ACE Aviation Holdings Inc., the parent of Air Canada, announced it will cut 600 non-unionized employees yesterday and reported a fourth-quarter loss of $103 million.
The loss is down from a year-earlier profit of $15 million, the major drag on earnings coming from rising fuel costs, said CEO Robert Milton.
"There is no room for any complacency and we must continue to improve efficiencies in all of our businesses," Milton said.
The white-collar job cuts amount to a 20 per cent reduction in non-unionized staff.
Thousands of unionized jobs have also been cut at Air Canada in the last few years as the Montreal-based company has restructured.
"Our intention is to work collectively with labour to make sure the company moves forward," Air Canada's Monty Brewer said.
Milton didn't discount the possibility of other cuts or sales of assets to ensure profitability.
"Nothing will be ruled out if it will enhance value for the ACE shareholder."
Canada's biggest airline said its net income was $258 million in its first full year since emerging from creditor protection, contrasting with a 2004 loss of $880 million, which included $871 million in reorganization and restructuring costs.
At the same time, ACE said employees of Air Canada and the Jazz regional operation will receive a total of $54.8 million through its profit-sharing plan for 2005.
"Although rising fuel costs have prevented us from achieving our 2005 profitability targets, the ACE board has approved the 2005 profit-sharing payments on an extraordinary basis to recognize the efforts of our employees," Milton said. Under the plan, Air Canada workers get $43.5 million or an average of 2.7 per cent of their salaries, of which $30 million has already been paid in monthly incentives. Jazz workers get $11.3 million.
Milton said high jet-fuel prices made the past year "challenging," but ACE's results "are among the strongest in the industry and we've made good progress in building shareholder value, reinventing our business and winning over more customers."
Fuel costs were up by $592 million, or 37 per cent, for the year.
Full-year operating revenue rose 10 per cent to $9.83 billion from $8.90 billion, with per-share earnings of $2.46 and an operating-profit margin of 4.6 per cent, up from 1.3 per cent in the prior year.
Quarterly revenue was $2.36 billion, up 141/2 per cent from $2.06 billion, "reflecting passenger revenue increases in all markets," the airline said. The net loss of $1.02 per share in the seasonally weak October-December quarter compared with a year-earlier profit of 17 cents per share.
The latest period included $30 million in writedowns or losses on the sale of assets as well as foreign-exchange losses of $11 million.
During the year ACE raised $792 million in new equity and debt, plus $287.5 million by spinning off the Aeroplan loyalty program income trust.
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