- As over-capacity in certain markets impacted its pricing power, Air Canada (TSX:AC) has lowered its full-year core profit forecast
- The airline stated operating revenues in Q2 2024 were $5.5 billion, on 6.5 per cent increased operated capacity year-over-year, as compared with about $5.4 billion in Q2 2023
- Operating income was $466 million, with an operating margin of 8.4 per cent, as compared with $802 million in Q2 2023
- Shares of Air Canada opened trading at C$16.65
As over-capacity in certain markets impacted its pricing power, Air Canada (TSX:AC) has lowered its full-year core profit forecast.
In a news release, the airline stated operating revenues in Q2 2024 were about $5.5 billion, on 6.5 per cent increased operated capacity year-over-year, as compared with about $5.4 billion in Q2 2023.
Earnings before interest, taxes, and amortization (EBITDA) came in at $914 million during Q2, down from $1.2 billion last year. It expects the full year number to come in at a range of between $3.1 billion and $3.4 billion, which is below the $3.7 billion to $4.2 billion previously forecast.
Operating income was $466 million, with an operating margin of 8.4 per cent, as compared with $802 million in Q2 2023.
The revised adjusted EBITDA guidance for 2024 is mainly influenced by the current lower yield environment, lower-than-expected load factors for the latter half of the year, and competitive pressures in international markets. This guidance also takes into account the company’s assumptions about jet fuel prices and a weakened Canadian dollar relative to the U.S. dollar.
The updated 2024 capacity guidance range considers ongoing supply chain challenges, shifting market conditions, and continuing geopolitical issues. The revised adjusted cost per available seat mile range for 2024 reflects the impact of the updated available seat mile capacity guidance. Air Canada is effectively managing costs through productivity improvements, cost reductions and other measures.
The airline added that it still continues to experience robust demand. Operating revenues for Q2 are projected to set a new record for this period, with load factors remaining above historical averages.
Air Canada plans to release its full Q2 2024 results on Aug. 7.
Canada’s largest airline, Air Canada provides scheduled service directly to more than 180 airports in Canada, the United States and internationally on six continents. Its Air Canada Cargo freight division provides air freight lift and connectivity to hundreds of destinations across six continents using Air Canada’s passenger and freighter aircraft.
Shares of Air Canada (TSX:AC) opened trading at C$16.65. The stock dove 4 per cent lower at open and has lost more than 13 per cent since the year began.
Join the discussion: Find out what everybody’s saying about this stock on the Air Canada Bullboard investor discussion forum, and check out the rest of Stockhouse’s stock forums and message boards.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.
(Top photo: Air Canada)