Air Canada (TSX:AC) reported its first-quarter earnings last week. For the first three months of the year, the company posted some impressive growth, with operating revenue of $4.9 billion nearly doubling from the less than $2.6 billion in sales it reported in the same period last year. It's a pattern that management expects will continue, with CEO Michael Rousseau stating that "Our first quarter financial results exceeded both internal and external expectations and we expect demand to persist, supported by strong advance bookings for the remainder of the year."
Strong demand and a low price of oil helped the company squeak out a net profit of $4 million, versus a loss of $974 million in the prior-year period. These are encouraging number heading into the busy travel season, as demand is likely not even at its peak. Although consumers have been battling inflation, travel demand has remained fairly resilient thus far. And according to Air Canada, that's something that could end up continuing as the year goes on, even in the face of a potential recession.
Since the start of the year, Air Canada's stock is up a modest 9%. But when looking at a period of five years, the stock is down 11% as a loss of demand during the pandemic has resulted in some brutal earnings reports for the company.
But with demand strong and oil prices coming down, Air Canada could make for a good investment to buy right now as its numbers could improve even further from here on out. And although there may be a downturn in the economy, it may not necessarily lead to a big decline in sales as travel demand could still remain strong enough for Air Canada to perform well as the year goes on.
