AC EPS was -12c vs estimates of +1c. Revenue was $5.17B, about 1% above estimates. Air Canada's 1Q Ebitda profit and margin may continue to grow, though at a slower pace, as seat additions trim yields and costs rise. Ebitda jumped 34% vs. 4Q22, to C$521 million, on a margin up 180 bps, to 10.1%. Revenue rose 11%, to C$5.2 billion on capacity up 9%, mostly to Asia-Pacific (36%) and Europe (11%), which will likely persist in 1Q. Yield growth slowed to 2% on competition and could fall 2% in 1Q on hard comparisons. Cost per available seat kilometer before fuel rose 4%, and may extend into 2024 on labor, infrastructure and aircraft costs. Jet-fuel price averaged C$1.18 a liter, down 12%, which could fall further. Ebitda may rise 20% vs. 1Q23, to C$494 million, on a margin up 110 bps, 9.5%. Air Canada's adjusted net loss shrank 80% toC$44 million, or 12 cents a share. The 'miss' will disappoint investors. The demand is there, but costs are higher than expected. We would give the quarter and outlook just an 'ok' rank. The stock is cheap, at least, on valuation.
5i Research Answer: