Investor Outlook: Air Canada Profit Hit by Strike but Premium Travel Lifts Outlook
Air Canada’s third-quarter earnings dropped five percent following the summer flight attendant strike, with both revenue and profits falling significantly compared to last year. However, analysts remain optimistic about the airline’s recovery, citing rising demand for premium and international travel.
Analyst Insights
BNN Bloomberg interviewed Nicolas Owens, equity analyst for industrials at Morningstar, about Air Canada’s financial results. Owens noted that despite higher labor costs and delayed aircraft deliveries potentially pressuring margins, the airline’s focus on efficiency and attracting premium customers will help mitigate these challenges.
“I’d say all in all, the impact is potentially more muted than some might have expected. That’s because if you’re only making a few per cent margin on the flights you do operate, when you don’t fly them you also save some costs.”
Market Reaction
Air Canada’s stock remained mostly unchanged after the earnings release. The summer strike caused a noticeable revenue decline, but compensation provided to stranded customers may influence ongoing costs.
“No surprise—the strike hurt, and this could drag on as some customers are paid compensation for being stranded.”
Conclusion
While the strike had a clear short-term negative impact, premium travel demand and operational improvements are expected to support Air Canada’s recovery.
Author’s summary: Air Canada’s earnings fell due to the strike, but growing premium travel demand and efficiency initiatives are expected to drive a strong recovery.