admin Air Canada’s profits halved despite rising revenue in its latest quarter, as the country’s largest airline struggled to complete the final stages of its recovery from COVID-19.
“Our second-quarter results were solid, although they did not achieve our internal expectations,” CEO Michael Rousseau told analysts during a conference call on Wednesday.
Increased capacity and strong demand for international flights drove a two per cent year-over-year revenue growth to $5.52 billion in the quarter ended 30 June.
However, revenue-per-seat figures declined compared to the previous year, when soaring post-pandemic demand and lower capacity across the industry resulted in fuller planes, higher fares, and wider profit margins.
Consequently, net income in Air Canada’s second quarter dropped by 51 per cent year-over-year to $410 million.
Operating expenses, which were nine per cent higher than those of a year earlier, also contributed to the decline, as the cost of jet fuel and labour increased, explained chief financial officer John Di Bert.
Despite ongoing growth, Air Canada’s post-COVID-19 recovery remains incomplete, four and a half years after borders closed and lockdowns began.
“We’re still not back to 2019 levels in terms of scale and the size of the airline,” Di Bert said.
Last Friday, the company’s share price dropped to $14.90, marking a closing low not seen since October 2020.
“Like our shareholders, we’re disappointed with our stock price performance here … especially coming off our record 2023 and having completely repaired the balance sheet. We also know that most global airline stocks are having similar challenges,” Rousseau said.
National Bank analyst Cameron Doerksen noted that Air Canada’s stock is likely to remain under pressure until it reaches a new contract with its pilots, though he added that the current share price reflects an “overly pessimistic outlook.”
Earlier this year, executives expressed confidence that corporate travel would boost profits in 2024, despite the persistence of pandemic habits such as video conferencing and remote work.
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