Air Canada reports bigger loss than market expectations as costs rise

An Air Canada jet comes in for a landing at Laguardia Airport in New York City, New York, U.S., January 11, 2023. REUTERS/Mike Segar/ File Photo

(Reuters) -Air Canada reported a bigger first-quarter loss than market expectations on Thursday, as higher operating costs tied to labor and aircraft maintenance dampened gains from a rebound in business travel.

Increased capacity and flights led to higher costs, while air carriers are compelled to spend billions to repair and operate old and less fuel-efficient aircraft due to production problems faced by planemakers.

Operating expenses rose 6% to C$5.22 billion ($3.80 billion), the airline said even as it benefited from a resurgence in big spending by corporate customers who have been largely absent from the post-pandemic travel boom.

“As we look toward the summer, we see a continued healthy demand environment,” Air Canada CEO Michael Rousseau said.

The airline reaffirmed its 2024 core profit forecast and said it continues to expect adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the range of C$3.7 billion to C$4.2 billion.

Canada’s largest carrier reported a first-quarter adjusted loss of C$0.27 per share, compared with analysts’ average estimates of a C$0.07 loss, according to LSEG data.

Its quarterly operating revenue rose 7% to C$5.23 billion, beating Wall Street expectations of C$5.19 billion.

($1 = 1.3722 Canadian dollars)

(Reporting by Shivansh Tiwary in Bengaluru; Editing by Arun Koyyur)