Air Canada lost C$81 million ($59 million) in the first quarter of 2024 as higher costs related to increased capacity, and less cargo revenue, weighed on the company.
But excluding interest, taxes, depreciation and amortisation (EBITDA), the company earned C$453 million, slightly more than in 2023, the airline reports on 2 May.
“Air Canada’s solid first-quarter results position our airline for a strong performance in 2024,” says chief executive Michael Rousseau. “As we look toward the summer, we see a continued healthy demand environment.”
Air Canada’s revenue during the quarter ending 31 March rose 7% year on year to C$5.2 billion, as its capacity jumped 11% in one year. Passenger revenue rose 9%, supported by higher traffic, most notably in the Pacific and Atlantic markets. Cargo revenue, however, fell by 9%.
The airline’s expenses increased 6% to C$5.2 billion in the first quarter, reflecting costs associated with the capacity increase and a bump in labour, maintenance and IT expenses. But an almost 20% decline in fuel prices “partially offset” those increases.
“Demand continues to trend favourably,” adds Mark Galardo, the airline’s executive vice-president of network planning and revenue management. Corporate travel is returning, and the airline has seen “encouraging signals” for the segment, anticipating a 10-20% increase year on year in the second quarter.
FLEET
Air Canada, including sister carrier Air Canada Rouge, ended the first quarter with 248 aircraft, five more than at the end of 2023. It had 118 aircraft operating behalf of Air Canada by regional carriers under the Air Canada Express brand.
Executives say they are “in the process” of adding more leased Boeing 737 Max 8s to the fleet. The delivery of these would be in 2024, and they would enter service in 2025 after being reconfigured, says chief financial officer John Di Bert. The airline expects to imminently announce such a deal.
“We remain focused on having the right fleet in the right place to capitalise on our opportunities,” he says.
The incoming leased jets will help mitigate a potential squeeze related to the Pratt & Whitney PW1000G engine recall, adds CEO Rousseau.
“We do see the opportunity to add more capacity at profitable margins,” he says. “There is a strong business case to take these planes into our fleet and do some reconfiguration… It’s also defensive to some degree because we have challenges with the Airbus A220 engines.”
Air Canada currently has “six or seven planes sitting on the ground”, due to the engine recalls, he says, adding that the airline “will be discussing compensation with Pratt”. The carrier has 24 A220s in service, with 27 more on order with Airbus, according to Cirium fleets data.
“We are incurring the cost right now, and those costs are in our numbers at this point in time. Hopefully we can recover some of that in the not-too-distant future,” Rousseau says.
For the full year, the company expects its capacity as measured in available seat miles to rise 6-8%, with adjusted EBITDA of between C$3.7 billion and C$4.2 billion.
“We are confident in our ability to deliver on our full-year 2024 guidance,” Rousseau says.
