Air Canada First Quarter 2024 Financial Results

DALLAS — Air Canada (AC) has released its financial results for the first quarter of 2024. Here are the key details:

• Operating revenues for the quarter amounted to C$5.2 billion, which is a 7% increase compared to the same period last year.
• The airline achieved an operating income of $11 million and an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of C$453 million.
• Air Canada experienced a significant improvement in on-time arrivals, with a double-digit increase compared to the first quarter of 2023.
• The leverage ratio as of March 31, 2024, stood at 0.9.

Air Canada's President and CEO, Michael Rousseau, expressed confidence in the company's ability to meet its full-year 2024 guidance. He highlighted a positive demand environment and a wide range of travel options for customers during the summer season.

During the first quarter, AC generated over C$1 billion of free cash flow, mainly from operating activities. The airline's net debt-to-adjusted EBITDA ratio improved to 0.9 at the end of the quarter.

Air Canada has also made progress in deleveraging its balance sheet by reducing gross debt. These efforts have been acknowledged by credit rating agencies, including a recent upgrade by S&P Global Ratings.

For the full year 2024, AC remains confident in its ability to generate significant free cash flow. The airline plans to leverage its strong balance sheet to invest in its global network and implement capital allocation strategies that will create long-term value for the company and its shareholders.

First Quarter 2024 Financial Results

Here are some key financial results for Air Canada's first quarter of 2024:

• Operating revenues of C$5.226 billion increased by C$339 million or 7% compared to the previous year, driven by an 11% growth in operated capacity.
• Operating expenses of C$5.215 billion increased by C$311 million or 6%, primarily due to higher costs across various categories, including labor, maintenance, and information technology.
• Operating income reached C$11 million, with an operating margin of 0.2%, showing an improvement of C$28 million.
• Adjusted EBITDA amounted to C$453 million, with an adjusted EBITDA margin of 8.7%, representing a C$42 million increase.
• The net loss for the quarter was C$81 million, resulting in a diluted loss per share of C$0.22. In comparison, the same period last year saw a net income of C$4 million and a diluted loss per share of C$0.03.
• Adjusted net loss for the quarter was C$96 million, with an adjusted loss per diluted share of $0.27. In the first quarter of 2023, adjusted net loss was C$188 million, with an adjusted loss per diluted share of C$0.53.
• Adjusted CASM (cost per available seat mile) was 14.76 cents, reflecting a 1.6% increase primarily driven by labor, maintenance, and information technology expenses.
• The net debt-to-adjusted EBITDA ratio improved to 0.9 as of March 31, 2024, compared to 1.1 as of December 31, 2023.
• Air Canada generated net cash flows from operating activities of C$1.592 billion, representing a C$155 million increase, with strong growth in advance ticket sales.
• Free cash flow for the quarter was C$1.056 billion, showing a C$69 million increase, also driven by strong growth in advance ticket sales.

Fleet Update, Outlook

Air Canada is currently arranging lease agreements for additional Boeing 737-8 aircraft, which are scheduled for delivery in 2024 and will enter service in 2025 after reconfiguration.

For the second quarter of 2024, the airline plans to increase its ASM (available seat mile) capacity by approximately 7% compared to the same quarter in 2023.

Air Canada reiterates its full-year 2024 guidance, which includes a 6 to 8% increase in ASM capacity compared to 2023 and a 2.5 to 4.5% increase in adjusted CASM compared to 2023. The airline also expects adjusted EBITDA to range between C$3.7 billion and C$4.2 billion for the year.

Air Canada's guidance is based on assumptions, including moderate Canadian GDP growth for 2024, an average exchange rate of C$1.35 per U.S. dollar, and an average jet fuel price of C$1.03 per liter for the year.

These financial results and future plans provide insights into AC's performance and expectations for the coming months.