Air Canada T.AC

Alternate Symbol(s): ACDVF

Industrials Airlines

Air Canada is an airline company. The Company is a provider of scheduled passenger services in the Canadian market, the Canada-United States (U.S.) transborder market and the international market to and from Canada. It provides scheduled service directly to more than 180 airports in Canada, the United States and internationally on six continents. The Company’s Aeroplan program is Canada's premier travel loyalty program, where members can earn or redeem points on the airline partner network of 45 airlines, plus through a range of merchandise, hotel and car rental rewards. Its freight division, Air Canada Cargo, provides air freight lift and connectivity to hundreds of destinations across six continents using its passenger and freighter aircraft. Its Air Canada Vacations is a tour operator, which is engaged in developing, marketing, and distributing vacation travel packages in the outbound/inbound leisure travel market. Air Canada Rouge is Air Canada's leisure carrier.

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Post by Tempo1on Feb 16, 2024 8:07am

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Post# 35883705

CIBC: first pass

Q4 First Pass: EBITDA In Line With Our Expectations; 2024 EBITDA Guidance Ahead

Key Takeaway:

AC reported Q4 results that were generally in line with expectations. Adj. EBITDA came in at $521MM versus our estimate of $527MM. AC also provided an update to its previous 2024 outlook, calling for an adj. EBITDA range of $3.7B-$4.2B. We are looking for $3.5B and consensus is at $3.8B. The company is hosting a call at 8:00 a.m. ET. We generally walk away with a positive first take on AC’s results with the midpoint of its 2024 EBITDA guidance ahead of Street expectations.

Q4 Recap: We recap AC’s Q4 results below, noting that metrics came in above our and consensus expectations.

- AC reported Q4 revenue of $5.18B, up from $4.68B the year prior and versus our estimate of $5.28B (consensus $5.13B). Cargo revenue in the quarter was $244MM, down from $288MM in the same quarter last year and versus our estimate of $245MM. Passenger revenue was up 12% Y/Y to $4.55B, we had estimated $4.70B.

- ASMs were up 9% Y/Y and RPMs were up 10% Y/Y. Our expectation for ASMs was up 10% Y/Y (AC was guiding to up 10%) and RPMs up 13% Y/Y. Load factor was 83.5%, up from 82.8% the year prior and our estimate of 85.0% (consensus 83.9%). Q4 yield was 22.3 cents, up from 21.9 cents a year prior and versus our estimate of 22.4 cents. PRASM was 18.6 cents, up 2.6% Y/Y and versus our estimate of up 19 cents, up 4.9% Y/Y.

- Adjusted EBITDA was $521MM, up from $389MM the year prior, versus our estimate of $527MM (consensus $558MM). Adj. EBITDA margin was 10.1%, in line with our estimate and versus consensus of 10.9%. Adj. CASM in Q4 was 14.2 cents, up 4.1% Y/Y. Adj. CASM in 2023 ended at 13.5 cents, up 2.2%, and in line with AC’s own full-year CASM guidance.

- Operating income (excluding special items) for Q4 came in at $79MM, up from $(28)MM prior year and versus our forecast of $108MM (consensus $117MM). - FCF in the quarter was $669MM, up from $320MM a year ago. This brings full-year FCF to $2.76B.

- Advanced tickets liability ended the quarter at $4.34B, down from $4.53B last quarter.

Liquidity Update:

At the end 2023, AC’s unrestricted liquidity was $10.29B versus $9.95B at the end of Q3. This liquidity consisted of $9.30MM in cash, cash equivalents, short- and long-term investments and $995MM available under undrawn credit facilities. Net debt at the end of Q4 was $4.56B, down from $5.44B at the end of Q3. Leverage ratio came in at 1.1x, down from 1.4x at the end of Q3.