Enbridge, Air Canada beat Q4 analyst estimates

Enbridge Inc. said Friday that it hit record oil-shipping volumes in December, as rising Western Canada production filled up the extra capacity the company has been adding to its system.

The increased volumes helped push Enbridge to an adjusted net income of $1.01 billion or 61 cents per common share, beating out analyst expectations of 56 cents per share of adjusted earnings according to data from Thomson Reuters.

Special items, however, pushed unadjusted net income down to $207 million, a 42% decline from the year-earlier period, resulting in net income of 13 cents per share.

The unusual and infrequent items included a $2.8-billion after-tax account charge from the write down of assets held for sale, partially offset by a $2 billion accounting benefit from U.S. tax reform.

The company has earmarked at least $10 billion of non-core assets for sale, focusing on its oil and gas gather and process facilities, and its onshore renewables division, with $3 billion targeted for 2018.

Read: Oil production boom has IEA warning about 2014 crash

A Reuters report out Thursday said the company was increasing its sales target to $8 billion for the year, but company CEO Al Monaco said on a conference call Friday that the company has a solid funding plan and no need to increase that target.

“Use that information with caution since it’s not from us,” said Monaco.

“There’s certainly nothing to indicate to us that additional assets will be required. But obviously, as we always would, if there are ideas that come forward or offers put on the table that we can’t turn down, then we’ll probably take a look at those.”

Monaco said that recently proposed reforms to major project assessments in Canada has created some unpredictability for the time being, but that it looks to generally be in the right direction.

“Everybody would agree that there’s been regulatory uncertainty for a while and that is causing investor concern—and obviously concern from us as well in terms of where we put capital to work,” he said.

“I would comment that in general, we’re supportive of the government’s goal to increase confidence in the process, and we’re thinking the direction is right in terms of aspects of the legislation.”

Monaco added the unpredictability of new legislation also comes as the U.S. looks to make investments more attractive—which will factor in where Enbridge may put its capital, he added.

Enbridge reported adjusted full-year net income of $2.98 billion or $1.96 per common share, above analyst expectations of $1.88 per share, in a year that saw it take over U.S.-based Spectra Energy and add significant natural gas shipping capacity to its existing oil pipeline infrastructure.

Read: U.S. considers duties on Canadian pipeline material

Air Canada’s Q4 results

Air Canada’s fourth-quarter revenue and adjusted earnings came in ahead of analyst estimates, as the Montreal-based airline posted record-high annual revenue for 2017.

Its adjusted net income was $61 million, or 22 cents per share for the quarter—well ahead of analyst estimates of 14 cents per share, according to Thomson Reuters data.

The airline’s operating revenue was $3.82 billion in the fourth quarter, up from $3.43 billion a year earlier and above the estimate of $3.745 billion.

Net income was $8 million or two cents per share for the three months ended Dec. 31, which was an improvement over a 2016 fourth-quarter loss of $179 million but lower than expected.

Analysts had estimated 15 cents per share of net income.

“Overall, we liked what we saw in the Q4 results,” wrote analyst Walter Spracklin of RBC Dominion Securities in a note to clients. He added that Air Canada’s new guidance shows its costs will be higher in the first quarter and full year than the RBC estimate, and includes a number of one-time costs.

Spracklin said analysts would be looking for more information about management’s margin expectations for 2018, which weren’t mentioned in the press release.

Fighting off low-cost upstarts

Air Canada is looking to cut operating costs and defend against competition from upstart low-cost competitors by adding more planes to its Rouge fleet and flying them on regional routes within Canada.

The increased use of Rouge planes domestically is permitted under changes to the collective agreement with pilots negotiated last year.

Several more Rouge planes are being added this summer and, once all Boeing 787s are delivered next year, there will be no limit on the number or type of single-aisle planes that can be flown by Rouge.