Air Canada cuts 2024 core profit forecast as over-capacity impacts prices
2024.07.22 09:55
(Reuters) -Air Canada cut its full-year core profit forecast on Monday, as over-capacity in certain markets and competition on international routes impacted its pricing power, sending its shares down nearly 4% in morning trade.
A rush among carriers to cash in on summer travel demand has forced airlines to offer discounts on tickets to fill their planes.
The updated forecast reflects the lower yield environment, less-than-expected load factors for the second half of the year and competitive pressures in international markets, Canada’s largest carrier said on Monday.
The airline now expects its 2024 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be in the range of C$3.1 billion ($2.26 billion) to C$3.4 billion, compared with its previous forecast of C$3.7 billion to C$4.2 billion.
“Although the carrier seems to have made some strides in managing its seat mile costs, the demand environment looks weaker than we anticipated,” Citi analyst Stephen Trent wrote in a note.
Air Canada reported preliminary second-quarter operating revenue of C$5.5 billion, up 6% from a year earlier. Analysts on average were expecting C$5.65 billion, according to LSEG data.
The carrier also expects second-quarter operating income at C$466 million, compared with C$802 million reported a year earlier.
($1 = 1.3740 Canadian dollars)
