Air Canada's Stock Soars 10% On Improved Demand Forecast

Air Canada's shares rose on Friday. The airline improved its 2023 forecast. More people want to fly with them. Fuel prices have also decreased.

On Friday, Air Canada's stock (AC.TO) went up by almost 12%. The airline upgraded their 2023 outlook. This is because they think there will be more people wanting to travel and fuel prices will be cheaper.

The airline from Montreal changed their forecast. They now think they will earn between 3.5 billion and 4 billion dollars by 2023. Before, they thought they would earn between 2.5 billion and 3 billion dollars.

On Friday, Air Canada's stock rose by 14% on the Toronto Stock Exchange. This boost led to the stock closing at $20.46 per share, which is almost 12% higher than the previous day.

Walter Spracklin, a RBC Capital Markets analyst, said that AC is taking advantage of high demand and can increase prices. They are using the decrease in fuel prices to their advantage. Spracklin also raised the stock's price target from $20 to $22 per share.

We are worried about what will happen to demand and pricing after the summer. However, we think the management is doing a good job recovering after COVID-19.

Air Canada didn't change how many seats it plans to offer, but it revised its estimate of how much it will cost to fly each seat. Adjusted CASM will likely be 0.5% to 2.5% lower than in 2022, instead of just being compared to 2019 levels. This is a measure of operating costs that doesn't include fuel expenses.

Cameron Doerksen is an analyst at National Bank. He says in a note to clients that investors are worried about higher costs. He stresses that higher prices are making up for these costs.

Air Canada is going to lower their unit costs by 2024. This means they will make their operations cheaper. An analyst named Doerksen thinks their stock will do well and has given it an "outperform" rating. He also raised his predicted price for the stock to $32 per share.

Kevin Chiang, a CIBC analyst, increased the price target for the stock from $30 to $31 per share. He mentioned that despite the uncertain economic situation and growing interest rates, there are no indications of a decline in air travel demand.

Chiang wrote to clients on Friday. He expects Canadian air traffic to stay strong.

Air Canada is still in the early stages of getting better. This means there's less chance of earnings being affected soon.

Alicja Siekierska is a big shot journalist for Yahoo Finance Canada. You can track her activities on Twitter @alicjawithaj.

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