Air Canada (TSX:AC) stock increased 8.23% at the bottom of the noon hour on September 20. Reports indicate that Canada’s largest airliner plans to offer ultralow-cost fare and expand its regional networks in Canada to compete with low cost airliners that will hit the market in 2018.
The lower fares will be available to select customers and the company has yet to determine what regional routes will be targeted for lower rates. The regional Rouge airline fleet that Air Canada possesses is lower cost than the rest of its aircraft but currently the company has less than 50 commissioned. On September 19 Air Canada and U.S. aviation services company AAR Corp. (NYSE:AIR) signed a 10-year agreement for AAR to provide Air Canada with airframe maintenance for its Airbus narrow-body fleet.
Air Canada posted record second quarter results on August 1. System passenger revenue climbed 11.9% to $3.5 billion as traffic growth jumped 13.6%. The company posted adjusted net income of $215 million or $0.78 per diluted share compared to $203 million or $0.72 per share in Q2 2016.
Shares of Air Canada have surged 84% in 2017 and 166% year over year. Increased customer traffic and lower fuel costs have given a boon to the top airline in the country. Demand for air travel is expected to climb in the coming years. Moving early against low-cost airliners show that Air Canada is committed to protect its market share domestically. Even after explosive year-to-date gains this stock looks great in the long-term.
