Citing lower yields and lower demand than expected, Air Canada is substantially lowering expectations for its second-quarter financial outlook.
Canada’s largest airline on 22JUL said it now expects its second-quarter EBITDA (Earnings Before Interest, Taxes, Deprecation and Amortization) to land in the $3.1 to $3.4 billion range. That’s down significantly from their earlier estimate of $3.7 to $4.2 billion.
The airline said it expects adjusted EBITDA of $914 million for the quarter, down from $1.2 billion in Q2 last year. Operating income is expected to be $466 million for the quarter, compared to $802 million in Q2 last year.
Air Canada also reduced its projected ASM capacity from earlier estimates. It now is calling for a 5.5 to 6.5% increase over Q2 2023 versus earlier projections of a 6 to 8% increase.
“The updated 2024 adjusted EBITDA guidance range is largely driven by the lower yield environment, lower-than-expected load factors for the second half of the year and competitive pressures in international markets. It also reflects our assumptions including those relating to the price of jet fuel and a weakened Canadian dollar against the US dollar,” officials said.
“The updated 2024 capacity guidance range accounts for sustained supply chain pressures, evolving market conditions and ongoing geopolitical issues.”
Air Canada said the company “is effectively managing costs through productivity, cost reductions and other cost discipline initiatives.”
They also said the demand for air travel remains healthy.
“The second quarter operating revenues would represent a record for a second quarter, with load factors remaining above historical averages.”
More details will be announced when final Q2 figures are released on 07AUG.
