By Adriano Marchese

Air Canada shares jumped in early trading after the airline upgraded expectations for the full year following a better-than-expected third quarter marked by disruptions and labor disputes.

Shares traded over 11% higher at 21.01 Canadian dollars ($15.08).

The Canadian flagship airline on Friday said adjusted earnings before interest, taxes, depreciation and amortization for the year is now expected at C$3.5 billion from a previous range of C$3.1 billion to C$3.4 billion.

Last year, the company reported adjusted Ebitda of C$3.98 billion.

Costs are also expected lower. Air Canada said adjusted cost per available seat mile is now expected to accelerate at a slower pace, rising by 2% instead of previously anticipated 2.5% to 3.5%.

Air Canada also sees a slight decrease in capacity growth, measured in available seat miles, now guiding for a rise of 5% compared from 2023 levels, down from a growth of 5.5% to 6.5%.

Driving the rosier guidance is the assumption that Canada's GDP will grow moderately in the year, and that the Canadian dollar will trade at an average of C$1.36 per U.S. dollar. For jet fuel, the company expects that the price will average at about C$1.00 a liter.

Air Canada's negotiation with its pilots came to a head during the peak summer season, adding complexity to its operations in the period, it said. In the third quarter, revenue fell 4% to C$6.11 billion, beating analyst expectations for a decline to C$6.08 billion, according to FactSet.

While the company reported a higher net income of C$2.04 billion, or C$5.38 a share in the quarter, up from C$1.25 billion, or C$3.08 a share, in the comparable quarter a year ago, this was due to a favorable tax asset recognition of C$1.15 billion.

Adjusted earnings, adjusted earnings, which exclude one-offs and other exceptional items, came to C$2.57 a share. According to FactSet, analysts were expecting C$2.57 a share.

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

(END) Dow Jones Newswires

November 01, 2024 09:52 ET (13:52 GMT)

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