Analyst Chris Trent highlights Air Canada's strong premium cabin offerings and growing international demand as positive indicators for its long-term success. However, he cautions that the Canadian dollar's potential depreciation against the US dollar could impact both passenger demand and seat mile costs. Trent also lowered his earnings per share projections for 2025 and 2026, citing lower expected RASM growth, slightly higher CASM, and higher depreciation/taxation. Despite these adjustments, Trent maintains a “buy” recommendation on Air Canada shares.
“Air Canada appears to be on a solid, long-term trajectory, in light of its strong premium cabin offerings, ongoing strong international demand and as its loyalty/co-branded cash flow streams continue to spool up,” he said. “However, in contrast with its U.S. network peers, 2025 cash flow looks less robust, while the potential for incremental Canadian dollar depreciation against the US$ is worth watching, with respect to both cross-border passenger demand and seat mile costs.
The analyst lowered his 2025 and 2026 earnings per share projections to $2.30 and $2.96, respectively, from $3.15 and $3.55, citing a lower, expected RASM growth, slightly higher cost per available seat mile excluding fuel, lower, expected fuel prices and higher depreciation/taxation. “We rate Air Canada Buy, which is based on strong global potential for a continued recovery in international long-haul passenger revenue, and what looks to be a stock price dip. Although the carrier’s margins seem unlikely to catch those of several of its southern peers, this carrier has the most international long-haul exposure among Citi’s Americas Airline coverage.”) $1.
Mr. Pardy said the deal, announced last Monday, “passes the litmus test” on the key financial metrics that he focuses on and called the price “reasonable,” seeing it accretive to his 2025 cash flow per share estimates “under both our base and futures analysis, reflecting stable cash taxes and the use of debt in the funding structure.”
Maintaining a “sector perform” recommendation for Vermilion shares, Mr. Pardy trimmed his target by $1 to $16. The average target on the Street is $17.83.
AIR CANADA AVIATION INDUSTRY CURRENCY FLUCTUATIONS EARNINGS PROJECTIONS INVESTOR ANALYSIS
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Former Bank of Canada Governor Claims Canada in Recession Despite Lack of Consecutive Negative GDP QuartersStephen Poloz, former governor of the Bank of Canada, asserts that Canada is in a recession despite not meeting the technical definition of two consecutive quarters of negative GDP growth. Poloz attributes the lack of a technical recession to increased spending by new immigrants, while noting Canadians are spending less due to rising costs of living.
Read more »
Air Canada Targets 36% Revenue Surge by 2028, Fueled by Leisure Travel DemandAir Canada aims for a 36% increase in operating revenue by 2028, driven by strong demand for leisure travel both domestically and internationally. The airline anticipates a post-pandemic surge in air travel, with travelers prioritizing experiences over goods. Air Canada also forecasts adjusted EBITDA between $3.4-billion and $3.8-billion in 2025, exceeding analysts' expectations. The carrier plans to expand its network, focusing on routes to China and the Asia-Pacific region. Air Canada expects operating revenue of approximately $30-billion in 2028 with a core profit margin of 17% or greater.
Read more »
Canada’s unemployment rate jumps to multiyear-high, despite burst of hiringBolsters bets the Bank of Canada will deliver another outsized interest-rate cut next week
Read more »
Bank of Canada expected to deliver another big cut, despite currency concernsUntil recently, financial markets expected the bank to shift back to a normal quarter-point rate cut on Dec. 11, after a half-percentage-point move in October
Read more »
Bank of Canada made the right call, despite conflicting data making it hardThe Bank of Canada’s mandate is to keep inflation stable and predictable; its primary tool is adjusting the policy interest rate
Read more »
‘Stubborn’ fixed mortgage rates might not fall despite Bank of Canada cutEven after a second consecutive 50-basis-point interest rate cut on Wednesday, some experts warn fixed mortgage rates in Canada will not move materially lower.
Read more »