Soaring fuel costs push Air Canada to lower its full-year earnings forecast

Air Canada has lowered its full-year adjusted earnings forecast to between $2.4 billion and $2.7 billion, down from $2.9 billion to $3.2 billion announced less than three months earlier, citing higher fuel prices expected for the rest of the year.

The company reported net income attributable to shareholders of $139 million for the three months ended Sept. 30, down 47 per cent from a year earlier. Third-quarter operating revenues reached a record $6.98 billion, up 21 per cent, but fuel costs rose by $906 million over the same period. Adjusted earnings per share were 75 cents, flat year over year and above the 50 cents analysts had predicted, according to LSEG Data & Analytics.

Chief financial officer John Di Bert said in a release that revenue growth reflected strong demand and more cash intake per passenger. "While we expect the challenging environment to persist, our strong financial position provides us with the flexibility to respond to near-term developments. We remain focused on executing on what we can control," he said.

National Bank analyst Cameron Doerksen said overall demand remains positive. In a note to investors last week, he wrote that Air Canada had been expecting to offset higher fuel costs in the fourth quarter, but given higher fuel costs so far in the quarter, "we believe that is unlikely." Air Canada had raised fares further in recent weeks.

The company did not give a fuel price figure or the price level its new forecast assumes.