Air Canada Reports Second Quarter 2025 Financial Results
Air Canada (ACDVF) reported its Q2 2025 financial results with operating revenues of $5.632 billion, up 2% year-over-year. The company achieved an operating income of $418 million with a 7.4% operating margin and adjusted EBITDA of $909 million with a 16.1% margin.
Key highlights include a 5% increase in premium revenues, strong operational performance leading North American carriers in on-time performance, and completion of a $500 million substantial issuer bid. The company generated $895 million in operating cash flow and $183 million in free cash flow.
Air Canada maintained its full-year 2025 guidance, projecting adjusted EBITDA of $3.2-3.6 billion and capacity growth of 1-3%. The company also reaffirmed its 2028 targets, including reaching approximately $30 billion in operating revenues and maintaining less than 300 million shares outstanding.
Air Canada (ACDVF) ha comunicato i risultati finanziari del secondo trimestre 2025 con ricavi operativi pari a 5,632 miliardi di dollari, in aumento del 2% rispetto all'anno precedente. La compagnia ha registrato un utile operativo di 418 milioni di dollari con un margine operativo del 7,4% e un EBITDA rettificato di 909 milioni di dollari con un margine del 16,1%.
I punti salienti includono un aumento del 5% dei ricavi premium, una solida performance operativa che ha posizionato la compagnia tra i leader nordamericani per puntualità, e il completamento di un buyback sostanziale di 500 milioni di dollari. L'azienda ha generato 895 milioni di dollari di flusso di cassa operativo e 183 milioni di dollari di flusso di cassa libero.
Air Canada ha confermato le previsioni per l'intero anno 2025, prevedendo un EBITDA rettificato tra 3,2 e 3,6 miliardi di dollari e una crescita della capacità dell'1-3%. Ha inoltre ribadito gli obiettivi per il 2028, tra cui raggiungere circa 30 miliardi di dollari di ricavi operativi e mantenere meno di 300 milioni di azioni in circolazione.
Air Canada (ACDVF) reportó sus resultados financieros del segundo trimestre de 2025 con ingresos operativos de 5.632 millones de dólares, un aumento del 2% interanual. La compañía alcanzó un ingreso operativo de 418 millones de dólares con un margen operativo del 7,4% y un EBITDA ajustado de 909 millones de dólares con un margen del 16,1%.
Los aspectos destacados incluyen un aumento del 5% en ingresos premium, un sólido desempeño operativo que posiciona a la aerolínea como líder en puntualidad entre las compañías norteamericanas, y la finalización de una oferta sustancial de recompra por 500 millones de dólares. La empresa generó 895 millones de dólares en flujo de caja operativo y 183 millones de dólares en flujo de caja libre.
Air Canada mantuvo sus previsiones para todo el año 2025, proyectando un EBITDA ajustado de 3,2-3,6 mil millones de dólares y un crecimiento de capacidad del 1-3%. También reafirmó sus objetivos para 2028, incluyendo alcanzar aproximadamente 30 mil millones de dólares en ingresos operativos y mantener menos de 300 millones de acciones en circulación.
에어캐나다 (ACDVF)는 2025년 2분기 재무 실적을 발표하며 운영 수익 56억 3,200만 달러로 전년 대비 2% 증가했습니다. 회사는 영업이익 4억 1,800만 달러와 7.4%의 영업이익률, 조정 EBITDA 9억 900만 달러와 16.1%의 마진을 기록했습니다.
주요 내용으로는 프리미엄 수익 5% 증가, 북미 항공사 중 정시 운항 성과 선두, 그리고 5억 달러 규모의 대규모 자사주 매입 완료가 포함됩니다. 회사는 8억 9,500만 달러의 영업 현금 흐름과 1억 8,300만 달러의 자유 현금 흐름을 창출했습니다.
에어캐나다는 2025년 전체 연간 가이던스를 유지하며 조정 EBITDA를 32억~36억 달러로, 운항 용량은 1~3% 성장할 것으로 전망했습니다. 또한 2028년 목표도 재확인하며, 약 300억 달러의 운영 수익 달성과 3억 주 미만의 발행 주식 수 유지를 목표로 하고 있습니다.
Air Canada (ACDVF) a publié ses résultats financiers du deuxième trimestre 2025 avec des revenus d'exploitation de 5,632 milliards de dollars, en hausse de 2 % par rapport à l'année précédente. La société a réalisé un résultat opérationnel de 418 millions de dollars avec une marge opérationnelle de 7,4 % et un EBITDA ajusté de 909 millions de dollars avec une marge de 16,1 %.
Les points clés incluent une augmentation de 5 % des revenus premium, une solide performance opérationnelle plaçant Air Canada en tête des transporteurs nord-américains en matière de ponctualité, et la réalisation d'un rachat d'actions substantiel de 500 millions de dollars. La société a généré 895 millions de dollars de flux de trésorerie opérationnel et 183 millions de dollars de flux de trésorerie disponible.
