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Air Canada Shares Surge 11% on Strong Q3 Results, Rosier Outlook

AInvestFriday, Nov 1, 2024 4:07 pm ET
1min read
Air Canada's shares rose by 11% on November 1, 2024, following the release of its third-quarter financial results and an updated outlook that exceeded market expectations. The airline reported solid earnings and a resilient performance, despite facing industry headwinds and contract-related adjustments.

Air Canada's adjusted earnings per share (EPS) of $2.57 in Q3 2024 surpassed market expectations, contributing to the share price increase. This beat was driven by better-than-expected operating performance, with operating income of $1.040 billion and adjusted EBITDA of $1.523 billion, both up significantly from the previous year. The company's strong financial results, coupled with a rosier outlook, boosted investor confidence and led to the share price surge.

Air Canada's updated full-year guidance, which accounted for changes in fuel prices and contract-related adjustments, played a significant role in boosting investor confidence and driving the share price up. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for 2024 was increased to about $3.5 billion, up from earlier guidance of between $3.1 billion and $3.4 billion. This solid update, along with better-than-expected Q3 results, reassured investors about the company's financial outlook and growth prospects, leading to the share price surge.

Air Canada's adjusted EBITDA for the third quarter of 2024 was $1.523 billion, a decrease of $307 million year-over-year, but the adjusted EBITDA margin of 24.9% remained relatively strong. The company's adjusted earnings per diluted share of $2.57 were ahead of market expectations, contributing to the share price increase. Despite the year-over-year decline in adjusted EBITDA, the company's solid adjusted EBITDA margin and better-than-expected earnings per share indicate improved operational efficiency and profitability, which likely drove investor confidence and the subsequent share price increase.


Air Canada's operating income for Q3 2024 was $1.040 billion, a $375 million decrease from the previous quarter. The operating margin stood at 17.0%, down from 24.9% in the previous quarter. Despite the decline, Air Canada's shares rose 11% on a rosier outlook and better-than-expected Q3 results. This discrepancy can be attributed to investors focusing on the company's improved guidance for the full year, which accounted for updated expectations of jet fuel prices and contract-related cost adjustments. Additionally, the announcement of a normal course issuer bid and the recent ratification of a new pilot contract removed key overhangs on the stock, further boosting investor confidence.


In conclusion, Air Canada's strong Q3 results and rosier outlook have driven a significant increase in its share price. The company's solid financial performance, coupled with a resilient operating margin and improved guidance, has reassured investors about its growth prospects and financial health. As Air Canada continues to navigate industry headwinds and contract-related adjustments, investors remain optimistic about the company's long-term growth potential.
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