Air Canada profits hit by tax charge
ACE Aviation Holdings, parent company of Air Canada, posted a sharp drop in third-quarter profit to US$103 million compared to $271 million in the same period last year, due to a one off after tax charge of $70 million related to the redemption of pre-2002 Aeroplan miles.
Excluding the charge, ACE Aviation said its operating income for the three months ended September 30, was $305 million, although fuel expenses rose $87 million or 13% year-over-year in the quarter.
“This is purely an accounting charge and the only future expense to be incurred is the marginal cost of carriage on the miles that are redeemed,” said the company’s chief executive Robert Milton.
Chief financial officer Brian Dunne told analysts that due to security law restrictions, he and Milton couldn’t discuss the upcoming IPO for Air Canada, but said that it should go ahead by the end of the month.
Dunne added that last summer’s terrorist threat in London cost ACE millions of dollars.
“We estimate that the terrorist threat in London cut revenues by an additional $18 million,” he said.