By Adriano Marchese

After opening more than 6% higher, Air Canada shares retreated after the airline reported a loss in the fourth quarter due to higher costs.

Shares traded 3% lower at 17.69 Canadian dollars ($12.46) after reaching C$19.42 earlier in the morning.

Canada's flagship airline swung to a loss of C$644 million, it reported late Thursday, which on a per-share basis was a loss of C$1.81, compared with a net income of C$184 million, or C$0.41 a share a year earlier.

Air Canada logged higher expenses in the quarter, largely due to a C$490 million one-time charge in the period for pension plan amendments linked to the new collective agreement with the Air Line Pilots Association.

Adjusted earnings, which excludes one-off items and exceptional costs, came to C$0.25, meeting analyst expectations for the period, according to FactSet.

In the quarter, Air Canada generated revenue of C$5.4 billion which represented a 4% increase over the prior year period thanks to a 2.1% capacity growth. Analysts polled on FactSet expected a decline to C$5.13 billion.

Capacity in available seat miles were 24.95 billion, up from 24.44 billion.

Costs rose in the quarter, measured in adjusted cost per available seat mile, to 15.05 Canadian cents, up from 14.25 Canadian cents.

Looking ahead to 2025, adjusted earnings before interest, taxes, depreciation and amortization is expected to come in between C$3.4 billion and C$3.8 billion, compared with C$3.59 billion in 2024. Analysts expect adjusted Ebitda to be on the lower end of the range at C$3.49 billion this year.

Costs, measured in adjusted CASM, are expected to rise to between 14.25 Canadian cents and 14.5 Canadian cents, up from 13.49 Canadian cents last year.

Behind the guidance, Air Canada assumes moderate Canadian economic growth for 2025. While U.S. and Canadian tariffs are on pause for the month, Air Canada executives said in the earnings call Friday that they didn't want to speculate on the potential effects they could have if imposed.

Air Canada also assumes that the Canadian dollar will trade, on average, at C$1.40 per U.S. dollar for the full year 2025 and that the price of jet fuel will average C$0.95 per liter.

Executives said on the earnings call that the revenue environment experienced in the fourth quarter 2024 is continuing into 2025.

"January booking trends have aligned with our expectations despite some uncertainty. We see encouraging booking trends and yield signals for the second quarter and into the third," they said.

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

(END) Dow Jones Newswires

February 14, 2025 10:33 ET (15:33 GMT)

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