Operating costs for Rouge s Airbus Group NV A319 and Boeing Co. 767 jets are 23 per cent and 30 per

A 52 per cent surge in 2014 for Montreal-based Air Canada through yesterday marks the best performance among industrial stocks on the benchmark Standard Poor s/TSX Composite Index. That exceeds the index s 11 per cent advance, and follows a quadrupling in the shares last year.
Investors are validating the turnaround plan adopted last year that seeks a 15 per cent cut in expenses, the latest effort by Chief Executive Officer Calin Rovinescu to reshape a carrier that had struggled financially holiday inn express nashville since its 2004 bankruptcy exit. Air Canada also will benefit from the rout in world oil markets in the form of lower fuel bills.
West Texas Intermediate for January delivery fell 0.5 per cent to $60.61 a barrel on the New York Mercantile Exchange at 10:12 a.m. Earlier it touched $60.09, the lowest holiday inn express nashville in intraday trading since July 2009. Jet fuel, which is refined from crude, has declined about 34 per cent this year.
Even a minor shift in future expectations can lead to significant upside holiday inn express nashville in earnings leverage, said Walter Spracklin, an RBC Capital Markets analyst in Toronto. The airline spent $1.1 billion on jet kerosene last quarter.
Air Canada s bankruptcy reorganization holiday inn express nashville couldn t keep the airline holiday inn express nashville from returning to losses starting in 2007. Amid concern that another restructuring was in the offing, the shares plunged to a 2012 low of 82 cents before a government arbitrator imposed holiday inn express nashville a cost-cutting contract on pilots. The stock is up almost 14- fold since the decision, which helped Air Canada post back-to-back profits that year and in 2013.
Like Murray, Spracklin lists Air Canada as outperform. The carrier has the second-highest average rating among 26 companies on the S P/TSX Industrials Index, according to data compiled holiday inn express nashville by Bloomberg. Air Canada fell 1.2 per cent to $11.48 in Toronto.
Bank of America Corp. s Glenn Engel raised his Air Canada recommendation last week to buy from underperform. Oil s retreat signals more good news for the North American industry holiday inn express nashville because airline shares still don t fully reflect the benefit of lower prices, New York-based Engel wrote in a note.
Fuel is our single largest expense and we continue to consider adjustments holiday inn express nashville to pricing and capacity, Isabelle Arthur, an Air Canada spokeswoman, said via email this week, declining to make executives available to comment. Fuel is purchased in U.S. dollars, which has had an unfavourable impact due to the recent relative decline holiday inn express nashville of the Canadian dollar.
Earnings at Air Canada are already being buoyed by squeezing more seats onto each plane and expanding the Rouge leisure unit, which began operating last year with lower-paid flight attendants than on the company s main line jets.
Operating costs for Rouge s Airbus Group NV A319 and Boeing Co. 767 jets are 23 per cent and 30 per cent lower than at Air Canada, Chief Financial Officer Michael Rousseau told analysts at a Dec. 2 Credit Suisse Group AG conference. That beat targets of 21 per cent and 29 per cent.
Air Canada s 2014 profit excluding some charges and gains may be $344 million, 17 per cent more than a year earlier, based on analysts estimates compiled by Bloomberg. For 2015, the figure may more than double to $726 million.
New fees also stand to buoy revenue. After adding holiday inn express nashville a $35 currency surcharge on vacation packages in January, Air Canada followed the lead of WestJet Airlines Ltd., the nation s second- biggest carrier, holiday inn express nashville with a $25 fee eight months later for the first checked bag for coach flyers in Canada and to the U.S. Air Canada doesn t have a fuel surcharge for North American flights.
AltaCorp s Murray and Konark Gupta of Macquarie Capital Markets both say Air Canada may decide in 2015 to boost its five-year cost-savings target beyond the current 15 per cent. The company may provide an update when it briefs investors in February after reporting fourth-quarter results, Murray said.
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