Source: Air Canada
- Operating revenues of $5.196 billion for the first quarter of 2025, 1% lower year over year.
- Operating loss of $108 million and adjusted EBITDA* of $387 million with adjusted EBITDA margin* of 7.4%.
- Cash flow from operating activities of $1.526 billion and free cash flow* of $831 million, a year-over-year decrease of $66 million and $225 million respectively.
- Leverage ratio* of 1.3 at March 31, 2025, compared to 1.4 at end of 2024.
- Purchased and cancelled over 15 million shares in the quarter, completing the normal course issuer bid announced in November 2024.
- Announced intention to launch substantial issuer bid (SIB) to purchase and cancel up to $500 million of shares.
Air Canada has reported its first quarter 2025 financial results.
“Our first quarter 2025 results show Air Canada is effectively managing through a turbulent period. Total operating revenues of nearly $5.2 billion were stable year-over-year on similar capacity. Our revenue diversification strategy remains sound; sixth freedom revenues grew, and Air Canada Cargo and Air Canada Vacations delivered solid results in the period. We recorded adjusted EBITDA of $387 million. Winter is always a challenging test, yet in the quarter we made progress in on-time performance, baggage delivery and customer satisfaction. Most importantly, we carried our nearly 10.8 million passengers safely and I thank all employees for their hard work taking care of our customers,” said Michael Rousseau, President and Chief Executive Officer of Air Canada.
“In the quarter, we reported strong cash from operations and free cash flow. Our leverage ratio decreased from the fourth quarter of 2024. Although advance ticket sales grew in line with our expectations in the period, we anticipate market conditions will remain unsteady with an uncertain economic outlook. In response, we are prudently moderating our expectations and concentrating on controllable factors such as cost management and strategic capacity adjustments to ensure strong performance in key financial metrics.
“Our results demonstrate that we have a solid and diversified commercial foundation, a disciplined capital allocation strategy, and a skilled and dedicated team. We are encouraged that despite some shifts in certain markets, overall demand trends remain steady. In the quarter, we purchased and cancelled over 15 million shares to complete the normal course issuer bid program announced last November. In our ongoing drive to create value, we are pleased to announce today our intention to launch a substantial issuer bid to purchase and cancel up to $500 million worth of shares. The SIB underscores our commitment, as we advance toward our 2028 financial targets, to creating significant value for shareholders and succeeding on a sustained, long-term basis for the benefit of all stakeholders,” said Mr. Rousseau.
*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.
The following is an overview of Air Canada’s results of operations and financial position for the first quarter 2025 compared to the same period in 2024.
First Quarter 2025 Financial Results
- Operating revenues of $5.196 billion decreased $30 million or 1% on an operated capacity decline of 0.4% year over year.
- Operating expenses of $5.304 billion increased $89 million or 2%, driven by depreciation, ground package costs and the impact of an unfavourable foreign exchange variance year over year. Lower fuel prices year over year partially offset the increase.
- Operating loss of $108 million compared to operating income of $11 million in the same period in 2024.
- Adjusted EBITDA of $387 million, with an adjusted EBITDA margin of 7.4%, decreased $66 million and 1.3 percentage points, respectively.
- Adjusted pre-tax loss* of $215 million, compared to an adjusted pre-tax loss of $94 million in the same period in 2024.
- Net loss of $102 million and diluted loss per share of $0.40 compared to a net loss of $81 million and diluted loss per share of $0.22.
- Adjusted net loss* of $150 million and adjusted loss per diluted share of $0.45 compared to an adjusted net loss of $96 million and adjusted loss per diluted share of $0.27.
- Adjusted CASM* of 15.27 cents compared to 14.76 cents, an increase of 3.5%.
- Net cash flows from operating activities of $1,526 million decreased $66 million.
- Free cash flow* of $831 million decreased $225 million.
Outlook
For the second quarter of 2025, Air Canada plans to increase its ASM capacity between 2% and 2.5% from the same quarter in 2024.
For the full year 2025, Air Canada is updating some of its guidance and major assumptions to account for the recent trends in the commercial environment and fuel price expectations. The updated full year 2025 guidance is as follows:
|
Metric
|
Prior 2025 Guidance
|
Updated 2025 Guidance
|
| Adjusted EBITDA | $3.4 billion to $3.8 billion | $3.2 billion to $3.6 billion |
| ASM capacity | 3% to 5% increase versus 2024 | 1% to 3% increase versus 2024 |
| Adjusted CASM | 14.25 ¢ to 14.50 ¢ | 14.25 ¢ to 14.50 ¢ |
| Free cash flow | Break even +/- $200 million | Break even +/- $200 million |
Major Assumptions
Air Canada made assumptions in providing its guidance—including a marginal increase of Canadian GDP growth for 2025 (previously moderate growth). Air Canada continues to assume that the Canadian dollar will trade, on average, at C$1.40 per U.S. dollar for the full year 2025. Air Canada also assumes that the price of jet fuel will average C$0.88 (previously C$0.95) per litre for the full year 2025.
