Air Canada has soared back into the black, with Canada's largest airline reporting a reversal of last year's net losses in both the final quarter and full year.

The Montreal-based airline says fourth-quarter net income improved to $8 million, or three cents per diluted share, reversing a net loss of $60 million, or 22 cents per diluted share, in the same 2011 period.

Operating revenue rose to $2.84 billion from just under $2.7 billion.

On an adjusted basis, however, the airline posted a net loss for the quarter of $6 million or two cents per share, although that was still a big improvement on 2011 when it reported an adjusted net loss of $167 million, or 60 cents per share, for the quarter.

For the full year, net income was $131 million, or 45 cents per diluted share, on revenues of $12.1 billion. That compared with a net loss of $249 million, or 92 cents per diluted share, on revenue of $11.6 billion in 2011, which included a $55-million charge related to Aveos.

Full-year adjusted net income from continuing operations was $53 million, or 19 cents per diluted share, compared with a net loss of $122 million, or 44 cents per diluted, share in 2011.

"I am extremely pleased to report a strong fourth quarter and a full-year net profit for Air Canada of $131 million in 2012," president and CEO Calin Rovinescu said.

"These results reflect the success of Air Canada's ongoing transformation aligned with strict cost control and disciplined capacity management," he added.

Rovinescu cited strong revenue performance by the airline's international network.

"Our focus remains firmly fixed on further cost reduction and increased revenue generation, including improved yields, positioning us well for the future," he said.

Air Canada reported a 2.6 per cent increase in revenue passenger miles to 12.6 billion from 12.1 billion, while available seat miles increased 1.2 per cent to 15.48 billion from 15.29 billion.

WestJet profit also soars

WestJet, Canada's second-largest airline, reported a $60.9 million profit in the fourth quarter on Wednesday, a 71 per cent increase from a year earlier.

The Calgary-based airline also says it earned $242 million last year, a 63 per cent increase from 2011.

WestJet is set to launch a new regional carrier called Encore later this year.

with files from CBC News