RE:New Press Release - Air Canada Issues Annual Report Highlighting its Achievements in 2023 Point to be noted as explained/presented in earlier posts:
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.