Investor Outlook: Air Canada Profit Hit by Strike but Premium Travel Lifts Outlook
Air Canada’s third-quarter earnings dropped five per cent following the summer flight attendant strike, with revenue and profits falling sharply compared to last year.
Despite this, analysts remain optimistic, noting that demand for premium and international travel is strengthening, supporting a recovery ahead.
Analyst Insight
BNN Bloomberg interviewed Nicolas Owens, equity analyst for industrials at Morningstar, about the airline’s performance.
“Higher labour costs and delayed aircraft deliveries could weigh on margins in the near term, but the airline’s focus on efficiency and premium customers should help offset those pressures.”
Discussion on Strike Impact
Andrew, the host, commented on Air Canada shares being flat amidst a five per cent revenue decline due to the strike. He emphasized that customer compensation for stranded passengers might continue to affect earnings.
“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.”
Summary
- Revenue and profits dropped five per cent year over year due to the strike.
- Demand for premium and international travel is strengthening.
- Higher labour costs and delayed deliveries may pressure margins short term.
- Efficiency measures and premium customer focus could balance cost pressures.
Author’s summary: Despite strike-related losses, Air Canada’s emphasis on premium travel and operational efficiency positions it well for recovery in a challenging environment.