Air Canada Reports Second Quarter 2024 Financial Results
- Second quarter operating revenues of
$5.5 billion , increased 2% year over year - Operating income of
$466 million , decreased$336 million year over year - Adjusted EBITDA* of
$914 million , decreased$306 million year over year - Leverage ratio* of 1.0 as at
June 30, 2024 , compared to 1.1 at end of 2023
"
"When compared to the second quarter of 2023, we increased our capacity 6.5 per cent in the period. Our adjusted unit cost was well contained, increasing 1.7 per cent. This was supported through rigorous cost discipline, which is always a top priority for us. We will continue to adapt to market conditions, manage capacity proactively and contain costs through productivity and other initiatives.
We further diversified our network, including with services to
*
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 |
Second Quarter 2024 Financial Results
The following is an overview of
- Operating revenues of
$5.519 billion increased$92 million or 2% on 6.5% more operated capacity. The year-over-year capacity increase was in line the projection provided inAir Canada's May 2, 2024 , news release. - Operating expenses of
$5.053 billion increased$428 million or 9%. - Operating income of
$466 million , with an operating margin of 8.4%, decreased$336 million . - Adjusted EBITDA of
$914 million , with an adjusted EBITDA margin of 16.6%, declined$306 million . - Net income of
$410 million or$1.04 diluted earnings per share, compared to$838 million or$2.34 respectively. - Adjusted net income of
$369 million or$0.98 adjusted earnings per diluted share, compared to$664 million or$1.85 respectively. - Adjusted CASM of
13.53 cents increased 1.7% year-over-year, driven by labour, maintenance and information technology expenses increasing at a higher rate than capacity. - Net cash flows from operating activities of
$924 million , decreased$566 million . - Free cash flow* of
$451 million , decreased$514 million . - Net debt-to-adjusted EBITDA ratio was 1.0 at
June 30, 2024 , compared to 1.1 atDecember 31, 2023 .
Outlook
For the third quarter of 2024,
For the full year 2024,
Metric |
2024 Guidance |
ASM capacity |
5.5 to 6.5% increase versus 2023 |
Adjusted CASM |
2.5 to 3.5% increase versus 2023 |
Adjusted EBITDA |
|
Major Assumptions
Non-GAAP Financial Measures
Below is a description of certain non-GAAP financial measures and ratios used by
Adjusted CASM
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
Adjusted CASM is reconciled to GAAP operating expense as follows:
(Canadian dollars in millions, except |
Second Quarter |
First Six Months |
||||||||||
2024 |
2023 |
Change |
2024 |
2023 |
Change |
|||||||
Operating expense – GAAP |
$ |
5,053 |
$ |
4,625 |
$ |
428 |
$ |
10,268 |
$ |
9,529 |
$ |
739 |
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft fuel |
|
(1,333) |
|
(1,187) |
|
(146) |
|
(2,587) |
|
(2,562) |
|
(25) |
Ground package costs |
|
(137) |
|
(126) |
|
(11) |
|
(472) |
|
(444) |
|
(28) |
Freighter costs (excluding fuel) |
|
(38) |
|
(39) |
|
1 |
|
(73) |
|
(70) |
|
(3) |
Operating expense, adjusted for the |
$ |
3,545 |
$ |
3,273 |
$ |
272 |
|
7,136 |
|
6,453 |
|
683 |
ASMs (millions) |
|
26,203 |
|
24,606 |
|
6.5 % |
|
50,540 |
|
46,513 |
|
8.7 % |
Adjusted CASM (cents) |
¢ |
13.53 |
¢ |
13.30 |
¢ |
0.23 |
¢ |
14.12 |
¢ |
13.87 |
¢ |
0.25 |
EBITDA and Adjusted EBITDA
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is commonly used in the airline industry and is used by
Adjusted EBITDA margin (adjusted EBITDA as a percentage of operating revenues) is commonly used in the airline industry and is used by
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 |
2024 |
2023 |
Change |
2024 |
2023 |
Change |
||||||
Operating income – GAAP |
$ |
466 |
$ |
802 |
$ |
(336) |
$ |
477 |
$ |
785 |
$ |
(308) |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
448 |
|
418 |
|
30 |
|
890 |
|
846 |
|
44 |
Adjusted EBITDA |
$ |
914 |
$ |
1,220 |
$ |
(306) |
$ |
1,367 |
$ |
1,631 |
$ |
(264) |
Operating revenues |
$ |
5,519 |
$ |
5,427 |
$ |
92 |
$ |
10,745 |
$ |
10,314 |
$ |
431 |
Operating margin (%) |
|
8.4 |
|
14.8 |
|
(6.4) pp |
|
4.4 |
|
7.6 |
|
(3.2) pp |
Adjusted EBITDA margin (%) |
|
16.6 |
|
22.5 |
|
(5.9) pp |
|
12.7 |
|
15.8 |
|
(3.1) pp |
Adjusted Pre-tax Income (Loss)
Adjusted pre-tax income (loss) is used by
Adjusted pre-tax income (loss) is reconciled to GAAP income (loss) before income taxes as follows:
(Canadian dollars in millions) |
