(Reuters) -Air Canada said on Friday it would return to 2019 capacity levels next year on strong travel demand, after reporting a larger-than-expected quarterly loss per share.
The carrier’s shares plunged more than 10% in morning trade.
North American carriers are adding seats to meet surging travel demand after a pandemic-induced slump, despite global economic uncertainty, while also wrestling with higher labour costs.
“We’re seeing significant inflationary pressures, again, because of labour shortages a little bit around the world,” Air Canada’s Chief Financial Officer Amos Kazzaz told analysts.
Prices for ground handling contracts, labour and catering are rising, he added.
Air Canada’s cost per available seat mile (CASM) is expected to rise about 13% to 15% above 2019 levels this year.
Canada’s largest carrier said it expects its 2023 capacity to increase by about 24% from a year earlier to hit 90% of pre-pandemic levels, after reporting record fourth-quarter revenue.
While corporate demand in North America has stabilised, international business travel is picking up, said Air Canada’s Chief Commercial Officer Lucie Guillemette, who is retiring in the spring.
“What we are seeing is a steady growth on corporate for international markets,” she said.
Air Canada Chief Executive Michael Rousseau said travel demand for leisure and visiting friends and relatives is making up for lower demand by business travellers.
Montreal-based Air Canada’s fourth-quarter operating revenue rose nearly 71% to C$4.68 billion ($3.46 billion). Analysts, on average, were expecting operating revenue of C$4.4 billion according to IBES data from Refinitiv.
The carrier’s fourth-quarter adjusted net loss came in at C$217 million, or 61 Canadian cents per share, compared with an adjusted loss of C$577 million, or C$1.61 per share, a year earlier.
Analysts were expecting a loss of 21 Canadian cents per share.
($1 = 1.3515 Canadian dollars)
(Reporting by Pratyush Thakur in Bengaluru and Allison Lampert in Montreal; Editing by Anil D’Silva and Shounak Dasgupta)