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.
Announcement of a Substantial Issuer Bid
Air Canada announced today that the Board of Directors has authorized a substantial issuer bid (the “Proposed Offer”) pursuant to which Air Canada intends to offer to purchase for cancellation up to $500 million of its Class A Variable Voting Shares and Class B Voting Shares (collectively, the “Shares”). Air Canada anticipates that the terms and pricing of the Proposed Offer will be determined, and that the Proposed Offer will commence, during the next week and will be completed before the end of June 2025. Air Canada intends to fund the substantial issuer bid with cash on hand.
Shareholders wishing to accept the Proposed Offer will have the opportunity to tender their Shares by making (i) an “auction tender” at a specified price per Share within a range to be proposed by Air Canada (i.e. a modified “Dutch auction”) and for a specified number of Shares (an “Auction Tender”) or (ii) a “purchase price tender” at no specified price per Share, agreeing to have a specified number of Shares purchased at the purchase price to be determined by the Auction Tenders. The maximum and minimum price range to be proposed by Air Canada under the modified Dutch auction will be determined in the context of the market price of its Shares shortly before the commencement of the Proposed Offer. The Proposed Offer will be optional for all shareholders, who will be free to choose whether to participate, how many Shares to tender and, in the case of Auction Tenders, at what price to tender within the specified range. Shareholders who do not tender any Shares (or whose Shares are not purchased under the Proposed Offer) will see a proportionate increase in their equity interest in Air Canada, to the extent any Shares are purchased under the Proposed Offer. The Proposed Offer will not be conditional upon any minimum number of Shares being tendered and will be subject to conditions customary for transactions of this nature.
The discussion in this news release relating to the Proposed Offer is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell Air Canada’s Shares. The Proposed Offer referred to in this news release has not yet commenced. The solicitation and the offer to buy Shares will only be made pursuant to a separate issuer bid circular, which will contain full details of the Proposed Offer and will be filed with the securities regulatory authorities and mailed to Air Canada’s shareholders.
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 $30 billion | Exceed $30 billion |
| Adjusted EBITDA margin* | Greater than or equal to 17% | Between 18% and 20% |
| Net cash flows from operating activities as a percentage of adjusted EBITDA* | Approximately 90% | Approximately 90% |
| Additions to property, equipment and intangible assets as a percentage of operating revenues* | Lower than or equal to 12% | Lower than 12% |
| Free cash flow margin* | Approximately 5% | Approximately 5% |
| Return on invested capital* | Not provided | Greater than or equal to 12% |
| 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, but not limited to, 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 Canada/U.S. currency exchange rates. Air Canada also incurs expenses related to ground packages at Air Canada Vacations which some airlines, without comparable tour operator businesses, may not incur. In addition, these costs do not generate ASMs and therefore excluding these costs from operating expense results provides for a more meaningful comparison across periods when such costs may vary.
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 March 31, 2025, and eight as at March 31, 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.
Adjusted CASM is reconciled to GAAP operating expense as follows:
| (Canadian dollars in millions, except where indicated) |
First Quarter
|
|||||
|
2025
|
2024
|
Change
|
||||
| Operating expense – GAAP |
$
|
5,304
|
$
|
5,215
|
$
|
89
|
| Adjusted for: |
|
|
|
|
|
|
| Aircraft fuel |
|
(1,186)
|
|
(1,254)
|
|
68
|
| Ground package costs |
|
(373)
|
|
(335)
|
|
(38)
|
| Freighter costs (excluding fuel) |
|
(42)
|
|
(35)
|
|
(7)
|
| Operating expense, adjusted for the above-noted items |
$
|
3,703
|
$
|
3,591
|
$
|
112
|
| ASMs (millions) |
24,240
|
24,337
|
(0.4)%
|
|||
| Adjusted CASM (cents) |
¢
|
15.27
|
¢
|
14.76
|
¢
|
0.51
|
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:
|
First Quarter
|
||||||
| (Canadian dollars in millions, except where indicated) |
2025
|
2024
|
Change
|
|||
| Operating income (loss) – GAAP |
$
|
(108)
|
$
|
11
|
$
|
(119)
|
| Add back: |
|
|
|
|
|
|
| Depreciation, amortization and impairment |
|
495
|
|
442
|
|
53
|
| Adjusted EBITDA |
$
|
387
|
$
|
453
|
$
|
(66)
|
| Operating revenues |
$
|
5,196
|
$
|
5,226
|
$
|
(30)
|
| Operating margin (%) |
|
(2.1)
|
|
0.2
|
|
(2.3) pp
|
| Adjusted EBITDA margin (%) |
|
7.4
|
|
8.7
|
|
(1.3) 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.
