Not Bad For A Company Fresh Out Of Bankruptcy...

In its first full year of operations since emerging from bankruptcy, Air Canada finds itself with an enviable problem: what to do with the $300 million net profit the airline took in for 2005?

A profit of any kind for a full-service airline like Air Canada has been nearly unheard of lately, as other North American carriers struggle with high fuel prices and either the reality -- or looming threat -- of bankruptcy.

In fact, having cash on hand for the year is an anomaly usually reserved only for low-cost carriers such as Southwest Airlines -- so how did Air Canada do it?

According to the London Free Press, a lot of it had to do with the airline's parent company, ACE Aviation Holding, selling off over 14 percent of its Aeroplan customer loyalty program  in a June IPO -- that alone raised almost $288 million.

It's also of note that profits aren't unheard of for Canadian carriers. One of Air Canada's main competitors, Calgary-based WestJet Airlines, also posted healthy profits for 2005 -- but that's not unusual, as the low-cost carrier has been a consistent money-maker.

Still, a profit is a profit, especially in a year that saw soaring fuel prices and not one, but two new bankruptcies among the other major carriers.

Having tasted solvency, Air Canada understandably wants to keep the streak going -- through spinning off more of its operations, according to the Free Press, while lowering its cost base to keep up with the LCCs.

Last month, the carrier announced it would turn its low-cost subsidiary, Air Canada Jazz, into an income trust. The airline's maintenance arm, Air Canada Technical Services (ACTS) -- which has also captured third-party contracts -- is also due for an initial public offering.

"The year kicks off with the efforts on Jazz," ACE Aviation chairperson Robert Milton said. "ACTS remains a focus which looks to be about a year away as it develops its own independent financial statements."

"The other key focus obviously is Air Canada," Milton added.

Pointing out the airline's new Embraer aircraft -- including, as was reported in Aero-News, Air Canada's first E190s (right) -- as well as onboard amenities such as seats that convert to beds for overseas flights and in-flight entertainment screens on the back of every seat, Milton even bragged to the Free Press that discounts carriers such as WestJet and Southwest need to watch out for Air Canada, as well as for other mainline carriers emerging from bankruptcy healthier than they were before.

FMI: www.aircanada.com