Air Canada a maintenu ses prévisions pour l'ensemble de l'année 2025, projetant un EBITDA ajusté compris entre 3,2 et 3,6 milliards de dollars et une croissance de capacité de 1 à 3 %. Elle a également réaffirmé ses objectifs pour 2028, notamment atteindre environ 30 milliards de dollars de revenus d'exploitation et maintenir moins de 300 millions d'actions en circulation.
Air Canada (ACDVF) meldete seine Finanzergebnisse für das zweite Quartal 2025 mit operativen Einnahmen von 5,632 Milliarden US-Dollar, was einem Anstieg von 2 % im Jahresvergleich entspricht. Das Unternehmen erzielte ein operatives Ergebnis von 418 Millionen US-Dollar mit einer operativen Marge von 7,4 % sowie ein bereinigtes EBITDA von 909 Millionen US-Dollar mit einer Marge von 16,1 %.
Wesentliche Highlights sind ein 5%iger Anstieg der Premium-Einnahmen, starke operative Leistungen, die Air Canada zu einem der pünktlichsten nordamerikanischen Fluggesellschaften machen, sowie der Abschluss eines substantiellen Rückkaufprogramms in Höhe von 500 Millionen US-Dollar. Das Unternehmen generierte 895 Millionen US-Dollar operativen Cashflow und 183 Millionen US-Dollar freien Cashflow.
Air Canada bestätigte seine Prognose für das Gesamtjahr 2025 und erwartet ein bereinigtes EBITDA von 3,2 bis 3,6 Milliarden US-Dollar sowie ein Kapazitätswachstum von 1-3 %. Zudem bekräftigte das Unternehmen seine Ziele für 2028, darunter etwa 30 Milliarden US-Dollar operative Einnahmen und die Beibehaltung von weniger als 300 Millionen ausstehenden Aktien.
- Operating revenues increased 2% to $5.632 billion
- Premium revenues grew 5% year-over-year
- Strong cash flow with $895 million from operations
- Led North American carriers in on-time performance for May and June
- Completed $500 million share buyback program
- Maintained solid leverage ratio of 1.4
- Fully repaid convertible notes in cash upon July maturity
- Operating income declined from $466M to $418M year-over-year
- Operating margin decreased from 8.4% to 7.4%
- Adjusted EBITDA margin dropped from 16.6% to 16.1%
- Higher jet fuel price assumptions for 2025 (C$0.92 vs previous C$0.88)
- Operating revenues of
$5.63 2 billion2% versus last year. - Operating income of
$418 million 7.4% and adjusted EBITDA* of$909 million 16.1% . - Premium revenues up
5% from the second quarter of 2024. - Cash flow from operating activities of
$895 million $183 million - Completion of
$500 million - Leverage ratio* of 1.4 at June 30, 2025.
"Air Canada's second quarter 2025 results showcase the airline's many strengths in the face of a challenging environment. We generated operating revenues exceeding
"Our distinctive product offerings and the unwavering dedication of our employees were recognized at the Skytrax World Airline Awards. We are proud to have been recognized as the Best Airline in
"A key pillar of our strategy is delivering value to our shareholders through effective capital allocation programs. Building on the successful reinstatement in 2024 of our normal course share purchase program, we completed a
*Adjusted CASM, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted EBITDA margin, leverage ratio, net debt, adjusted pre-tax income (loss), adjusted net income (loss), adjusted earnings (loss) per share, and free cash flow are referred to in this news release. Such measures are non-GAAP financial measures, non-GAAP ratios, or supplementary financial measures, are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. Refer to the "Non-GAAP Financial Measures" section of this news release for descriptions of these measures, and for a reconciliation of Air Canada non-GAAP measures used in this news release to the most comparable GAAP financial measure. Leverage ratio of 1.0 at June 30, 2024. Adjusted EBITDA and operating income for the trailing 12-month periods ended June 30, 2025 were |
Second Quarter 2025 Financial Results
- Operating revenues of
$5.63 2 billion - Operating expenses of
$5.21 4 billion - Operating income of
$418 million 7.4% and adjusted EBITDA of$909 million 16.1% - Adjusted pre-tax income of
$300 million - Net income of
$186 million $0.51 - Adjusted net income of
$207 million $0.60 - Adjusted CASM* of
14.4 cents - Net cash flows from operating activities of
$895 million $183 million
Outlook
For the third quarter of 2025, Air Canada plans to increase its ASM capacity between
For the full year 2025, Air Canada is reiterating its guidance previously provided on May 8, 2025 and updating certain major assumptions. Full year 2025 guidance is as follows:
Metric | 2025 Guidance |
Adjusted EBITDA | |
ASM capacity | |
Adjusted CASM | 14.25 ¢ to 14.50 ¢ |
Free cash flow | Break even +/- |
Major Assumptions
Air Canada made assumptions in providing its guidance—including a marginal Canadian GDP growth for 2025. Air Canada now assumes that the Canadian dollar will trade, on average, at
Air Canada's guidance constitutes forward-looking information within the meaning of applicable securities laws and is subject to important risks and uncertainties, including in relation to statements or actions by governments and uncertainty relating to the imposition of (or threats to impose) tariffs on Canadian exports or imports and their resulting impacts on the Canadian, North American and global economies and travel demand. Please see the discussion below under Caution Regarding Forward-looking Information.
2028 Targets
On December 17, 2024, Air Canada announced its long-term 2028 financial targets and 2030 aspirations described below:
Metric | 2028 Targets | 2030 Aspirations |
Operating revenues | Approximately | Exceed |
Adjusted EBITDA margin* | Greater than or equal to | Between |
Net cash flows from operating activities as a percentage of adjusted EBITDA* | Approximately | Approximately |
Additions to property, equipment and intangible assets as a percentage of operating revenues* | Lower than or equal to | Lower than |
Free cash flow margin* | Approximately | Approximately |
Return on invested capital* | Not provided | Greater than or equal to |
Fully diluted share count | Lower than 300 million shares | Lower than 300 million shares |
*Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted EBITDA margin, net cash flows from operating activities as a percentage of adjusted EBITDA, additions to property, equipment and intangible assets as a percentage of operating revenues, free cash flow margin and return on invested capital are referred to in this news release. Such measures are non-GAAP financial measures, non-GAAP ratios, or supplementary financial measures, are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. |
The 2028 long-term targets and 2030 aspirations provided in this news release do not constitute guidance or outlook but rather are provided for the purpose of assisting the reader in measuring progress toward Air Canada's objectives. The reader is cautioned that using this information for other purposes may be inappropriate. Air Canada may review and revise these targets and aspirations including as economic, geopolitical, market and regulatory environments change. These targets and aspirations are used as goals as Air Canada executes on its strategic priorities, and they assume a normal business environment. Air Canada's ability to achieve these targets and aspirations is also dependent on its success in achieving initiatives and business objectives that are described in Air Canada's 2024 Investor Day presentations, which are available at aircanada.com/investors, including those relating to increasing revenues, growing fleet and network capacity, and successfully executing on other key investments and initiatives, as well as other major assumptions, including those described in this news release, and are subject to a number of risks and uncertainties.
Non-GAAP Financial Measures
Below is a description of certain non-GAAP financial measures and ratios used by Air Canada to provide readers with additional information on its financial and operating performance. Such measures are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. The non-GAAP financial measures or ratios described in this section typically have exclusions or adjustments that include one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of past or future operating results. These items are excluded because the company believes these may distort the analysis of certain business trends and render comparative analysis across periods less meaningful and their exclusion generally allows for a more meaningful analysis of Air Canada's operating expense performance and may allow for a more meaningful comparison to other airlines.
Air Canada excludes the effect of impairment of assets, if any, when calculating adjusted CASM, adjusted EBITDA, adjusted EBITDA margin, adjusted pre-tax income (loss) and adjusted net income (loss) as it may distort the analysis of certain business trends and render comparative analysis across periods or to other airlines less meaningful.
Adjusted CASM
Air Canada uses adjusted CASM to assess the operating and cost performance of its ongoing airline business without the effects of aircraft fuel expense, the cost of ground packages at Air Canada Vacations, freighter costs and other items discussed above. These items may distort the analysis of certain business trends and render comparative analysis across periods less meaningful and their exclusion generally allows for a more meaningful analysis of Air Canada's operating expense performance and may allow for a more meaningful comparison to that of other airlines.
In calculating adjusted CASM, aircraft fuel expense is excluded from operating expense results as it fluctuates widely depending on many factors, including international market conditions, geopolitical events, jet fuel refining costs and
Air Canada also incurs expenses related to the operation of freighter aircraft which some airlines, without comparable cargo businesses, may not incur. Air Canada had six Boeing 767 dedicated freighter aircraft in service as at June 30, 2025, and at June 30, 2024. These costs do not generate ASMs and therefore excluding these costs from operating expense results provides for a more meaningful comparison of the passenger airline business across periods.
The following tables provide the adjusted CASM reconciliation to GAAP operating expense for the periods indicated.
