Finally, Some Good News for Air Canadahttp://www.fool.com/investing/general/2014/04/04/finally-some-good-news-for-air-canada.aspx Alexander MacLennan
April 4, 2014
After a big run in 2013, this year has been a rough one for Air Canada (TSX: AC.B). With a drop in the Canadian dollar, lower than expected earnings, and reduced guidance, the airline's shares fell from a peak of $9.90 in January to almost $5 by late March.
But on Apr.4, Air Canada shares surged more than 26%. I'll take a look at what this means for Air Canada and its future outlook.
A major reason for today's gains came from what was essentially a reversal of the downbeat guidance. In its March traffic report, Air Canada raised its Q1 outlook, guiding for earnings on par with the same period in 2013. In other words, $15 to $30 million higher than previous guidance.
Air Canada cited higher revenues, as well as higher revenue per available seat mile, and lower cost per available seat mile as reasons for the improved guidance.
At the same time, the airline appears to be keeping capacity under control. The March traffic results have revised available seat mile growth down to an increase of 6.5% to 8% compared to the previously estimated 7% to 9%. Domestic available seat mile growth has also been revised down to a range of 3% to 4% compared to the previous range of 3.5% to 4.5%.
Air Canada is also predicting a strong summer saying, "In addition, based on forward bookings, we expect a strong summer travel season ahe