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An Air Canada aircraft is de-iced at Vancouver International Airport in Richmond, B.C. on Dec. 21, 2022.DARRYL DYCK/The Canadian Press

Air Canada AC-T underscored the financial toll of the pandemic on Friday by posting a $1.7-billion loss for 2022, almost three years after COVID-19 roiled the aviation sector.

Still, the loss of $4.75 a share marks a step forward from 2021, when Canada’s largest airline lost $3.6-billion, or $10.25 a share. Revenue from seat sales in 2022 more than tripled from 2021 to $14.2-billion – about 83 per cent of 2019′s prepandemic levels, Air Canada said in its earnings report, released before markets opened Friday.

For the three months ended Dec. 31, a period that included the chaotic Christmas travel season, the carrier reported a profit of $168-million (41 cents), compared with a loss of $493-million ($1.38) in the fourth quarter of 2021. It recorded a foreign exchange gain of $316-million in the fourth quarter of 2022 and a currency loss of $732-million for the full year.

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Chief executive officer Michael Rousseau said he was pleased with the results and attributed the improved financial performance to “solid demand” and cost controls.

“These results also validate our strategy of diversifying our revenue sources,” he said. “Revenue from our premium cabins was about 13-per-cent higher, supported in part by Aeroplan. The loyalty program’s active membership is at an all-time high and continues to grow, and Air Canada Cargo revenue was up 55 per cent compared to the same quarter prepandemic.”

Air Canada’s share price fell 9 per cent to just over $21 on the Toronto Stock Exchange on Friday, bringing its 12-month decline to about 13 per cent, well off the prepandemic high of $51.

“Air Canada has certainly seen important improvements in the last year,” Citigroup analyst Stephen Trent said. “However, its valuation, relative to the likes of Delta Airlines, United Airlines and Copa Airlines, looks a little mismatched, considering this trio of competitors’ materially stronger operating results.”

Airlines cancelled thousands of flights over the 2022 holidays as winter storms slowed aircraft movements. The disarray came after a summer in which airlines, airports and government agencies were ill-prepared for a surge in passengers, leading to clogged terminals and passengers sitting in idling jets.

Craig Landry, Air Canada’s operations chief, said the holiday weather was more extreme than usual, affecting plane crew schedules and slowing the entire network. “It also coincided with some of the highest peak travel dates of the holiday season,” Mr. Landry said in a conference call with analysts Friday.

“During the week of Dec. 19, a continentwide weather event impacted all of our major hubs. In Vancouver, four-foot icicles formed on aircraft and bridges, rendering the assets unusable. In Calgary, the extreme cold exceeded safe conditions for de-icing activities and, in Toronto, facilities such as airport baggage handling systems started to freeze.”

Beginning in March, 2020, the pandemic halted most air travel and closed borders, sending the global airline industry into financial turmoil.

In the late spring of 2022, Canadian air traffic rebounded sharply. Air Canada saw passenger volumes rise 83 per cent in the final seven months of 2022 – more than 217,000 flights and 25 million customers – compared with all of 2021, Mr. Landry said.

In 2020, the carrier’s loss totalled $4.6-billion, compared with a profit in the previous year of $1.5-billion.

However, the 2022 fourth-quarter results signalled that demand has fully returned. Passenger revenue for the period exceeded 2019′s fourth quarter by 2 per cent, even as Air Canada offered just 85 per cent of that period’s operating capacity.

For the first quarter of 2023, the carrier plans to keep capacity tight, at 84 per cent of the same period in 2019. It forecast an adjusted profit for the year of $2.5-billion to $3-billon, before interest, taxes, depreciation and amortization.

“We are very encouraged with the positive outlook ahead,” Mr. Rousseau said. “Our quarterly ticket sales were 102 per cent of the fourth quarter of 2019, on a lower level of capacity, and we expect a solid demand environment in 2023.”

Analysts said Air Canada’s results offered a mixed picture – costs are elevated, but customer demand is strong. Bank of Montreal analyst Fadi Chamoun said the airline’s fourth-quarter profit missed consensus and his expectations, largely owing to higher expenses.

Royal Bank of Canada stock analyst Walter Spracklin said in a research note that a broader economic slowdown poses a risk to Air Canada’s strong demand and higher prices.

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