Air Canada Raises Profit Forecast

(Reuters) – Air Canada raised its annual core profit forecast on Friday, benefiting from strong demand for international travel and lower jet fuel prices.

Major North American carriers with international operations are capitalizing on the increasing demand for overseas travel and a resurgence in business bookings.

Air Canada is increasing its daily flights to China, while also adding capacity to other Asia Pacific routes.

The airline announced the repurchase of up to 35.78 million shares, its first buyback authorization since the pandemic. The repurchase aims to address the dilution due to financing needs during the pandemic.

Last month, Air Canada signed a new labor deal with its pilots that provides a four-year cumulative pay hike of about 42%, generating approximately C$1.9 billion in additional value.

CEO Michael Rousseau stated, "The demand environment remains favorable. We have adjusted our full-year guidance and underlying assumptions to account for the evolution of the fuel price environment and for certain contract-related adjustments."

The company lowered its expectation for the average price of jet fuel to C$1 per litre for 2024, down from the previous estimate of C$1.03.

The carrier now expects its 2024 adjusted earnings before interest, taxes, depreciation, and amortization to be about C$3.5 billion ($2.51 billion), compared to its previous forecast of C$3.1 billion to C$3.4 billion.

Montreal-based Air Canada posted an adjusted profit of C$2.57 per share in the third quarter, exceeding analysts' average estimate of C$1.58, according to data compiled by LSEG. It reported a quarterly operating revenue of C$6.12 billion for the three months ended Sept. 30, which was a 3.8% decrease compared to the previous year but surpassed analysts' expectations of C$6.06 billion.

($1 = 1.3929 Canadian dollars)