National Bank's comments on load factor - Feb 4thStrong demand on international routes
The Domestic load factor decreased 2.7 pts, but was still healthy at 77.0%. Traffic growth in international markets was strong with Atlantic up 14.4% (load factor up 1.4 pts to 79.1%), Pacific up 10.5% (load factor +5.5 pts to 86.4%), Latin America & Caribbean up 8.1% (load factor + 1.2 pts), and US Transborder traffic up 4.2% (load factor down 4.1 pts to 74.6%). We believe US transborder traffic continues to be boosted in part by Air Canada’s strategy of driving sixth freedom connecting traffic through its Canadian hubs, although load factor weakness may be a function of less Canadian outbound demand related to the weak CAD.
Maintain Outperform and $13.50 target ahead of Q4 results on Feb. 17th
January traffic supports our view that although there are some pockets of weakness (like Alberta) demand for air travel generally remains solid and that Air Canada’s international growth strategy is paying dividends. Air Canada will report its Q4 results on February 17th. We are forecasting EBITDAR of $388 million compared to $319 million in Q4 2014.