(Canadian dollars in millions, except where indicated) | Second Quarter | First Six Months | ||||||||||
2025 | 2024 | Change | 2025 | 2024 | Change | |||||||
Operating expense – GAAP | $ | 5,214 | $ | 5,053 | $ | 161 | $ | 10,518 | $ | 10,268 | $ | 250 |
Adjusted for: | ||||||||||||
Aircraft fuel | (1,148) | (1,333) | 185 | (2,334) | (2,587) | 253 | ||||||
Ground package costs | (157) | (137) | (20) | (530) | (472) | (58) | ||||||
Freighter costs (excluding fuel) | (42) | (38) | (4) | (84) | (73) | (11) | ||||||
Operating expense, adjusted for the above-noted items | $ | 3,867 | $ | 3,545 | $ | 322 | 7,570 | 7,136 | 434 | |||
ASMs (millions) | 26,860 | 26,203 | 2.5 % | 51,100 | 50,540 | 1.1 % | ||||||
Adjusted CASM (cents) | ¢ | 14.40 | ¢ | 13.53 | ¢ | 0.87 | ¢ | 14.81 | ¢ | 14.12 | ¢ | 0.69 |
(Canadian dollars in millions, except where indicated) | Full Year | |||
2024 | 2023 | |||
Operating expense – GAAP | $ | 20,992 | $ | 19,554 |
Adjusted for: | ||||
Aircraft fuel | (5,118) | (5,318) | ||
Ground package costs | (782) | (720) | ||
Freighter costs (excluding fuel) | (163) | (157) | ||
Provision for contractual lease obligations | (34) | - | ||
Pension plan amendments | (490) | - | ||
Operating expense, adjusted for the above-noted items | 14,405 | 13,359 | ||
ASMs (millions) | 104,381 | 99,012 | ||
Adjusted CASM (cents) | ¢ | 13.80 | ¢ | 13.49 |
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and impairment) and adjusted EBITDA margin (adjusted EBITDA as a percentage of operating revenues) are commonly used in the airline industry and are used by Air Canada as a means to view operating results and the related margin before interest, taxes, depreciation, amortization and impairment and other items discussed above. These items can vary significantly among airlines due to differences in the way airlines finance their aircraft and other assets.
Adjusted EBITDA and adjusted EBITDA margin are reconciled to GAAP operating income (loss) as follows:
Second Quarter | First Six Months | |||||||||||
(Canadian dollars in millions, except where indicated) | 2025 | 2024 | Change | 2025 | 2024 | Change | ||||||
Operating income – GAAP | $ | 418 | $ | 466 | $ | (48) | $ | 310 | $ | 477 | $ | (167) |
Add back: | ||||||||||||
Depreciation, amortization and impairment | 491 | 448 | 43 | 986 | 890 | 96 | ||||||
Adjusted EBITDA | $ | 909 | $ | 914 | $ | (5) | $ | 1,296 | $ | 1,367 | $ | (71) |
Operating revenues | $ | 5,632 | $ | 5,519 | $ | 113 | $ | 10,828 | $ | 10,745 | $ | 83 |
Operating margin (%) | 7.4 | 8.4 | (1.0) pp | 2.9 | 4.4 | (1.5) pp | ||||||
Adjusted EBITDA margin (%) | 16.1 | 16.6 | (0.5) pp | 12.0 | 12.7 | (0.7) pp | ||||||
Adjusted Pre-tax Income (Loss)
Adjusted pre-tax income (loss) is used by Air Canada to assess the overall pre-tax financial performance of its business without the effects of foreign exchange gains or losses, net interest relating to employee benefits, gains or losses on financial instruments recorded at fair value, gains or losses on sale and leaseback of assets, gains or losses on disposal of assets, gains or losses on debt settlements and modifications and other items discussed above. These items may distort the analysis of certain business trends and render comparative analysis across periods or to other airlines less meaningful.
A corporate charge for the settlement of tax matters related to the 2019 acquisition of Aeroplan was recorded in the second quarter of 2025. As this item is non-recurring and cash-neutral to Air Canada, since it recorded a related tax refund, it has been excluded from adjusted pre-tax income.
Adjusted pre-tax income is reconciled to GAAP income (loss) before income taxes as follows:
Second Quarter | First Six Months | |||||||||||
2025 | 2024 | Change | 2025 | 2024 | Change | |||||||
Income (loss) before income taxes – GAAP | $ | 103 | $ | 404 | $ | (301) | $ | (64) | $ | 339 | $ | (403) |
Adjusted for: | ||||||||||||
Foreign exchange (gain) loss | 190 | 2 | 188 | 201 | (57) | 258 | ||||||
Net interest relating to employee benefits | (5) | (6) | 1 | (10) | (11) | 1 | ||||||
Gain on financial instruments recorded at fair value | (6) | (29) | 23 | (60) | (40) | (20) | ||||||
Loss on debt settlements | - | - | - | - | 46 | (46) | ||||||
Other corporate expenses | 18 | - | 18 | 18 | - | 18 | ||||||
Adjusted pre-tax income | $ | 300 | $ | 371 | $ | (71) | $ | 85 | $ | 277 | $ | (192) |
Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share – Diluted
Air Canada uses adjusted net income (loss) and adjusted earnings (loss) per share – diluted as a means to assess the overall financial performance of its business without the after-tax effects of foreign exchange gains or losses, net financing expense relating to employee benefits, gains or losses on financial instruments recorded at fair value, gains or losses on sale and leaseback of assets, gains or losses on debt settlements and modifications, gains or losses on disposal of assets and other items discussed above. These items may distort the analysis of certain business trends and render comparative analysis to other airlines less meaningful.
A corporate charge for the settlement of tax matters related to the 2019 acquisition of Aeroplan was recorded in the second quarter of 2025. As this item is non-recurring and cash-neutral to Air Canada, since it recorded a related tax refund, it has been excluded from adjusted net income.
