MONTREAL – Shares of Air Canada hit a more than six-year high Friday after industry analysts upgraded their outlook for the country’s largest carrier on “fundamental” cost-cutting moves and improving passenger travel demand.

The Montreal-based carrier’s shares hovered around a peak of $10.48 set in morning trading. They were up 47 cents or 4.78 per cent at $10.40 in later trading.

Air Canada’s shares had the best performance of all public companies in Canada last year and are up from a 52-week low of $2.07.

Analysts believes that several initiatives, including the launch of low-cost Rouge subsidiary, addition of more seating on Boeing 777s and the delivery of long-haul Boeing 787 Dreamliners, give the airline a promising future.

Walter Spracklin of RBC Capital Markets boosted his target price nearly 42 per cent to $17, adding the airline’s shares could hit $30 under a best-case scenario of industry growth accelerating on a strong economy.

He says Air Canada’s operating results are beating forecast across all measures.

The analyst says he underestimated the strong demand environment, which supports higher prices and the airline’s ability to more quickly reduce costs.

Cameron Doerksen of National Bank Financial also increased his target price to $12, from $8.50 saying several catalysts are emerging. They include higher fares, stabilized costs and better Trans-Atlantic revenues.

He also upgraded WestJet Airlines (TSX:WJA) on the strengthening domestic fare environment, stabilization of fuel prices and high multiples valuations for its peers.

His target price was raised to $29, up from $27. That prompted the Calgary-based carrier’s shares to gain 61 cents or 2.38 per cent at $26.27.

Source: The Canadian Press