MONTREAL, CANADA — Air Canada reported break-even results in the first quarter, as the airline capitalized on strong travel demand and reduced fuel expenses, inching closer to a full recovery from the pandemic. 

Canada's leading carrier recorded operating revenue of C$4.9 billion ($3.6 billion), nearly double the figure from the same period last year when Covid restrictions were still in effect. This performance exceeded analysts' expectations of C$4.5 billion, according to Bloomberg data.

The Q1 revenue marks Air Canada's second-highest quarterly figure since the pandemic began three years ago, surpassed only by the peak travel season in 2021. The airline plans to increase capacity by 23% this year, bringing its flight schedule to approximately 90% of 2019 levels.

Similar to some US airlines, Air Canada is experiencing sustained demand from travelers. Last month, American Airlines Group Inc. and United Airlines Holdings Inc. both projected that second-quarter profits could surpass Wall Street expectations due to solid bookings for international flights.

Air Canada CEO Michael Rousseau said in a news release that the Q1 financial results surpassed both internal and external forecasts and anticipated continued demand, supported by robust advance bookings throughout the year. The airline reported a load factor of nearly 85% for the quarter, up from 66% a year earlier and higher than pre-pandemic levels.

Air Canada reported earnings of C$4 million and a minor operating loss of C$17 million. Despite an 8% increase in share price this year, the airline has trailed its US counterparts since the start of 2020, as Canada maintained Covid restrictions for a longer duration than the US.

RBC Capital Markets analyst Walter Spracklin noted in a client memo that while demand and pricing may weaken after the summer, a potential structural shift in airline demand could sustain travel despite a slowing economy.