Air Canada AC-T +1.61%increase reported a lower second-quarter profit on Wednesday, as excess capacity in certain markets and stiff competition on international routes hurt its pricing power.
North American carriers are struggling to protect their pricing power as a rush to cash in on booming demand for summer travel left them with excess capacity, forcing them to offer discounts to fill seats.
Last month, the carrier cut its full-year core profit forecast citing a lower yield environment and competition in international markets.
Airlines are also facing heightened costs associated with labour and aircraft maintenance.
Air Canada is yet to finalize a new contract with the union representing its pilots, which might come with additional cost pressures for Canada’s largest airline.
The carrier’s profit fell to $410-million or $1.04 per share, from $838-million, or $2.34 per share, a year earlier.
The Canadian carrier’s operating revenue rose 2 per cent to $5.52-billion in the quarter ended June 30.
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