Air Canada, the country's biggest airline, reported a fourth-quarter net loss on Thursday, as higher maintenance and fuel costs overshadowed the gains from increased passenger traffic, Reuters reported.

It posted a loss of C$80 million, or 22 Canadian cents a share, compared with a year-earlier net profit of C$89 million, or 27 Canadian cents a share.

Excluding one-time items, the company reported a loss of 64 Canadian cents a share.

Quarterly revenue rose 3.2 percent to C$2.70 billion.

Its unit cost in quarter, as measured by operating expense per available seat mile, rose 4.9 percent from a year ago.

As of December 31, Air Canada said its cash, cash equivalents and short-term investments amounted to C$2.10 billion, or 18 percent of 2011 operating revenues.

Air Canada's smaller rival,WestJet Airlines, said on Wednesday it will launch a short-haul airline to serve smaller markets inCanadaby the end of 2013. That will further ratchet up competition between the two airlines.

In the first quarter of 2012, Air Canada plans to increase its system capacity, as measured by available seat miles, by 2.5 percent to 3.5 percent above first quarter 2011 levels.

On a full year-basis, the company expects its system capacity to remain flat to rising 1.5 percent above 2011 levels.

The company expects its cost per available seat mile, excluding fuel expense and the cost of certain ground packages, to rise 4 percent to 5 percent in the first-quarter from year ago levels, largely due to a projected increase in aircraft maintenance costs.

On the same basis, the company expects its full-year 2012 cost per available seat mile to rise by 1 percent to 2 percent above 2011 levels.