Adjusted pre-tax income (loss) is reconciled to GAAP income (loss) before income taxes as follows:
| (Canadian dollars in millions) |
First Quarter
|
|||||
|
2025
|
2024
|
$ Change
|
||||
| Loss before income taxes – GAAP |
$
|
(167)
|
$
|
(65)
|
$
|
(102)
|
| Adjusted for: |
|
|
|
|
|
|
| Foreign exchange (gain) loss |
|
11
|
(59)
|
70
|
||
| Net interest relating to employee benefits |
|
(5)
|
(5)
|
–
|
||
| Gain on financial instruments recorded at fair value |
(54)
|
(11)
|
(43)
|
|||
| Loss on debt settlements |
|
–
|
46
|
(46)
|
||
| Adjusted pre-tax loss |
$
|
(215)
|
$
|
(94)
|
$
|
(121)
|
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.
Adjusted net income (loss) and adjusted earnings (loss) per share are reconciled to GAAP net income as follows:
| (Canadian dollars in millions) |
First Quarter
|
|||||
|
2025
|
2024
|
$ Change
|
||||
| Net loss – GAAP |
$
|
(102)
|
$
|
(81)
|
$
|
(21)
|
| Adjusted for: |
|
|
|
|
|
|
| Foreign exchange (gain) loss |
11
|
(59)
|
70
|
|||
| Net interest relating to employee benefits |
|
(5)
|
(5)
|
–
|
||
| Gain on financial instruments recorded at fair value |
(54)
|
(11)
|
(43)
|
|||
| Loss on debt settlements |
–
|
46
|
(46)
|
|||
| Income tax, including for the above reconciling items |
–
|
14
|
(14)
|
|||
| Adjusted net loss |
$
|
(150)
|
$
|
(96)
|
$
|
(54)
|
| Weighted average number of outstanding shares used in computing diluted income per share (in millions) |
|
330
|
358
|
(28)
|
||
| Adjusted loss per share – diluted |
$
|
(0.45)
|
$
|
(0.27)
|
$
|
(0.18)
|
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) |
First Quarter
|
|
|
2025
|
2024
|
|
| Weighted average number of shares outstanding – basic |
330
|
358
|
| Effect of dilution |
–
|
–
|
| Weighted average number of shares outstanding – diluted |
330
|
358
|
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.
|
First Quarter
|
||||||
| (Canadian dollars in millions) |
2025
|
2024
|
$ Change
|
|||
| Net cash flows from operating activities |
$
|
1,526
|
$
|
1,592
|
$
|
(66)
|
| Additions to property, equipment and intangible assets |
|
(695)
|
|
(536)
|
|
(159)
|
| Free cash flow |
$
|
831
|
$
|
1,056
|
$
|
(225)
|
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) |
March 31, 2025
|
December 31, 2024
|
Change
|
|||
|
Total long-term debt and lease liabilities
|
$
|
10,710
|
$
|
10,915
|
$
|
(205)
|
|
Current portion of long-term debt and lease liabilities
|
|
2,016
|
1,755
|
261
|
||
|
Total long-term debt and lease liabilities (including current portion)
|
|
12,726
|
12,670
|
56
|
||
|
Less cash, cash equivalents and short- and long-term investments
|
|
(8,061)
|
(7,752)
|
(309)
|
||
|
Net debt
|
$
|
4,665
|
$
|
4,918
|
$
|
(253)
|
|
Adjusted EBITDA (trailing 12 months)
|
$
|
3,520
|
3,586
|
(66)
|
||
|
Net debt to adjusted EBITDA ratio
|
|
1.3
|
1.4
|
(0.1)
|
||
For further information on Air Canada’s public disclosure file, including Air Canada’s latest Annual Information Form, consult SEDAR+ at www.sedarplus.ca.