The airline's shares fell 14 per cent or 42 cents at $2.58 in morning trading on the Toronto Stock Exchange after the airline reported preliminary results that included a bigger loss than investors expected, in part due to the cost of a stormy winter.

The stock had been on a tear, rising from a low of 82 cents last year to a peak of $3.40 earlier this month.

The country's largest airline said it expects to lose $260 million, compared with a loss of $274 million a year earlier.

The loss adjusted for one-time items was $143 million compared with a loss of $162 million in the first quarter of 2012.

Analysts had expected Air Canada's adjusted loss would be $120.4 million or 40 cents per share on $3 billion of revenues, according to those polled by Thomson Reuters.

Analyst Chris Murray of PI Financial Corp. said the results were a little "light" but didn't warrant the drop in the stock.

"I think the sell off has been much too sharp given the numbers that they've put out," he said in an interview.

David Tyerman of Canaccord Genuity said Air Canada's high debt and hefty pension obligations magnify the reaction to both positive and negative news.

Although the results were more in line with his expectations, he said investors may be worried by the impact of capacity growth plans on revenues and yield.

"I think that it is spooking investors potentially and analysts because there's an anxiety out there already about capacity increases so I think this is just reinforcing it," he said.

Preliminary report

Air Canada said it issued the preliminary report ahead of the full results on May 3 to comply with disclosure rules as it explores a range of debt financing options.

It didn't disclose what financing options are being considered.

Analysts said the airline could be renegotiating high yield bonds or could become the first Canadian airline to tap into a new way to finance aircraft purchases that reduces interest rates.

Air Canada said the most recent quarter included a $10-million hit due to flight cancellations and delays caused by severe weather conditions.

It also had a higher proportion of leisure passengers than business travellers in part due to an earlier Easter holiday.

The airline recorded a $24-million accounting item related to the impaired value of Airbus A340-300 passenger jets.