Air Canada is reporting $115 million of adjusted net income in the second quarter, a big improvement from a year earlier and far better than analysts were expecting.

The Montreal-based airline says its operating revenue for the three months ended June 30 totalled $3.06 billion, a second-quarter record for Air Canada and up from $2.99 billion a year earlier and slightly better than analyst estimates.

The adjusted profit amounted to 41 cents per share, an improvement from a year-earlier adjusted net loss of $7 million, or two cents per share.

Analysts had estimated Air Canada would have 10 cents per share of adjusted net income and $3.02 billion of revenue, according to data compiled by Thomson Reuters.

Air Canada continued to show a net loss, which is before adjustments, although much smaller than last year's $161 million.

Its net loss for the most recent quarter was $23 million or nine cents per diluted share, compared with a loss of 59 cents in the same quarter of 2012.

"These results are a clear indication that we are gaining momentum in our transformation towards sustainable profitability at Air Canada and underscore our Company-wide efforts to achieve cost containment and continue to improve on our revenue and yield performance," Air Canada chief executive Calin Rovinescu said in a statement.

The airline, which is already closely aligned with the Jazz regional service operated by Chorus Aviation Inc. recently launched a new discount long-range service called Rouge.

This summer, Rouge will fly to Edinburgh, Venice and Athens, as well as a number of Caribbean destinations. In the winter it will add additional sun destinations in the Caribbean, Mexico and the U.S.

Rovinescu said market response to the new leisure carrier "has been very positive" and Air Canada's plans are on track for growing the Rouge fleet to serve more holiday destination markets.