Adjusted net income and adjusted earnings per share are reconciled to GAAP net income as follows:
Second Quarter | First Six Months | |||||||||||
2025 | 2024 | Change | 2025 | 2024 | Change | |||||||
Net income – GAAP | $ | 186 | $ | 410 | $ | (224) | $ | 84 | $ | 329 | $ | (245) |
Adjusted for: | ||||||||||||
Foreign exchange (gain) loss | 190 | 2 | 188 | 201 | (57) | 258 | ||||||
Net interest relating to employee benefits | (5) | (6) | 1 | (10) | (11) | 1 | ||||||
Gain on financial instruments recorded at fair value | (6) | (29) | 23 | (60) | (40) | (20) | ||||||
Loss on debt settlements | - | - | - | - | 46 | (46) | ||||||
Other corporate expenses | 18 | - | 18 | 18 | - | 18 | ||||||
Income tax, including for the above reconciling items | (176) | (8) | (168) | (176) | 6 | (182) | ||||||
Adjusted net income | $ | 207 | $ | 369 | $ | (162) | $ | 57 | $ | 273 | $ | (216) |
Weighted average number of outstanding shares used in computing diluted income per share (in millions) | 341 | 376 | (35) | 344 | 376 | (32) | ||||||
Adjusted earnings (loss) per share – diluted | $ | 0.60 | $ | 0.98 | $ | (0.38) | $ | 0.16 | $ | 0.73 | $ | (0.57) |
The table below reflects the share amounts used in the computation of basic and diluted earnings per share on an adjusted earnings per share basis:
(In millions) | Second Quarter | First Six Months | ||
2025 | 2024 | 2025 | 2024 | |
Weighted average number of shares outstanding – basic | 323 | 358 | 326 | 358 |
Effect of dilution | 18 | 18 | 18 | 18 |
Weighted average number of shares outstanding – diluted | 341 | 376 | 344 | 376 |
Free Cash Flow
Air Canada uses free cash flow as an indicator of the financial strength and performance of its business, indicating the amount of cash Air Canada can generate from operations and after capital expenditures. Free cash flow is calculated as net cash flows from operating activities minus additions to property, equipment, and intangible assets, and is net of proceeds from sale and leaseback transactions.
The table below reconciles free cash flow to net cash flows from (used in) operating activities for the periods indicated.
Second Quarter | First Six Months | |||||||||||
(Canadian dollars in millions) | 2025 | 2024 | $ Change | 2025 | 2024 | $ Change | ||||||
Net cash flows from operating activities | $ | 895 | $ | 924 | $ | (29) | $ | 2,421 | $ | 2,516 | $ | (95) |
Additions to property, equipment, and intangible assets | (712) | (473) | (239) | (1,407) | (1,009) | (398) | ||||||
Free cash flow (1) | $ | 183 | $ | 451 | $ | (268) | $ | 1,014 | $ | 1,507 | $ | (493) |
Net Debt
Net debt is a capital management measure and a key component of the capital managed by Air Canada and provides management with a measure of its net indebtedness.
Net Debt to Trailing 12-Month Adjusted EBITDA (Leverage Ratio)
Net debt to trailing 12-month adjusted EBITDA ratio (also referred to as "leverage ratio") is commonly used in the airline industry and is used by Air Canada as a means to measure financial leverage. Leverage ratio is calculated by dividing net debt by trailing 12-month adjusted EBITDA.
The table below reconciles leverage ratio to Air Canada's net debt balances as at the dates indicated.
(Canadian dollars in millions) | June 30, 2025 | December 31, 2024 | June 30, 2024 | |||
Total long-term debt and lease liabilities | $ | 10,247 | $ | 10,915 | $ | 10,858 |
Current portion of long-term debt and lease liabilities | 1,547 | 1,755 | 1,619 | |||
Total long-term debt and lease liabilities (including current portion) | 11,794 | 12,670 | 12,477 | |||
Less cash, cash equivalents and short- and long-term investments | (7,037) | (7,752) | (8,869) | |||
Net debt | $ | 4,757 | $ | 4,918 | $ | 3,608 |
Adjusted EBITDA (trailing 12 months) | $ | 3,515 | 3,586 | $ | 3,718 | |
Net debt to adjusted EBITDA ratio | 1.4 | 1.4 | 1.0 | |||
The tables below present comparative figures for the twelve-month periods ending December 31, 2023 and 2024, in reference to Air Canada's full-year 2025 guidance, 2028 financial targets, and 2030 aspirations.
