Air Canada's (AC.TO) second-quarter profit smashed past analysts' estimates as it flew more passengers at lower costs.

Passenger traffic rose 13.6 per cent in the quarter ended June 30, while revenue from passengers increased 11.9 per cent to $3.52 billion.

The Montreal-based company said adjusted cost per available seat mile (CASM) — a key measure of how much an airline spends to fly a passenger — fell 3.5 per cent in the quarter.

"Demand continues to be robust in a stable fuel and pricing environment as we move into what has historically been our most important quarter given the travel demands and patterns of our North American customers," Chief Executive Calin Rovinescu said.

Net earnings rose to $300 million, or $1.08 per share, in the quarter, from $186 million, or 66 cents per share, a year earlier.

Excluding one-time items, the airline earned 78 cents per share. Analysts on average had expected a profit of 36 Canadian cents per share, according to Thomson Reuters I/B/E/S.

Operating revenue climbed 13 per cent to $3.91 billion.

Fuel costs rose by 17.4 per cent in the reported quarter, lower than the 48 per cent rise it saw in the quarter ended March 31.

Shares of Air Canda were up almost 12 per cent at the market open Tuesday.