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Highlights
- Air Canada (TSX:AC) announced its first-quarter results for fiscal 2022 on Tuesday, April 26.
- The Canadian airline said its average seat miles (ASM) capacity grew 3.4 times year-over-year (YoY) in Q1 2022.
- The company expects CASM capacity to hover around 13 to 15 per cent in 2022.
Air Canada (TSX:AC) has been turning heads on the stock markets as the airline announced its first-quarter results for fiscal 2022 on Tuesday, April 26.
The Canadian flyer said that it started 2022 on a weak note in the face of the omicron spread and resultant travelling restrictions. However, the company added that it quickly recovered in March, with passenger volumes surpassing December levels and ticket sales compared to March 2019 levels, which signalled towards “ much stronger” Q2 and Q3 this year.
The Canadian government also removed several travelling mandates effective from April 25, which could boost travel demand in the coming spring season.
With such developments in the travel industry, let us analyze Air Canada’s performance in the latest quarter.
Air Canada (TSX: AC)’s financial performance in Q1 FY2022
Air Canada said its average seat miles (ASM) capacity grew 3.4 times year-over-year (YoY) in Q1 2022. However, it was still 45 per cent down from 2019 levels.
The airline saw its passenger revenue surge to C$ 1.917 billion in the latest quarter, i.e., nearly five times up from Q1 2021.
The flyer’s operating revenue amounted to C$ 2.57 billion in Q1 2022, i.e., approximately 3.5 times greater than Q1 2021. Its operating loss also declined to C$ 550 million in the latest quarter compared to C$ 1.04 billion in Q1 2021.
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Air Canada saw its cost per available seat mile (CASM) reduce to 21.8 cents in the first three months of FY2022 compared to 42.2 cents a year ago. The company narrowed down its EBITDA loss, special items excluded, to C$ 143 million in Q1 2022 compared to C$ 763 million in the same quarter of 2021.
It also shortened net loss to C$ 974 million in Q1 2022 from C$ 1.3 billion a year ago.
Air Canada’s stock performance
Stocks of Air Canada declined by over three per cent YoY. However, the airline stock grew by nearly 15 per cent year-to-date (YTD) and closed at C$ 24.22 per share on April 25.
Bottomline
The Canadian airline company planned to expand its ASM capacity by approximately 150 per cent in 2022 compared to 2021. It also expects CASM capacity to hover around 13 to 15 per cent and adjusted EBITDA margin to reach somewhere between eight to 11 per cent in 2022.
The company also stated that it would keep adjusting capacity and undertake necessary steps considering passenger demand, health guidelines, travel rules and factors like inflation and costs.
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Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
