02:37 PM EST, 01/21/2025 (MT Newswires) -- Canadian CPI data for December showed that the air transportation component decreased 5.3% for the sixth straight month, but was up 8.1% on December 2019 (pre-COVID), notes National Bank.

While airfares in Canada showed signs of strength in the first half of 2024, they were much weaker in the second half with the December reading declining y/y for the sixth straight month, analyst Cameron Doerksen writes.

Still, fares in December were ahead of 2019 levels for the fourth consecutive month. Doerksen adds that Transat reported its fiscal fourth-quarter (ended October) results in December and highlighted that so far in fiscal Q1, its yields were up 1.0% y/y while the load factor was up 1.1 points.

Looking ahead, Transat management expects industry capacity to be much more disciplined in F2025 (Transat planning for just 2% capacity growth), and based on airline scheduling data, industry capacity growth in Q1/25 is indeed expected to be modest while an early look at capacity for the trans-Atlantic market this summer shows the same, which should be beneficial for pricing, in National Bank's view.

Air Canada ( ACDVF ) is rated Outperform, with a $27 target.

Transat is rated Underperform, with a $1.50 target.

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