Air Canada (AC.TO) announced an upward revision in its 2024 core profit forecast on Friday, buoyed by sustained demand for international travel.
However, the airline cautioned about escalating labour expenses.
Canada’s largest carrier disclosed a wider-than-anticipated adjusted per-share quarterly deficit of C$0.12, contrasting with analysts’ projections of C$0.04, attributed to escalating labour expenses.
North American airlines with substantial global operations are capitalising on robust demand as travellers opt for experiences over material goods.
Yet, they confront cost pressures amidst pilots and other staff securing improved terms through negotiations.
During the robust holiday travel period, airlines leveraged heightened demand, witnessing a surge in passenger numbers.
Air Canada accommodated around 2.6 million customers between Dec. 18 and Jan. 6, marking a 10% increase from the corresponding period in 2022.
Air Canada, headquartered in Montreal, noted that international travel contributed approximately 65% to the surge in overall passenger revenue.
Mark Galardo, a vice president specialising in network planning, informed analysts, “Our growth on the trans-Pacific is really going to be the main driver of international growth.
We will be looking at international growth that exceeds 10% versus where we were last 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), surpassing the previous target of C$3.5 billion to C$4.0 billion set in February last year.
According to LSEG data, analysts had expected an average adjusted EBITDA of C$3.76 billion.
Air Canada forecasts an increase in adjusted CASM (cost per available seat mile) of 2.5% to 4.5% compared to 2023, contingent upon reaching a labour agreement with pilots.
The union representing approximately 5,300 Air Canada pilots aims to bridge a wage disparity with counterparts at higher-paying US legacy carriers.
The Canadian airline’s operating revenue surged by 11% to C$5.18 billion in the fourth quarter, outpacing Street forecasts of C$5.12 billion.