(Canadian dollars in millions, except where indicated) | 2024 Results | 2023 Results |
ASM Capacity | 104.381 billion | 99.012 billion |
Adjusted CASM (cents) | 13.80¢ | 13.49¢ |
Operating expenses | ||
Adjusted EBITDA | ||
Operating income | ||
Free cash flow | ||
Net cash flows from operating activities |
(Canadian dollars in millions, except where indicated) | 20241 | 20231 |
Operating revenues | ||
Adjusted EBITDA margin | 16 % | 18 % |
Operating margin | 6 % | 10 % |
Net cash flows from operating activities as a percentage of adjusted EBITDA | 110 % | 108 % |
Additions to property, equipment and intangible assets as a percentage of operating revenues | 12 % | 7 % |
Free cash flow margin | 6 % | 13 % |
Return on invested capital | 14 % | 18 % |
Income before income taxes | ||
Fully diluted share count | Approximately 376 million shares | Approximately 376 million shares |
1Percentage amounts in the table above may not calculate exactly due to rounding. |
The 2028 long-term targets and 2030 aspirations provided in this news release do not constitute guidance or outlook but rather are provided for the purpose of assisting the reader in measuring progress toward Air Canada's objectives. The reader is cautioned that using this information for other purposes may be inappropriate. Air Canada may review and revise these targets and aspirations including as economic, geopolitical, market and regulatory environments change. These targets and aspirations are used as goals as Air Canada executes on its strategic priorities, and they assume a normal business environment. Air Canada's ability to achieve these targets and aspirations is also dependent on its success in achieving initiatives and business objectives that are described in Air Canada's 2024 Investor Day presentations, which are available at aircanada.com/investors, including those relating to increasing revenues, growing fleet and network capacity, and successfully executing on other key investments and initiatives, as well as other major assumptions, including those described in this news release, and are subject to a number of risks and uncertainties.
Net cash flows from operating activities as a percentage of adjusted EBITDA
Air Canada uses net cash flows from operating activities as a percentage of adjusted EBITDA to measure cash conversion from adjusted EBITDA. This measure is defined as the ratio of net cash flows from operating activities to adjusted EBITDA.
Additions to property, equipment and intangible assets as a percentage of operating revenues
Air Canada uses additions to property, equipment and intangible assets as a percentage of operating revenues to measure the proportion of operating revenues that are reinvested as capital expenditures. This measure is defined as the ratio of additions to property, equipment and intangible assets to operating revenues.
Free cash flow margin
Air Canada uses free cash flow margin to measure the amount its free cash flow represents as a percentage of operating revenues. This measure is defined as the ratio of free cash flow to operating revenues.
The table below presents the quantitative reconciliation for adjusted EBITDA, adjusted EBITDA margin, net cash flows from operating activities as a percentage of adjusted EBITDA, additions to property, equipment and intangible assets as a percentage of operating revenues, free cash flow and free cash flow margin, in each case for the financial years ended December 31, 2024 and 2023.
(in millions, except where indicated) | 2024 | 2023 | ||
Total operating revenues – GAAP | $ | 22,255 | $ | 21,833 |
Operating income – GAAP | $ | 1,263 | $ | 2,279 |
Add back: | ||||
Depreciation and amortization | 1,799 | 1,703 | ||
EBITDA | 3,062 | 3,982 | ||
Add back: | ||||
Provision for contractual lease obligations | 34 | - | ||
Pension plan amendments | 490 | - | ||
Adjusted EBITDA | $ | 3,586 | $ | 3,982 |
Net cash flows from operating activities | $ | 3,930 | $ | 4,320 |
Additions to property, equipment and intangible assets | (2,636) | (1,564) | ||
Free cash flow | $ | 1,294 | $ | 2,756 |
Operating margin | 6 % | 10 % | ||
Adjusted EBITDA margin | 16 % | 18 % | ||
Net cash flows from operating activities as a percentage of adjusted EBITDA | 110 % | 108 % | ||
Additions to property, equipment and intangible assets as a percentage of operating revenues | 12 % | 7 % | ||
Free cash flow margin | 6 % | 13 % | ||
Return on invested capital
Air Canada uses return on invested capital (ROIC) to assess the efficiency with which it allocates its capital to generate returns. ROIC is calculated as the ratio of adjusted pre-tax income (loss), excluding interest expense, to invested capital. Invested capital includes average year-over-year long-term debt and lease obligations, average year-over-year shareholders' equity, and the embedded derivative on Air Canada's convertible notes. In 2020, Air Canada issued convertible unsecured notes. Air Canada had the option to deliver cash or a combination of cash and shares on the conversion date in lieu of shares, giving rise to an embedded derivative that was included as part of the definition of capital. Air Canada calculates invested capital on a book value-based method when calculating ROIC.
