MONTREAL -- Air Canada's shares surged more than six per cent on heavy trading volumes Tuesday a day after the airline reported good traffic numbers in October and at least one analyst boosted his target price by 39 per cent.

Shares of the Montreal-based carrier gained 11 cents to $1.91 in trading on the Toronto Stock Exchange. That's five cents short of the 52-week high set about two weeks ago.

About 1.7 million shares traded, up from the 372,000 daily average.

Air Canada (TSX:AC.B) reported Monday that it flew its planes with record percentages of seats full in October as passenger traffic increased with only slight increases in capacity.

The country's largest carrier said planes in its domestic and international systems were 82.9 per cent full in the month, up 3.5 percentage points from 79.4 per cent a year ago.

System traffic, including regional airlines, increased 4.9 per cent on a system-wide capacity increase of 0.4 per cent.

Traffic grew by 7.1 per cent on Atlantic routes, by 6.8 per cent on Pacific routes and by five per cent in Canada where planes were 83.2 per cent filled, up from 80.6 per cent a year earlier.

Traffic on routes to Australia, the Caribbean, Mexico, Central America and South America decreased 2.2 per cent.

Chris Murray of PI Financial Corp. boosted his share price target Monday to $2.50 from $1.80 on anticipation of the strong traffic numbers, fuel estimates and the expiration of some 80 million warrants.

"We believe further clarity on costs for fiscal year 2013 are the key driver of earnings as we anticipate limited traffic and capacity growth and a flat yield environment with fuel prices down slightly year over year," he wrote.

David Tyerman of Canaccord Genuity said October's traffic performance was encouraging for revenues as demand appears to be positive.

"We continue to project moderate mid-term sales and margin increases, driven by industry growth and ongoing cost cutting efforts at Air Canada. In particular, we expect moderate margin improvement from revised maintenance contracts and recently concluded labour agreements."

Air Canada is expected to earn $202 million, or 70 cents per share in adjusted profits on $3.27 billion of revenues in the third quarter, according to analysts polled by Thomson Reuters. That compares to profits of $157 million or 55 cents per share last year.