By Ross Marowits, The Canadian Press

MONTREAL - An aerospace analyst has high earnings expectations for Canada's two largest airlines and the prospects of Bombardier to land new orders.

Walter Spracklin of RBC Capital Markets said Tuesday he expects Air Canada (TSX:AC-B.TO - News) and WestJet Airlines (TSX:WJA.TO - News) will report solid operating results next month as higher traffic and fares compensate for volatile fuel prices during the third quarter.

"We see top-line revenue as being lifted in the Canadian airline segment and we are adjusting our forecasts accordingly," he wrote in a report.

Spracklin increased his price target for WestJet by $1 to $21 after the Calgary-based airline's domestic traffic increased by 7.9 per cent during the quarter. He expects it will report 49 cents per share in adjusted profits, up 18.6 per cent from his earlier forecast of 41 cents per share, when the company releases its results on Nov. 7. Pre-tax operating earnings (EBITDAR) should be $194 million, compared to the $181 million consensus among analysts.

Air Canada's traffic and yield data were relatively in line with his higher expectations. He expects the Montreal-based airline with report 81 cents per share in adjusted profits in the quarter, or $541 million in EBITDAR. That compares to the consensus of $524 million.

"With robust operating metrics and new growth opportunities, WestJet remains well-positioned for further valuation upside," he wrote.

"At the same time, we believe Air Canada shares present a compelling trading opportunity and a cyclical/sector play should macro conditions improve."

Spracklin added that Air Canada will be helped by its operational flexibility and transformation strategy.

He also raised Chorus Aviation's (TSX:CHR-B.TO - News) EBITDA by 9.2 per cent to $40 million, from $37 million as a result of better cost controls.

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Aerospace analyst has high expectations for Canadian airlines and Bombardier