It’s a great day for Air Canada (TSE:AC). The airline that recently ramped up its China flights brought out its earnings report, and the news was smooth sailing and clear flying all the way. Investors were over the moon—or close to it—and sent shares up over 11% in Friday morning’s trading.
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While the third quarter was not all smiles and sunshine for Air Canada—remember that labor issue that almost shut the airline down just weeks ago?—there was certainly plenty to like. Revenue dropped 4%, reaching $6.11 billion, and profit came in at $2.04 billion. That was up in a big way from the third quarter of 2023, which featured $1.25 billion in income.
However, that $2.04 billion also included a $1.15 billion “income tax recovery,” which, had that not been there, would have left income down slightly against the third quarter. Meanwhile, adjusted earnings per share came in at $2.57, which was a significant drop from the $3.41 per share brought in this time last year.
It Gets Better from There
The news was already pretty good for Air Canada and investors, if not as good as one might have wanted, but future outlooks got even better. A Reuters report noted that Air Canada was looking for “booming demand” for business travel, and for overseas travel in general. It also looks for its trans-Atlantic operations to “bounce back” in 2025.
In addition, the firm took a significant step forward in reinforcing investor confidence, launching the first share buyback it has undertaken since the pandemic. The authorization allows Air Canada to buy back as many as 35.8 million shares. Air Canada is undertaking the move, the report noted, in a bid to reduce the dilution that it engaged in back during the pandemic when its ability to operate was so thoroughly curtailed.
Is Air Canada a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:AC stock based on eight Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 21.91% rally in its share price over the past year, the average TSE:AC price target of C$23.13 per share implies 10.69% upside potential.
