(Corrects 4th paragraph to say Air Canada raised the lower end of its forecast for "capacity growth", not the upper end of its forecast for "capacity")
Nov 8 (Reuters) - Air Canada's third-quarter profit handily beat analysts' estimates as a key measure of costs fell and the company, which launched a discount airline earlier this year, forecast higher capacity for the year.
Apart from launching the low-cost Rouge carrier, Air Canada has beefed up its international network and boosted capacity to fend off intensifying competition.
The company expects its system capacity, as measured by available seat miles, to increase in the range of 3-4 percent in the fourth quarter.
Air Canada also raised the lower end of its full-year forecast for capacity growth. It expects capacity to grow 2.0-2.5 percent for the year, compared with its previous forecast of 1.5-2.5 percent.
The company said last month that its cost control measures were having a better-than-expected impact.
The company's cost per available seat mile (CASM) - the cost incurred to fly a single seat one mile - fell 3.4 percent in the third quarter.
CASM excludes fuel, the cost of ground packages at Air Canada Vacations and special items, Air Canada said.
Air Canada expects the cost, a key industry measure, to decrease 2-3 percent in the fourth quarter, from a year-ago.
The company's main domestic rival, WestJet Airlines Ltd , reported a better-than-expected quarterly profit earlier this week as costs fell.
Adjusted net income jumped 59.4 percent to C$365 million ($349 million), or C$1.29 per share, beating the average analyst estimate of C$1.03 per share, according to Thomson Reuters I/B/E/S.
Net income fell 17 percent to C$299 million, or C$1.05 per share, from C$359 million, or C$1.28 per share. ($1 = 1.0448 Canadian dollars) (Reporting by Sayantani Ghosh in Bangalore; Editing by Maju Samuel)