ALBERTA

Air Canada passenger traffic up 12.9% in March; WestJet posts 1.5% increase

04/06/2015 08:20 EDT | Updated 06/06/2015 05:59 EDT
Canada's two largest airlines both reported an increase in passenger traffic in March as demand for air travel continued despite the shock to the economy from a rapid decrease in oil prices.

Air Canada (TSX:AC), in particular, did well last month, reporting a 12.9 per cent increase in passenger traffic. The strong increase saw its load factor improve to 83.1 per cent from 81.7 per cent in March 2014 despite an 11.1 per cent increase in system-wide capacity.

WestJet Airlines (TSX:WJA) reported a 1.5 per cent increase in traffic in March from a year earlier as a record 1.7 million people flew on the Calgary-based airline and its regional subsidiary, WestJet Encore.

However, WestJet's capacity grew 4.8 per cent, causing its load factor — or the amount of seats that are used — to fall by 2.7 points to 81.3 per cent, from 84 per cent in March 2014.

Load factor is one of the statistics used by airlines and analysts to measure whether an airline has right number of flights and seating for the level of passenger demand.

"Air Canada generated greater traffic in all markets resulting in an unprecedented volume of passengers transported for the month," president and CEO Calin Rovinescu said in a statement

"Our traffic increase was led by significant growth in the U.S. transborder, Atlantic, Pacific and Latin American and Caribbean markets. These strong traffic results underscore the effectiveness of our commercial strategy focusing on international growth and the strategic deployment of Air Canada rouge to compete more effectively in leisure markets."

WestJet CEO Gregg Saretsky said load factors have been depressed by the industry's increased supply of seats to some southern sun markets that has been rising faster than demand. Transat AT (TSX:TRZ.B) has said industry seat capacity to sun destinations was up 12 per cent this winter.

"Despite this, the overall demand environment remains strong," Saretsky said in a statement, adding that revenue per available seat for the first quarter is expected to be in line with prior guidance.

On the Toronto Stock Exchange, WestJet's (TSX:WJA) shares closed down $1.29 or 4.33 per cent at $28.50 on Monday, while Air Canada shares were off 19 cents or 1.57 per cent at $11.88.

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