(Reuters) – Air Canada cut its full-year core profit forecast on Monday as overcapacity in some markets and intense competition on international routes impacted pricing power, sending the airline’s shares down about 4%.
Airlines’ rush to capitalize on summer travel demand has forced airlines to offer discounts on tickets to fill their planes.
The updated forecast reflects lower returns, lower-than-expected load factors for the second half of the year and competitive pressure in international markets, Canada’s largest airline said Monday.
The airline now expects its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be between C$3.1 billion ($2.26 billion) and C$3.4 billion in 2024, up from its previous forecast of C$3 .7 billion to C$4.2 billion. .
The company has tightened its unit cost forecast and now expects full-year adjusted cost per available seat mile (CASM) to grow 2.5% to 3.5%, compared to previous expectations of an increase of 2 .5% to 4.5%.
“While the airline appears to have made some progress in controlling seat-mile costs, the demand environment appears weaker than we expected,” Citi analyst Stephen Trent wrote in a note.
Air Canada reported preliminary second-quarter operating revenue of C$5.5 billion, up 1.7% from a year earlier. Analysts on average expected $5.65 billion, according to LSEG data.
The airline also expects operating income of C$466 million, compared with C$802 million a year earlier.
($1 = 1.3740 Canadian dollars)
