ALBERTA

Air Canada and WestJet flew fuller planes in November as demand continued

12/03/2014 09:04 EST | Updated 02/02/2015 05:59 EST
Canada's two largest airlines flew with fewer empty seats in November compared with a year ago as demand continued to outpace the increased capacity put on the market.

Air Canada (TSX:AC) reported a November load factor of 77.7 per cent, up from 76.5 per cent a year ago.

Traffic measured by revenue passenger miles climbed 8.7 per cent, led by increases on Atlantic and U.S. transborder routes.

The airline increased capacity measured in available seat miles by 6.9 per cent.

"These strong results achieved during a traditionally off-peak travel season demonstrate the ongoing effectiveness of our commercial strategy," said Air Canada CEO Calin Rovinescu in a statement.

Air Canada's planes were fullest in Canada with a load factor of 83.2 per cent, up from 82.8 per cent a year earlier. Traffic was up 5.4 per cent and available seats increased 4.9 per cent.

Traffic to the United States grew 12.3 per cent on a 9.6 per cent increase in capacity. The load factor was up 1.9 percentage points to 78.8 per cent. A 14.3 per cent boost to Atlantic traffic outpaced the seven per cent increase in capacity.

The Pacific routes saw the only decrease in load factor as the 10.4 per cent increase in available seats was greater than the nine per cent increase in demand.

WestJet Airlines reported a November load factor of 80.5 per cent, up from 79.7 per cent a year ago.

Traffic grew 8.0 per cent, surpassing the 6.9 per cent increase in capacity.

"We continue to be very pleased with our strong traffic growth as we achieved our second-highest load factor in November, even as WestJet Encore, which operates at lower load factors similar to most regional airlines, continued to expand," WestJet president and CEO Gregg Saretsky said in a statement.

WestJet (TSX:WJA) launched its Encore service last year in Western Canada and has been expanding the service with the recent addition of a route between Thunder Bay, Ont., and Toronto.

The airline has said it wants Encore to double its fleet of 14 Bombardier Q400 turboprops by 2016.

Analyst Chris Murray of AltaCorp Capital said November's traffic numbers point to continued strong demand that support higher prices and profit growth through the rest of 2014 and into 2015.

He added falling fuel prices should improve margins even though the airline recently said that it would offset the lower costs with reduced fares.

Analyst Cameron Doerksen of National Bank Financial said he expects strong demand will continue in December as its airfare survey suggests WestJet is focusing on higher load factors at the expense of prices to manage its revenue per available seat mile.

"We do expect some of the lower fares to be recovered through recently introduced first bag fees, however," he added.

WestJet expects to add up to $100 million per year in baggage fees following the Oct. 29 introduction of the new charges.

Meanwhile last week, WestJet's flight attendants voted to reject a tentative agreement reached between the airline and the WestJet Flight Attendant Association Board. WestJet's flight attendants are not unionized, but are represented by an employee association.

The airline said it would meet in the coming weeks with the association board and focus on understanding specific concerns, following the steps outlined in a dispute resolution process.

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