International Travel Boom Boosts Air Canada's Profit Outlook for 2024

Air Canada, on Friday, increased its core profit forecast for 2024, attributing it to the continued demand for international travel, but also cautioned about escalating labor expenses. The leading Canadian airline disclosed a larger-than-anticipated adjusted quarterly loss per share of C$0.12, which is higher than the C$0.04 predicted by analysts, due to rising labor costs.


North American airlines with substantial international operations are reaping the benefits of robust demand as consumers prefer to spend on travel rather than goods. However, they are facing cost challenges as pilots and other employees make progress in negotiations. The airlines capitalized on the high travel demand during the holiday season, witnessing a surge in passengers. Approximately 2.6 million customers flew with Air Canada between December 18 and January 6, marking a 10% increase compared to the same period in 2022.


Air Canada, based in Montreal, stated that international travel contributed to about 65% of the total passenger revenue increase. Mark Galardo, a vice president specializing in network planning, informed analysts that their growth in the trans-Pacific sector would be the primary contributor to international growth. He added that they anticipate an international growth rate that surpasses 10% compared to the previous year. The airline anticipates its 2024 core profit to range between C$3.7 billion ($2.75 billion) and C$4.2 billion ($3.12 billion), an increase from the C$3.5 billion C$4.0 billion target set in February of the previous year.

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According to LSEG data, analysts were predicting an average adjusted EBITDA of C$3.76 billion. The airline expects the adjusted CASM (cost per available seat mile) to increase by 2.5% to 4.5% compared to 2023, assuming a labor agreement with pilots. The union representing approximately 5,300 Air Canada pilots aims to close the wage disparity with higher-paid pilots at U.S. legacy carriers. The operating revenue of the Canadian carrier increased by 11% to C$5.18 billion in the fourth quarter, surpassing the Street's expectations of C$5.12 billion.

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