Air Canada Q3 Revenue Misses Estimates Due to Labor Disruptions

Air Canada’s third-quarter revenue fell short of analysts’ estimates, primarily due to significant labor disruptions experienced during the period. The airline reported adjusted earnings of C$1.73 per share on revenue of C$6.09 billion for the quarter ending September 30. This performance was below Refinitiv’s average analyst estimates, which projected adjusted earnings of C$1.83 per share and revenue of C$6.37 billion.

Operational Challenges and Financial Impact

The company attributed the revenue miss to labor disruptions, specifically air traffic control (ATC) shortages. These shortages were particularly pronounced in Quebec and Ontario, leading to numerous flight cancellations and delays throughout the third quarter. These operational issues impacted Air Canada’s ability to maximize its capacity and serve its customers efficiently. The airline estimates that these disruptions resulted in approximately C$100 million in lost revenue.

Air Canada was identified as the Canadian airline with the highest number of flight cancellations during the third quarter. Between July 1 and September 26, the airline cancelled 855 flights, representing 1.6% of its total scheduled flights. Furthermore, 48% of Air Canada’s flights during this period experienced delays. In addition to the labor issues, ancillary revenue was also slightly below expectations, contributing to the overall revenue shortfall.

Revised Outlook and Capacity Guidance

In light of the third-quarter challenges, Air Canada has revised its full-year adjusted core profit forecast. The company now anticipates an adjusted core profit between C$3.7 billion and C$3.9 billion, a slight reduction from its previous forecast range of C$3.7 billion to C$4.0 billion. Despite these revisions, Air Canada reiterated its guidance for capacity. The airline still expects its capacity to increase by approximately 20% in 2023 compared to 2022 levels. The adjustments reflect the financial impact of the operational disruptions faced during the reporting period.

Key Points

• Adjusted Q3 earnings: C$1.73 per share
• Refinitiv average estimate for Q3 earnings: C$1.83 per share
• Adjusted Q3 revenue: C$6.09 billion
• Refinitiv average estimate for Q3 revenue: C$6.37 billion
• Revised full-year adjusted core profit forecast: C$3.7 billion – C$3.9 billion
• Previous full-year adjusted core profit forecast: C$3.7 billion – C$4.0 billion
• Estimated lost revenue due to labor disruptions: C$100 million
• Flight cancellations between July 1 and Sept. 26: 855 flights
• Percentage of flights cancelled between July 1 and Sept. 26: 1.6%
• Percentage of flights delayed between July 1 and Sept. 26: 48%
• Capacity increase expected for 2023 from 2022 levels: about 20%

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