By Adriano Marchese

Air Canada shares were flying Friday morning after the company reported better-than-feared results in the first quarter and trimmed its outlook in line with analyst forecasts.

Shares rose 12% to 17.04 Canadian dollars ($12.24).

The Canadian flagship airline late Thursday lowered its full-year guidance for adjusted earnings before interest, taxes, depreciation, and amortisation between C$3.2 billion and C$3.6 billion, down from previous guidance of C$3.4 billion to C$3.8 billion.

The lower guidance reflects recent trends in the commercial-airline space as well as lower fuel prices. The new outlook is more in-line with what analysts expected, according to Scotiabank analyst Konark Gupta, which supports "our estimate at the low-end and the Street at the high-end, with a reduced capacity target."

Adjusted cost per available seat mile and free cash flow guidance remained unchanged, however, which Gupta credits the company's cost and capital expenditure savings.

Air Canada also lowered its expectations for capacity, measured in available seat miles, to grow 1% to 3%, rather than the 3% to 5% expansion it previously anticipated.

The stock has been under pressure in 2025, falling about 23% since the year began. Along with general trade and economic concerns, President Trump's early aggressive trade stance toward Canada stymied some interest for cross-border travel among Canadians, adding questions about how demand would shape up for air travel between the two neighboring countries.

Gupta calls the new guidance cut "a clearing event," adding that reduced costs and capital expenditures, and the company's substantial issuer bid are all positives given the stock's depressed valuation.

For the first quarter, Air Canada reported operating revenue of C$5.2 billion, down from the C$5.28 billion expected by analysts.

Loss came to C$102 million, or C$0.40 a share, compared with a loss of C$81 million, or C$0.22 a share, the prior year.

Stripping out one-time expenses and exceptional costs, adjusted loss per share was C$0.45. Analysts polled by FactSet expected a loss of C$0.52.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

May 09, 2025 10:14 ET (14:14 GMT)

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