- Air Canada (TSX:AC) reported a lower Q2 2024 profit as excess capacity and stiff competition on international routes hurt its pricing power
- Its net profit came in at C$410 million in the quarter, a significant decrease from the C$838 million reported in the same period last year
- This decline comes despite a slight increase in operating revenue, which edged up 2 per cent to C$5.52 billion from C$5.43 billion a year earlier
- Shares of Air Canada opened trading at C$15.38
Air Canada (TSX:AC) reported a lower Q2 2024 profit as excess capacity and stiff competition on international routes hurt its pricing power.
Its net profit came in at C$410 million in the quarter, a significant decrease from the C$838 million reported in the same period last year. This decline comes despite a slight increase in operating revenue, which edged up 2 per cent to C$5.52 billion from C$5.43 billion a year earlier.
Air Canada’s net income for the quarter translated to C$1.04 per diluted share, down sharply from C$2.34 per diluted share in the same quarter of 2023. On an adjusted basis, Air Canada earned 98 cents per diluted share, compared with an adjusted profit of C$1.85 per diluted share a year ago.
Its flights increased operated capacity by 6.5 per cent compared with the previous year contributed to the rise in operating revenue. Despite this increase, Air Canada’s profitability took a hit, reflecting the ongoing challenges in the aviation industry, including fluctuating fuel costs and competitive pressures.
Earnings before interest, taxes, and amortization came in at C$914 million, compared with C$1.2 billion in Q2 2023.
In its forward-looking statements, Air Canada outlined its plans to boost its available seat mile capacity by 4 per cent to 4.5 per cent by Q3 2024 compared with the same quarter in 2023. This move aims to capture more market share and accommodate the expected rise in travel demand during the peak travel season.
CEO Michael Rousseau commented on the results, saying, “We saw healthy demand, with load factors remaining above historical averages. We remained sharply focused on our customers and operations throughout the quarter and experienced a 10-percentage point year-over-year improvement in our on-time performance, even with the increased flying. I thank our employees for their hard work in safely transporting 11.6 million customers in the quarter and I am pleased to see their efforts recognized as we were ranked the best airline in Canada and received five honours at the Skytrax 2024 World Airline Awards, the most of any Canadian carrier.”
In July, the airline lowered its full-year core profit forecast, reporting operating revenues in Q2 2024 were about C$5.5 billion, on 6.5 per cent increased operated capacity year-over-year, as compared with about C$5.4 billion in Q2 2023.
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 nearly 1.4 per cent higher at C$15.38. The stock has lost more than 20 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 image: Adobe Stock)