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Air Canada beats Q3 profit estimates but cuts forecast on rising fuel prices

By Reuters News


Overview

  • Canada airline's Q3 revenue rose yr/yr, beating analyst expectations

  • Adjusted EPS for Q3 beat analyst expectations

  • Company completed C$800 mln share buyback, reducing shares outstanding by about 10%


Outlook

  • Air Canada lowers 2026 adjusted EBITDA forecast to C$2.4 bln-C$2.7 bln from C$2.9 bln-C$3.2 bln

  • Company now expects 2026 free cash flow to be break-even ± C$150 mln, down from C$200 mln-C$500 mln

  • Company says higher fuel prices are weighing on 2026 outlook


Result Drivers

  • PASSENGER AND CARGO DEMAND - Co said higher passenger load factor, increased yields and 33% growth in cargo revenues drove Q3 revenue growth

  • COST AND PRICING ACTIONS - Co said pricing, capacity and cost measures helped offset higher fuel expenses

  • FUEL PRICE PRESSURE - Co said higher fuel prices are expected to weigh on results for remainder of yr


Company press release:


Key Details

Metric

Beat/Miss

Actual

Consensus Estimate

Q3 Revenue

Beat

C$6.98 bln

C$6.88 bln (13 Analysts)

Q3 Adjusted EPS

Beat

C$0.75

C$0.53 (13 Analysts)

Q3 EPS

C$0.49

Q3 Net Income

C$139 mln

Q3 Operating Margin

3.70%


Analyst Coverage

  • The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 10 "strong buy" or "buy", 3 "hold" and 1 "sell" or "strong sell"

  • The average consensus recommendation for the airlines peer group is "buy"

  • Wall Street's median 12-month price target for Air Canada is C$34.00, about 55.8% above its October 28 closing price of C$21.82

  • The stock recently traded at 19 times the next 12-month earnings vs. a P/E of 15 three months ago


Reuters Recommended Reads

  • Oct 28 - Canadian competition watchdog warns Air Canada-United deal could raise airfares

  • Oct 28 - As Iran war drags on, airlines pull back on fuel hedges and warn on fares

  • Oct 29 - India's IndiGo says fare increases inevitable as fuel costs rise


For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.


(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)

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