Air Canada, WestJet post record monthly load factors on higher traffic, capacity

Photo: The Canadian Press. All rights reserved.

A pilot taxis a Westjet Boeing 737-700 plane to a gate after arriving at Vancouver International Airport on February 3, 2014. THE CANADIAN PRESS/Darryl Dyck

Canada's two largest airlines set records in August by flying the fullest planes for any month in their histories as strong demand continued to outpace increased capacity.

Air Canada (TSX:AC.B) said its load factor was 89.8 per cent, up from 89.5 per cent in August 2013, as it flew more than four million passengers, the most in any month in the carrier's 77-year history.

The increase in the proportion of seats filled came as the airline said Thursday that its system-wide traffic increased 10.8 per cent while capacity was up 10.4 per cent.

The results were led by the Atlantic and transborder markets which recorded strong double-digit growth in traffic and capacity. Air Canada's domestic traffic was up six per cent on a 4.7 per cent increase in capacity.

"These strong traffic results demonstrate that we continue to effectively execute both our international growth plan and Air Canada rouge leisure strategy," said CEO Calin Rovinescu.

WestJet Airlines Ltd. (TSX:WJA) said its load factor was the highest of any month since the airline was founded in 1996, rising to 89.3 per cent from 87.9 per cent a year ago.

Traffic increased 7.4 per cent compared with August 2013 while capacity increased 5.7 per cent.

The Calgary-based airline said it flew 1.9 million passengers in August.

National Bank analyst Cameron Doerksen said even though WestJet has added capacity, domestic demand and prices remain strong.

"Notably, the August load factor was the highest for any month in WestJet's history," Doerksen said in a research note.

WestJet has been adding capacity and growing its operations, including an announcement earlier this summer that it would expand its fleet to include wide-body aircraft that have longer range than its current Boeing 737s.

The airline said in July that it plans to operate four of the wide-body planes initially, with their first flights going between Alberta and Hawaii in the 2015 winter season.

WestJet has said it expects to expand into overseas markets starting in the summer of 2016, but has not said if it will move beyond Europe to include Asia or other markets.

The airline began flying between St. John's, N.L., and Dublin in June.

Walter Spracklin of RBC Capital Markets said with both carriers flying nearly 90 per cent full, base fares will likely move higher.

"When considering the ramp in new capacity, both from WestJet and other Canadian airlines, the higher load factors continue to highlight the robust strength of the Canadian travel demand environment," he wrote.

Air Canada has been adding capacity since it launched its low-cost leisure subsidiary Rouge last year to service the Caribbean, the U.S. and Europe. It has also increased the number of seats on many of its large Boeing 777 aircraft. The Montreal-based airline is among the 20 largest airlines in the world, serving more than 35 million customers in 2013.

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