ron Kuhlmann, Tuesday, September 15, 2009