Moody’s predicts Air Canada and WestJet earnings will surpass pre-COVID levels in 2024

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Air Canada, WestJet earnings to top pre-COVID highs in 2024: Moody's



“Air Canada & WestJet Airlines Expected to Book Higher Earnings in 2024”

Air Canada and WestJet Airlines are expected to experience higher earnings in 2024, despite potential challenges arising from a slower global economy. Analysts at Moody’s Investors Service anticipate strong travel demand driving this growth, signaling a positive projection for both airlines.

Rising Profit and Passenger Count

Air Canada reported a significant increase in profit in its latest quarter, accompanied by a higher year-over-year passenger count during the recent holiday travel season. Similarly, WestJet celebrated “record-breaking guest volumes” from mid-to-late December. These positive performance indicators set the stage for a promising year ahead.

Challenges and Competition

While both airlines are on an upward trajectory, external factors such as a slower global economy, conflicts in the Middle East, and volatile fuel and labor costs could pose challenges to their post-pandemic recovery. Additionally, the emergence of low-cost Canadian carriers like Lynx Air and Flair Airlines adds another layer of competition for Air Canada and WestJet.

Profitability Outlook

Despite the potential obstacles, analysts at Moody’s remain optimistic, projecting an increase in operating profit for both Air Canada and WestJet in 2024. They believe that the two airlines will exceed pre-pandemic levels this year and outperform their Canadian peers. The factors driving this profitability growth include strong passenger demand that continues to support profit growth, even in the face of a slower global economy.

The Path to Growth – Air Canada and WestJet

Moody’s analysts foresee Air Canada benefiting from the strong demand for international travel and the higher fares that passengers are willing to pay for such routes. While nearly three-quarters of its revenue is generated from international travel, Air Canada’s executive vice-president is confident in the strong demand across various geographies and segments.

As for WestJet, the airline anticipates improved profitability from strategic decisions such as prioritizing routes to Western Canada and the deployment of newer, more fuel-efficient aircraft that could lower fuel costs. With the goal of returning to operation as a low-cost carrier, these moves are aligned with WestJet’s long-term strategy.

Conclusion

While the road ahead may pose some challenges, the overall outlook for both Air Canada and WestJet is positive. The prospect of higher earnings in 2024, driven by strong travel demand, reflects resiliency in the face of potential economic headwinds. As these airlines navigate the evolving landscape of the aviation industry, their ability to adapt and innovate will play a crucial role in determining their long-term success.



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