Air Canada hiked its earnings outlook Thursday, saying it expects earnings to rise due to an improvement in traffic as well as stronger-than-anticipated demand and lower-than-expected fuel prices. 

The Montreal-based airline says adjusted earnings before interest, taxes, depreciation and amortization in 2023 are expected to come in between $3.5 billion and $4 billion, up from between the guidance of $2.5 billion and $3 billion released Feb. 17. 

The company says its outlook assumes moderate Canadian GDP growth for 2023, as well as the Canadian dollar trading on average at $1.34 per U.S. dollar, and a $1.09-per-litre average jet fuel price.

Air Canada posted a $1.7-billion loss in fiscal 2022, but reported a profit in the final quarter as the industry continued to claw its way back from the pandemic, and announced plans to boost capacity in 2023. 

Chief executive Michael Rousseau told analysts in February that the company expects solid demand in 2023. 

The airline is releasing its results for the first quarter of 2023 on May 12.