Return on invested capital is reconciled to GAAP income (loss) before income taxes as follows:
(in millions, except where indicated) | 2024 | 2023 | ||
Income before income taxes – GAAP | $ | 515 | $ | 2,212 |
Adjusted for: | ||||
Provision for contractual lease obligations | 34 | - | ||
Pension plan amendments | 490 | - | ||
Foreign exchange (gain) loss | 400 | (389) | ||
Net interest relating to employee benefits | (22) | (25) | ||
(Gain) on financial instruments recorded at fair value | (28) | (115) | ||
Loss on debt settlements and modifications | 8 | 10 | ||
Adjusted pre-tax income | $ | 1,397 | $ | 1,693 |
Add back: | ||||
Interest expense | 763 | 944 | ||
Adjusted pre-tax income before interest expense | $ | 2,160 | $ | 2,637 |
Invested capital: | ||||
Average long-term debt and lease liabilities (including current portion) | 13,266 | 15,084 | ||
Embedded derivative on convertible notes | 45 | 56 | ||
Average shareholders' equity (deficiency) | 1,592 | (380) | ||
Invested capital | $ | 14,903 | $ | 14,761 |
Return on invested capital (%) | 14 % | 18 % | ||
Second Quarter 2025 Conference Call
Air Canada will host its quarterly analysts' call on Tuesday, July 29, 2025, at 8:00 a.m. ET. Michael Rousseau, President and Chief Executive Officer, John Di Bert, Executive Vice President and Chief Financial Officer, and Mark Galardo, Executive Vice President and Chief Commercial Officer and President, Cargo, will present the results and be available for analysts' questions. Immediately following the analysts' Q&A session, Mr. Di Bert and Pierre Houle, Vice President and Treasurer, will be available to answer questions from term loan B lenders and holders of Air Canada bonds.
Media and the public may access this call on a listen-in basis. Details are as follows:
Webcast: | |
By telephone: | 647-932-3411 or 1-800-715-9871 (toll-free) |
Conference ID 4600266 | |
Please allow 10 minutes to be connected to the conference call. |
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This news release includes forward-looking statements within the meaning of applicable securities laws. Forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may involve, but are not limited to, comments relating to guidance, strategies, expectations, planned operations or future actions. Forward-looking statements are identified using terms and phrases such as "preliminary"; "anticipate"; "believe"; "could"; "estimate"; "expect"; "intend"; "may"; "plan"; "predict"; "project"; "will"; "would"; and similar terms and phrases, including references to assumptions.
Forward-looking statements, by their nature, are based on assumptions including those described herein and are subject to important risks and uncertainties, which are amplified in the current environment. Forward-looking statements cannot be relied upon due to, among other things, changing external events and general uncertainties of the business of Air Canada. Actual results may differ materially from results indicated in forward-looking statements due to a number of factors, including those discussed below.
Factors that may cause results to differ materially from results indicated in forward-looking statements include economic conditions, statements or actions by governments and uncertainty relating to the imposition of (or threats to impose) tariffs on Canadian exports or imports and their resulting impacts on the Canadian, North American and global economies and travel demand, geopolitical conditions such as the military conflicts in the
Air Canada has and continues to establish targets, make commitments and assess the impact regarding climate change, and related initiatives, plans and proposals that Air Canada and other stakeholders (including government, regulatory and other bodies) are pursuing in relation to climate change and carbon emissions. The achievement of our commitments and targets depends on many factors, including the combined actions of governments, industry, suppliers and other stakeholders and actors, as well as the development and implementation of new technologies. In particular, our 2030 carbon emission-related targets and our related 2050 aspiration are ambitious and heavily dependent on new technologies, renewable energies and the availability of a sufficient supply of sustainable aviation fuels (SAF), which continues to present serious challenges. In addition, Air Canada has incurred, and expects to continue to incur, costs to achieve its goal of net-zero carbon emissions and to comply with environmental sustainability legislation and regulation and other standards and accords. The precise nature of future binding or non-binding legislation, regulation, standards and accords, on which local and international stakeholders are increasingly focusing, cannot be predicted with any degree of certainty, nor can their financial, operational or other impact. There can be no assurance of the extent to which any of our climate goals will be achieved or that any future investments that we make in furtherance of achieving our climate goals will produce the expected results or meet increasing stakeholder environmental, social and governance expectations. Moreover, future events could lead Air Canada to prioritize other nearer-term interests over progressing toward our current climate goals based on business strategy, economic, regulatory and social factors, and potential pressure from investors, activist groups or other stakeholders. If we are unable to meet or properly report on our progress toward achieving our climate change goals and commitments, we could face adverse publicity and reactions from investors, customers, advocacy groups or other stakeholders, which could result in reputational harm or other adverse effects to Air Canada.
The forward-looking statements contained or incorporated by reference in this news release represent Air Canada's expectations as of the date of this news release (or as of the date they are otherwise stated to be made) and are subject to change after such date. However, Air Canada disclaims any intention or obligation to update or revise any forward-looking statements whether because of new information, future events or otherwise, except as required under applicable securities regulations.
