Air Canada reported first-quarter revenue nearly doubled compared with a year earlier as travellers hopped back on airplanes en masse _ even as higher costs tamped down net earnings.
Buoyed by a record $4.9 billion in revenue, the quarter marked the second in a row where the carrier has turned a profit following 11 straight quarters of losses totalling $10.1 billion.
Net income amounted to $4 million, up from $974 million in losses a year ago.
Chief executive Michael Rousseau said the results for the three months ended March 31 beat out all expectations, and that he believes demand will persist amid strong advance bookings for the rest of the year.
“The winter and the start of the spring can be very challenging in North America, especially Canada. Apart from the weather disruptions that can affect all aspects of the air transport system, it usually comes with high traffic flows, particularly with a spring break peak,” Rousseau told analysts on a conference call Friday.
“The strong and improving collaboration between our people and our ecosystem partners has been key to our service delivery during this period, and sets our expectation for continued strong performance through the summer.”
Despite an uncertain economic outlook, Air Canada’s sustained profits over the past half-year hint at a return to stability for an industry devastated by COVID-19, which brought lockdowns, border closures and travel restrictions.
Air Canada Vacations, the airline’s getaway package business, yielded “remarkable results,” the CEO said. And its cargo business added five more freighters to the one it operated a year ago.
Chief financial officer Amos Kazzaz, slated to step down on June 30, noted that “the cost world is different” than before 2020, with everything from airplane food to ground handlers toting a higher price tag.
Meanwhile, thanks to higher rates, the interest expense on Air Canada’s $6.5-billion net debt rose 17 per cent to $245 million year over year, even though the carrier reduced that debt by a half-billion dollars.
However, lower than expected jet fuel prices helped prompt Air Canada last week to raise its financial forecast for the year. The Montreal-based company boosted its adjusted earnings expectations to between $3.5 billion and $4 billion from $2.5 billion to $3 billion.
On a per diluted per share basis, Air Canada reported a loss of three cents due to an adjustment related to the assumed conversion of convertible notes compared with a loss of $2.72 per diluted share in the same quarter last year.
The airline reported revenue of $4.9 billion in its latest quarter, up from $2.6 billion in the first three months of 2022.
On an adjusted basis, Air Canada said it lost 53 cents per diluted share last quarter compared with an adjusted loss of $2.09 per diluted share a year earlier.
The average analyst estimate had been for an adjusted loss of 74 cents per share and $4.35 billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.