AC Baseline Cash Flow is now $4.3 Billion per year. Key points as summarized by Rouge10 in earlier post for serious investors. However the troll posts 50x a day to keep them off view, so will keep re-posting this: And to be clear, AC has already factored in new deal for pilots into the 2024 guidance. AC management is super conservative. Example for jet fuel, for 2024 they have budgeted global jet fuel price at $129.00 USD per barrel. Most recent IATA jet fuel price monitor has it at $109.06 USD per barrel. So its $20 USD per barrel lower than budget. Each $USD difference adds $45 Million CAD to operating profits. So at current prices thats $900 million CAD extra operating profits, annual. So even when oil does go up significantly especially in second half of year, there is plenty of cushion, and AC fuel traders will hedge before that. AC management has similar cushions built into guidance in several items.
In 2023
1. AC produced $4.3B cash flow from operations with EBITDA of $4.0B
2. Capex of $1.6B and produced $2.75B FCF (highest ever other than Aeroplan transaction ).
3. All of $2.7B FCF helped AC deleverage and net debt reduced by almost $3.0b . LR of 1.1 is now within target.
What does above mean for 2024 and beyond:
1. AC is forecasting EBITDA of $3.7B-$4.3B for 2024. With mid range EBITDA of $4.0B (though upper end is achievable) AC will produce cash flow of $4.3B again this year.
2. Above numbers were presented in mid Feb, by when, most of Q1 numbers are in sight and advanced bookings for Q2/3 are well under way. Solid confidence in these numbers.
3. As per my earlier post capex for 2024 should be limited (<$1B) and let's say $1.3B are paid in advance for 2026 capex.
4. That mean's ~$2.0B FCF. That means $5.5 FCF/share.
5. Precovid that would mean >$55 stock price.
AC can choose to use $2.0B to further deleverage, share buy back, dividends or even make advance payments for 2026 capex.
You can expect above numbers (even better) for coming years. New planes will bring new efficiencies. When capex becomes normal (year 2027), do you math with FCF> $3.0B.
If sp stays lower, best use will be stock buy back. AC is now positioned on rock solid financials. They should continue with their judicious use of capital and capacity management. We are seeing financial success story unfold in front of our eyes.
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With the focus on international routes (example: check the latest Air Canada program for Hong Kong visits... National Post.. goods article) and the rapid growth of Aeroplan members expect this cash flow to jump in 2025 and beyond... so even greater FCF to come.
Also expect Credit Agency upgrade.
Have you read the Moody's report on 2024 Canada - Airlines profit rising for Air Canada and Westjet?