Air Canada announced a share buyback and raised its core profit forecast for the year, as it benefits from a strong demand for international travel. Its shares rose over 10% in morning trading in Toronto. Major North American airlines with international operations are leveraging a booming overseas travel demand and improved business reservations.
Air Canada said it is increasing its flights from Canada to China and adding capacity on other Asia-Pacific routes.
Mark Galardo said Air Canada is seeing early signs that transatlantic trade will rebound in 2025. The Montreal-based airline reported quarterly earnings that were ahead of analyst expectations for revenue and adjusted profits despite experiencing weeks of softer bookings due to labor uncertainty while its pilots negotiated their new contract.
Air Canada signed a new contract with its pilots in the last month. This agreement would provide a general four year cumulative pay increase of around 42%. This additional value is estimated at CAD 1.9 billion.
Air Canada is monitoring the impact of a weeks-long strike by over 33,000 factory workers, and a production crises at U.S. planemaker Boeing on deliveries of the carrier’s 12 remaining 737 MAX aircraft. Chief Financial Officer John Di Bert informed analysts. Some deliveries will be made in 2025.
The airline announced that it would repurchase up to 35,8 million shares. This is its first authorization for a buyback since the COVID-19 Pandemic. The repurchase will address the dilution due to the airline’s financing needs during pandemic.
“The demand climate remains favorable.”
“We have adjusted our full year guidance and underlying assumptions in order to take into account the evolution of fuel prices and certain contract-related changes,” CEO Michael Rousseau stated.
The carrier expects to earn CAD 3.5 billion in 2024, compared to its previous forecasts of CAD 3.1-3.4 billion. Air Canada’s adjusted profit in the third-quarter was CAD 2,57 per share, compared to analysts’ average estimates of CAD 1,58, according LSEG data.
It reported a quarterly revenue of CAD 6,12 billion for the three months ending Sept. 30. This was down 3.8% from the previous year, but it beat analysts’ expectations. Analysts had expected CAD 6,06 billion. The company reduced its expectation of the average price for jet fuel in 2024 to CAD 1, down from CAD 1,03, which was the previous estimate.
