MONTREAL, Feb. 13, 2025 /PRNewswire/ – Air Canada today reported its fourth quarter and full year 2024 financial results.
“Air Canada achieved record annual revenues in 2024 of $22.3 billion on a five per cent increase in capacity over 2023. We executed our plan, making adjustments where necessary, achieving nearly $3.6 billion in annual adjusted EBITDA and free cash flow of $1.3 billion. We also bought back for cancellation over 20 million shares in 2024 and over 15 million more in early 2025, completing the normal course issuer bid program we announced in November. We safely transported about 47 million passengers during the year, and I thank all Air Canada employees for their dedication to serving our customers with glowing-hearted hospitality,” said Michael Rousseau, President and Chief Executive Officer of Air Canada.
“2024 allowed us to demonstrate the wide-ranging strengths and adaptability of Air Canada. We adapted to market conditions and nimbly adjusted our network during the year. We were pleased to achieve a new contract with our pilots with limited disruption. We also enhanced the customer experience through improved operations, including an eight-point gain in on-time performance over 2023 and ongoing fleet, product, technology, and airport investments.
“We are well positioned with a solid year behind us to leverage our competitive advantages, including our iconic brand, premium products, and global network, and to continue delivering on our plans. Our team has consistently proven its discipline, and we will continue to navigate uncertainty and external pressures with prudence and decisiveness. The demand environment remains favourable. We remain agile and responsive in our dynamic aviation industry and are prepared to adapt promptly to any changes or challenges that may arise,” 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 fourth quarter and full year 2024 compared to the same periods in 2023.
Fourth Quarter 2024 Financial Results
Full Year 2024 Financial Summary
Outlook
For the full year 2025, Air Canada is maintaining its guidance and its major assumptions. Full year 2025 guidance is as follows:
Metric
2025 Guidance
Adjusted EBITDA
$3.4 billion to $3.8 billion
ASM capacity
3% to 5% increase versus 2024
Adjusted CASM
14.25 ¢ to 14.50 ¢
Free cash flow
Break even +/- $200 million
Major Assumptions
Air Canada made assumptions in providing its guidance—including moderate Canadian GDP growth for 2025. Air Canada also assumes that the Canadian dollar will trade, on average, at C$1.40 per U.S. dollar for the full year 2025 and that the price of jet fuel will average 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 the potential impact of statements or actions by governments relating to the imposition of (or threats to impose) tariffs on exports or imports, and related consequences. 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 $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. Air Canada did not record charges for impairment of assets in 2024 or in 2023.
A charge of $34 million was recorded in the third quarter of 2024 in other operating expenses related to estimated costs associated with contractual lease obligations. Air Canada excluded this non-recurring expense in computing adjusted CASM, adjusted EBITDA, adjusted pre-tax income and adjusted net income.
With ratification of the collective agreement with ALPA, in the fourth quarter of 2024, Air Canada recorded a one-time pension past service cost of $490 million in the fourth quarter of 2024 as a result of certain pension plan amendments made in conjunction with the collective agreement. Air Canada excluded this charge in computing adjusted CASM, adjusted EBITDA, adjusted pre-tax income and adjusted net income.
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 December 31, 2024, and seven as at December 31, 2023. 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)
Fourth Quarter
Full Year
2024
2023
Change
2024
2023
Change
Operating expense – GAAP
$
5,658
$
5,096
$
562
$
20,992
$
19,554
$
1,438
Adjusted for:
Aircraft fuel
(1,154)
(1,391)
237
(5,118)
(5,318)
200
Ground package costs
(208)
(177)
(31)
(782)
(720)
(62)
Freighter costs (excluding fuel)
(50)
(46)
(4)
(163)
(157)
(6)
Provision for contractual lease obligations
–
–
–
(34)
–
(34)
Pension plan amendments
(490)
–
(490)
(490)
–
(490)
Operating expense, adjusted for the above-noted items
$
3,756
$
3,482
$
274
14,405
13,359
1,046
ASMs (millions)
24,949
24,439
2.1 %
104,381
99,012
5.4 %
Adjusted CASM (cents)
¢
15.05
¢
14.25
¢
0.80
¢
13.80
¢
13.49
¢
0.31
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) 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 and amortization 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:
Fourth Quarter
Full Year
(Canadian dollars in millions, except where indicated)
2024
2023
Change
2024
2023
Change
Operating income (loss) – GAAP
$
(254)
$
79
$
(333)
$
1,263
$
2,279
$
(1,016)
Add back:
Depreciation and amortization
460
442
18
1,799
1,703
96
EBITDA
206
521
(315)
3,062
3,982
(920)
Add back:
Provision for contractual lease obligations
–
–
–
34
–
34
Pension plan amendments
490
–
490
490
–
490
Adjusted EBITDA
$
696
$
521
$
175
$
3,586
$
3,982
$
(396)
Operating revenues
$
5,404
$
5,175
$
229
$
22,255
$
21,833
$
422
Operating margin (%)
(4.7)
1.5
(6.2) pp
5.7
10.4
(4.7) pp
Adjusted EBITDA margin (%)
12.9
10.1
2.8 pp
16.1
18.2
(2.1) 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)
Fourth Quarter
Full Year
2024
2023
$ Change
2024
2023
$ Change
Income (loss) before income taxes – GAAP
$
(721)
$
122
$
(843)
$
515
$
2,212
$
(1,697)
Adjusted for:
Provision for contractual lease obligations
–
–
–
34
–
34
Pension plan amendments
490
–
490
490
–
490
Foreign exchange (gain) loss
372
(72)
444
400
(389)
789
Net interest relating to employee benefits
(6)
(7)
1
(22)
(25)
3
