Toronto, Aug 8 - Air Canada, the world's ninth largest airline, Friday reported a second quarter profit of $155 million -- 27 percent up from the same period last year.

During this period, the airline also reported foreign exchange gains of $355 million as against $48 million during the same period last year.

However, the struggling national carrier, which was on the verge of seeking second bankruptcy protection in six years, still posted an operating loss of $113 million as against a profit of $7 million during the same period last year.

Air Canada said its revenue shrunk by 16 percent to $2.06 billion due to the continuing recession worldwide.

The airline had posted a record loss of $727 million in the fourth quarter of 2008 because of higher fuel costs and the global slowdown. To cut losses, the airline axed hundreds of staff and cut many international and North American flights.

It got $1 billion in financing to streamline its operations.

Air Canada CEO Calin Rovinescu said Friday that the airline will further step up cost-cutting to stop losses.