Jun. 2 at 2:10 AM
$AC.TSX @OnTheBalance @airlineinvestor101 @veecee1 @Nordico
Jet fuel price lowered last week to
$142, which is 42% higher than prewar and 34% lower than peak of
$220.
https://www.iata.org/en/publications/economics/fuel-monitor/
$UAL $DAL $AC.TSX mentioned that they can incrementally recover 100% of jet fuel price increase (100%: double) by Q4. But jet fuel price is down to 42% increase. Let's assume this level for rest of the year.
Jet fuel price increase recovered (ticket price) by Q
Q2 Q3 Q4
XAL: 50% 75% 100%
AC: 60% 75% 100%
But @ 42% price increase and strong demand/yield, above table will change to
Q2 Q3 Q4
XAL: 50% 100% + 100%+
AC: 60% 100%+ 100%+
If ticket prices stay at current levels, expect airlines to not only cover fuel price increase but also expand their margins in 2026.
At these levels Air Canada EBITDA will be ~
$4.0B. @ 4 EV/EBITDA multiple, stock price will be
$40+. @ US airlines multiple (5.5), it will be
$60+.