Air Canada sees 12-18 months of pain for airlines

Thu Sep 17, 2009 12:16pm EDT

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* CEO says cost cuts necessary for return to profit

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OTTAWA, Sept 17 (Reuters) - The global airline sector will need another 12 to 18 months to recover from the recession, Air Canada (ACa.TO) (ACb.TO) Chief Executive Calin Rovinescu said in an interview published on Thursday.

Air Canada last month posted a big quarterly operating loss and vowed to cut capacity and costs.

"The aviation sector is usually the first to feel the efects of a recession and the last to escape it," Rovinescu told La Presse newspaper.

"And for the moment, despite a slight recovery in cargo, everything indicates that our sector will need another 12 to 18 months to start breathing normally again," he said.

The airline wants C$400 million ($380 million) in cost cuts and C$100 million in "revenue enhancing" measures by 2011.

Rovinescu said Air Canada's operating costs were too great when compared to major rivals such as WestJet (WJA.TO). The cost cuts are necessary if Air Canada is to return to profit "by the end of 2010 or 2011", he added.

"I'm going to push my people so that we can do better than our objective of C$500 million (in savings) in two years," the newspaper quoted him as saying.

Rovinescu also said Air Canada was considering whether to return next year to Toronto's City Centre airport, which is currently being used by privately held Porter Airlines. Air Canada last operated out of the airport in 2006.

($1=$1.06 Canadian) (Reporting by David Ljunggren; editing by Peter Galloway)

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