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Air Canada hits 7-week high after projecting higher Q1 earnings as traffic grows


Air Canada (TSE:AC.B), the nation's largest airline, advanced to the highest in seven weeks after saying it expects higher first-quarter earnings before interest, taxes, depreciation, amortization and impairment, and aircraft rent (EBITDAR). 

The shares were up 21 percent at C$6.95 at 9:33 a.m. in Toronto, after reaching C$7.13, the highest intraday price since Feb. 11.

The Montreal, Quebec–based company said in a statement late yesterday that it now expects first-quarter earnings to match last year's level.

In February, Air Canada had expected EBITDAR to retreat by between C$15 million and C$30 million from a year earlier, when it earned C$145 million.

The expected improvement is mainly due to system-wide traffic growth and capacity increase, the company said.

Passenger traffic, measured in revenue passenger miles (RPMs), rose 1.4 percent to 4.843 billion RPMs, from 4.776 billion RPMs in the same period last year.  Traffic growth was led by the U.S. transborder market, the company said.

Capacity, measured in available seat miles (ASMs), improved 3.6 percent to 5.926 billion ASMs, from 5.722 billion ASMs last year.

System load factor, a measure of how full planes are, was 81.7 percent in March, a decline of 1.8 percentage point from the same month last year.

For the first quarter, Air Canada's load factor fell 0.7 percentage points from the same time last year to 80.3 percent as capacity grew by 3.8 percent, outpacing the 2.9 percent increase in traffic.

"Based on forward bookings, we expect a strong summer travel season ahead," Chief Executive Officer Calin Rovinescu said in the statement.

The stock had nearly doubled in the past twelve months through yesterday.




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