MarketScreener is not traditionally kind to airlines. The sector has a reputation for being unkind to investors, and rightly so when you consider its disastrous track record of creating shareholder value.

Ryanair aside, nowhere else is this the case, not even with carmakers or steelmakers. And that's saying something.

That said, for Air Canada - which published its annual results last Friday - 2023 was more than a good year. Sales reached an all-time high, and operating margin returned to double-digit territory for the first time in nine years.

Cash flow was equally buoyant, enabling the company to pay down $2.5 billion in debt and return to a less indecent level of financial leverage. Enterprise value is now close to $12 billion, shared equally between shareholders and creditors.

It's worth remembering, however, that Air Canada boosted its profits this year thanks in part to three exceptional items:

1. An excellent tourist season.

2. $430 million in financial income, thanks to the return on U.S.-dollar-denominated cash - which had been in overdrive since the capital increases during the pandemic - and which benefited from the rise in interest rates.

3. $389 million in favorable currency effects thanks to the fall in the Canadian dollar.

Here, then, is reason to temper our enthusiasm, and to take with a pinch of caution the very low earnings multiple at which the stock is valued - less than five times next year's expected earnings. less than five times next year's expected earnings - because rising interest rates also mean higher borrowing costs, and the company will feel the impact of this as soon as it refinances.

Between 2015 and 2020, Air Canada had undertaken - like other American airlines - to direct its cash flows towards share buybacks. Only to run out of cash when it came to absorbing the $6 billion in losses caused by the pandemic.