Air Canada swings to profit in 2023 as carrier signals pandemic recovery

Air Canada swung to a profit in 2023 and posted record revenue as international travel roared back.

Montreal-based Air Canada on Friday posted a full-year profit of $2.28-billion, reversing a $1.7-billion loss in 2022 as strong seat sales to foreign destinations signalled Canada’s flag carrier has left behind the pandemic. Operating revenues reached almost $22-billion for the year, an increase of 32 per cent that outpaced the 20-per-cent rise in seat capacity.

On a per share basis, profit for 2023 was $5.96, compared with a loss of $4.75 in 2022.

Michael Rousseau, chief executive officer of Air Canada, called it a “very successful year.” He said the carrier worked to reduce debt, contain costs and strengthen its balance sheet while improving flight completion and baggage handling.

“We have seen increased customer sat across the entire system,” Mr. Rousseau said on a conference call with analysts on Friday morning.

Operating expenses rose by 14 per cent in 2023, driven by a 21-per-cent rise in wages and other labour costs.

For the fourth quarter, profit rose by 9 per cent to $184-million, or 41 cents a share, from the same period in 2022. Operating revenues increased by 11 per cent to $5.2-billion, from a year ago.

Walter Spracklin, a stock analyst at Royal Bank of Canada, said the quarterly results fell short of his and Bay Street’s expectations. He pointed to lower margins stemming from higher costs.

The airline attributed its strong performance to a range of factors, including the easing of pandemic restrictions as much of the increase in ticket sales occurred in the first half of the year. Demand for international travel rebounded sharply, as yearly revenue for overseas fares rose by 50 per cent on a 26-per-cent rise in capacity. Additionally, higher fares boosted revenue per passenger by 6 per cent.

Overall passenger revenue for the year rose by 27 per cent to $19.4-billion, led by international travel and outweighing a 27-per-drop in cargo sales. Transpacific sales soared by 113 per cent, while airfares to the United States and transatlantic destinations rose by 37 per cent and 38 per cent, respectively.

Mark Galardo, Air Canada’s vice-president of network planning, said sales of international airfares are expected to rise by 10 per cent this year, as overall capacity increases by between 6 and 8 per cent.

Air Canada carried 44.8 million passengers in 2023, up from 36 million in 2022. It reduced its net debt by almost $3-billion to $4.7-billion.

The pandemic, beginning in early 2020, halted much of the world’s air travel and closed borders, sending the airline industry into a financial crisis.

Air Canada’s losses tally $9.9-billion between 2020 and 2022.