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Selected Financial Metrics and Statistics
The financial and operating highlights for Air Canada for the periods indicated are as follows:
Second Quarter | First Six Months | |||||
Financial Performance Metrics | 2025 | 2024 | $ Change | 2025 | 2024 | $ Change |
Operating revenues | 5,632 | 5,519 | 113 | 10,828 | 10,745 | 83 |
Operating income | 418 | 466 | (48) | 310 | 477 | (167) |
Operating margin (1) (%) | 7.4 | 8.4 | (1.0) pp (8) | 2.9 | 4.4 | (1.5) pp |
Adjusted EBITDA (2) | 909 | 914 | (5) | 1,296 | 1,367 | (71) |
Adjusted EBITDA margin (2) (%) | 16.1 | 16.6 | (0.5) pp | 12.0 | 12.7 | (0.7) pp |
Income (loss) before income taxes | 103 | 404 | (301) | (64) | 339 | (403) |
Net income | 186 | 410 | (224) | 84 | 329 | (245) |
Adjusted pre-tax income (2) | 300 | 371 | (71) | 85 | 277 | (192) |
Adjusted net income (2) | 207 | 369 | (162) | 57 | 273 | (216) |
Total liquidity (3) | 8,364 | 10,203 | (1,839) | 8,364 | 10,203 | (1,839) |
Net cash flows from operating activities | 895 | 924 | (29) | 2,421 | 2,516 | (95) |
Free cash flow (2) | 183 | 451 | (268) | 1,014 | 1,507 | (493) |
Net debt (2) | 4,757 | 3,608 | 1,149 | 4,757 | 3,608 | 1,149 |
Long-term debt and lease liabilities | 11,794 | 12,477 | (683) | 11,794 | 12,477 | (683) |
Diluted earnings per share | 0.51 | 1.04 | (0.53) | 0.10 | 0.87 | (0.77) |
Adjusted earnings per share – diluted (2) | 0.60 | 0.98 | (0.38) | 0.16 | 0.73 | (0.57) |
Operating Statistics (4) | 2025 | 2024 | % Change | 2025 | 2024 | % Change |
Revenue passenger miles (RPMs) (millions) | 22,796 | 22,449 | 1.5 | 42,683 | 42,969 | (0.7) |
Available seat miles (ASMs) (millions) | 26,860 | 26,203 | 2.5 | 51,100 | 50,540 | 1.1 |
Passenger load factor % | 84.9 % | 85.7 % | (0.8) pp | 83.5 % | 85.0 % | (1.5) pp |
Passenger revenue per RPM (Yield) (cents) | 22.1 | 22.2 | (0.7) | 21.9 | 22.0 | (0.1) |
Passenger revenue per ASM (PRASM) (cents) | 18.7 | 19.0 | (1.7) | 18.3 | 18.7 | (1.8) |
Operating revenue per ASM (TRASM) (cents) | 21.0 | 21.1 | (0.5) | 21.2 | 21.3 | (0.3) |
Operating expense per ASM (CASM) (cents) | 19.4 | 19.3 | 0.6 | 20.6 | 20.3 | 1.3 |
Adjusted CASM (cents) (2) | 14.4 | 13.5 | 6.4 | 14.8 | 14.1 | 4.9 |
Average number of full-time-equivalent (FTE) employees (thousands) (5) | 37.3 | 37.2 | 0.2 | 37.2 | 37.1 | 0.5 |
Aircraft in operating fleet at period-end | 364 | 356 | 2.2 | 364 | 356 | 2.2 |
Seats dispatched (thousands) | 14,478 | 14,213 | 1.9 | 27,817 | 27,692 | 0.4 |
Aircraft frequencies (thousands) | 98.5 | 97.9 | 0.6 | 189.9 | 188.9 | 0.5 |
Average stage length (miles) (6) | 1,855 | 1,844 | 0.6 | 1,837 | 1,825 | 0.7 |
Fuel cost per litre (cents) | 88.0 | 104.3 | (15.7) | 92.9 | 104.9 | (11.4) |
Fuel litres (thousands) | 1,271,963 | 1,273,467 | (0.1) | 2,463,407 | 2,458,185 | 0.2 |
Revenue passengers carried (thousands) (7) | 11,551 | 11,588 | (0.3) | 21,934 | 22,339 | (1.8) |
(1) | Operating margin is a supplementary financial measure and is defined as operating income (loss) as a percentage of operating revenues. |
(2) | Adjusted pre-tax income (loss), adjusted net income (loss), adjusted earnings (loss) per share, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted EBITDA margin, free cash flow, net debt and adjusted CASM are non-GAAP financial measures, capital management measures, non-GAAP ratios or supplementary financial measures. Such measures are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. Refer to section "Non-GAAP Financial Measures" of this release for descriptions of Air Canada's non-GAAP financial measures and for a quantitative reconciliation of Air Canada's non-GAAP financial measures to the most comparable GAAP measure. |
(3) | Total liquidity refers to the sum of cash, cash equivalents, short and long-term investments, and the amounts available under Air Canada's credit facilities. Total liquidity, as at June 30, 2025, of |
(4) | Except for the reference to average number of full-time equivalent (FTE) employees, operating statistics in this table include third party carriers operating under capacity purchase agreements with Air Canada. |
(5) | Reflects FTE employees at Air Canada and its subsidiaries. Excludes FTE employees at third-party carriers operating under capacity purchase agreements with Air Canada. |
(6) | Average stage length is calculated by dividing the total number of available seat miles by the total number of seats dispatched. |
(7) | Revenue passengers are counted on a flight number basis (rather than by journey/itinerary or by leg), which is consistent with the IATA definition of revenue passengers carried. |
(8) | "pp" denotes percentage points and refers to a measure of the arithmetic difference between two percentages. |
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SOURCE Air Canada
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