RBC on Q1 expectationsQ1 Preview - Expecting a noisy Q1 for the airlines sector Q1 preview. We expect Q1 to be a noisy quarter for the Canadian airlines, but remind investors that underlying drivers appear strong. Some of the moving parts this quarter include: the 737 MAX 8 grounding by the FAA that occurred March 13, the transition to IFRS 16, and the inclusion of Aeroplan (for Air Canada). In terms of fundamentals, we note traffic growth remains robust and capacity growth continues to be held in check; and as we discuss below, our Fare Tracker suggests fares are continuing to rise. RBC Fare Survey points to higher prices in Q1. Our proprietary Fare Survey tracks price changes on selected routes to gauge the direction and magnitude of fare prices in the quarter. Based on these data, overall fare growth was solid in Q1. For Air Canada, this is the eight consecutive quarter that our Survey has registered positive growth, with the RBC Fare Survey index up +3.9% Y/Y. WestJet fares showed a strong spike towards the end of the quarter, and ultimately our fare survey pointed to fares up a healthy 5.6% Y/Y in Q1. Updating estimates ahead of Q1. Our estimates have changed modestly ahead of the Q1 reporting season, mostly the result of the rise in oil prices, a slight increase in costs related to rescheduling the grounded MAX 8 flights (price targets unchanged). Highlights are below, with further details on pages 4-6. AC: Maintaining Outperform; Price Target remains at $43. We are adjusting our Q1 estimates for: 1) higher forward fuel curve; 2) decreased capacity forecasts and 3) modestly increased CASM (the latter two due to the grounding of the Boeing 737 MAX 8). We also note this is the first quarter including Aeroplan and using the new IFRS accounting rules. Suffice it to say it is shaping up to be a noisy quarter, but fundamentals appear sound.