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Air Canada ( AC.TO ) reported a profit in the first quarter of the year and doubled operating income as strong travel demand continued to help the airline recover from the Covid-19 pandemic.
The Montreal-based airline reported net income of $4 million in the first three months of the year, an improvement of nearly $1 billion from a loss of $974 million in the same quarter last year. Operating income for the quarter came in at $4.9 billion, compared with $2.6 billion in 2022, as the airline grapples with some pandemic travel restrictions.
Air Canada CEO Michael Russo said the results were due to strong demand in all markets and lower fuel prices.
“Our first quarter financial results exceeded internal and external expectations and we expect demand to continue, supported by strong pre-bookings for the remainder of the year,” Russo said in a news release.
Shares of the airline rose 5 percent on the Toronto Stock Exchange on Friday. Shares were trading at $21.49 as of 10:55 a.m., up 2 percent from Thursday’s close. Shares of Air Canada rose 12 per cent at the close on Friday after announcing a rise in its full-year outlook thanks to strong demand and lower fuel prices.
The results are the latest signs that the airline has fully recovered from the lows of the Covid-19 outbreak. Air Canada plans to increase revenue by 23 percent compared to last year.
Passenger revenue more than doubled in the first quarter of 2022, with half of the increase coming from international and domestic markets, said Mark Gallardo, Air Canada’s executive vice president of revenue and network planning.
“People want to travel,” Gallardo said.
While the company said it expects to see strong bookings for the rest of the year, RBC Capital Markets analyst Walter Spracklin said the macroeconomic backdrop and increased domestic competition will determine how much demand rates will be critical.
“Despite our view that demand and prices are expected to weaken after the summer, we are mindful that there is a structural shift in airline demand that could sustain travel despite a weakening economy,” Spracklin wrote in a note. Customers.
Since the start of the Covid-19 pandemic, competition has been heating up in the Canadian airline space. Russo said on a conference call with analysts on Friday that the company is eyeing the expansion of domestic carriers, but that he believes the airline can compete in a market with multiple carriers.
“There’s no doubt that Canada’s narrow body capacity is overflowing today and certainly planned for the next several years. We know that,” Russo said.
“The fact that we are very diverse around the world and with different businesses [Air Canada Vacations], aircraft and cargo give us comfort that we will continue to do well. There will definitely be some pressure domestically, and we know that and plan for that as we go forward. “
Alika Sikierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter. @alicjawithaj.
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