Please comment on AC Q2 earnings report.
Thanks, George
EPS of 60c missed estimates of 70c; revenue of $5.63B beat estimates of $5.55B. EBITDA of $909M missed estimates by 2%. Air Canada's Ebitda margin fell 50 bps vs. 2Q24 to 16.1% as higher unit costs and soft fares offset capacity gains and low fuel prices, trends likely to persist in 3Q. Passenger revenue per available seat mile (PRASM) fell 2%, led by domestic and US routes on oversupply and soft demand, and Pacific on hard comparisons. Capacity rose 2.5% and may add 3.5% in 3Q. If PRASM falls 2%, 3Q revenue could rise 2%, to C$6.23 billion. The jet-fuel price fell 16%, aiding operating margin by 380 bps. Cost per available seat mile before fuel (CASM-ex) rose 6% on labor, depreciation and airport expenses. If CASM-ex rises 7% and fuel price averages 90 cents a liter, Ebitda may fall 11%, to C$1.36 billion on a 21.8% margin. Air Canada's adjusted net profit fell 44% to C$207 million, or 60 cents a share. AC called the quarter 'challenging'. The stock fell the most since 2023.