Though the earnings report that came out of Canadian airline Air Canada (TSE:AC) was not exactly a big win, and annual adjusted core profit forecasts were lowered accordingly, investors were still very, very much on board. Sufficiently on board, in fact, to send shares skyrocketing, up over 13.5% in Friday morning’s trading.
Air Canada took its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) forecast down to between C$3.2 billion and C$3.6 billion. The change is small, but noticeable, as the original forecast called for between C$3.4 billion and C$3.8 billion. Revenue for this quarter, meanwhile, dropped to C$5.19 billion. This not only failed to meet analyst estimates of C$5.29 billion, it also faltered against the same time last year, down 1%.
The misses, however, were comparatively small, and Air Canada could pretty comfortably explain why they were there to begin with: a decline in bookings to the United States, which mirrored that of the entire industry. Eastern Canadian winter storms did not help matters either, nor did a jet accident in Toronto, both of which had an impact on revenue.
A New Airbus Play
Meanwhile, Air Canada also has a matter of getting airplanes up and running, and new reports from Simple Flying suggest that the big plan is to call in more Airbus (EADSY) planes. That is not surprising; given Boeing’s (BA) remarkable backlog and the tariffs accompanying a Boeing purchase these days, for Air Canada to look to Airbus instead just makes sense.
But Air Canada will be taking its time about Airbus introductions, with Air Canada revealing that it would put the new A321XLR into service “incognito.” Basically, Air Canada looks to put this plane into service without letting passengers know that they are, in fact, riding on an XLR. Reports suggest that the new seating layout will be all the indication they need to know that they are in fact riding in one, though they will not know before they get on the plane itself. The most likely place to see an XLR in service? The Ottawa to London route, reports note.
Is Air Canada Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:AC stock based on seven Buys, two Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 7.61% loss in its share price over the past year, the average TSE:AC price target of C$20.87 per share implies 19.8% upside potential.