Second Quarter |
First Six Months |
||||||||||
2024 |
2023 |
$ Change |
2024 |
2023 |
$ Change |
|||||||
Income before income taxes – GAAP |
$ |
404 |
$ |
796 |
$ |
(392) |
$ |
339 |
$ |
773 |
$ |
(434) |
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange (gain) loss |
|
2 |
|
(251) |
|
253 |
|
(57) |
|
(378) |
|
321 |
Net interest relating to employee benefits |
|
(6) |
|
(6) |
|
- |
|
(11) |
|
(12) |
|
1 |
(Gain) loss on financial instruments recorded at fair value |
|
(29) |
|
115 |
|
(144) |
|
(40) |
|
77 |
|
(117) |
Loss on debt settlement |
|
- |
|
2 |
|
(2) |
|
46 |
|
2 |
|
44 |
Adjusted pre-tax income |
$ |
371 |
$ |
656 |
$ |
(285) |
$ |
277 |
$ |
462 |
$ |
(185) |
Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share – Diluted
Adjusted net income (loss) and adjusted earnings (loss) per shares are reconciled to GAAP net income as follows:
(Canadian dollars in millions) |
Second Quarter |
First Six Months |
||||||||||
2024 |
2023 |
$ Change |
2024 |
2023 |
$ Change |
|||||||
Net income – GAAP |
$ |
410 |
$ |
838 |
$ |
(428) |
$ |
329 |
$ |
842 |
$ |
(513) |
Adjusted for: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange (gain) loss |
|
2 |
|
(251) |
|
253 |
|
(57) |
|
(378) |
|
321 |
Net interest relating to employee benefits |
|
(6) |
|
(6) |
|
- |
|
(11) |
|
(12) |
|
1 |
(Gain) loss on financial instruments recorded at fair value |
|
(29) |
|
115 |
|
(144) |
|
(40) |
|
77 |
|
(117) |
Loss on debt settlement |
|
- |
|
2 |
|
(2) |
|
46 |
|
2 |
|
44 |
Income tax, including for the above |
|
(8) |
|
(34) |
|
26 |
|
6 |
|
(55) |
|
61 |
Adjusted net income |
$ |
369 |
$ |
664 |
$ |
(295) |
$ |
273 |
$ |
476 |
$ |
(203) |
Weighted average number of outstanding |
|
376 |
|
358 |
|
18 |
|
376 |
|
358 |
|
18 |
Adjusted earnings per share – diluted |
$ |
0.98 |
$ |
1.85 |
$ |
(0.87) |
$ |
0.73 |
$ |
1.33 |
$ |
(0.60) |
(1) |
In 2024, the deferred income tax recovery recorded in other comprehensive income related to remeasurements on employee benefit liabilities is offset by a deferred income tax expense which was recorded through |
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 |
||
2024 |
2023 |
2024 |
2023 |
|
Weighted average number of shares |
358 |
358 |
358 |
358 |
Effect of dilution |
18 |
- |
18 |
- |
Weighted average number of shares |
376 |
358 |
376 |
358 |
Free Cash Flow
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) |
2024 |
2023 |
$ Change |
2024 |
2023 |
$ Change |
||||||
Net cash flows from operating activities |
$ |
924 |
$ |
1,490 |
$ |
(566) |
$ |
2,516 |
$ |
2,927 |
$ |
(411) |
Additions to property, equipment, and |
|
(473) |
|
(525) |
|
52 |
|
(1,009) |
|
(975) |
|
(34) |
Free cash flow (1) |
$ |
451 |
$ |
965 |
$ |
(514) |
$ |
1,507 |
$ |
1,952 |
$ |
(445) |
Net Debt
Net debt is a capital management measure and a key component of the capital managed by
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
The table below reconciles leverage ratio to
(Canadian dollars in millions) |
|
|
Change |
|||
Total long-term debt and lease liabilities |
$ |
10,858 |
$ |
12,996 |
$ |
(2,138) |
Current portion of long-term debt and lease liabilities |
|
1,619 |
|
866 |
|
753 |
Total long-term debt and lease liabilities (including current |
|
12,477 |
|
13,862 |
|
(1,385) |
Less cash, cash equivalents and short- and long-term |
|
(8,869) |
|
(9,295) |
|
426 |
Net debt (1) |
$ |
3,608 |
$ |
4,567 |
$ |
(959) |
Adjusted EBITDA (trailing 12 months) |
$ |
3,718 |
|
3,982 |
|
(264) |
Net debt to adjusted EBITDA ratio (1) |
|
1.0 |
|
1.1 |
|
(0.1) |
For further information on
Second Quarter 2024 Conference Cal l
Media and the public may access this call on a listen-in basis. Details are as follows:
Webcast: |
|
|
|
By telephone: |
+1-647-932-3411 or 1-800-715-9871 (toll-free) |
|
|
|
Conference ID 6478306 |
|
|
|
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. Forward-looking statements cannot be relied upon due to, among other things, changing external events and general uncertainties of the business of
Factors that may cause results to differ materially from results indicated in forward-looking statements include economic conditions as well as geopolitical conditions such as the military conflicts in the
The forward-looking statements contained or incorporated by reference in this news release represent
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Selected Financial Metrics and Statistics
The financial and operating highlights for
(Canadian dollars in millions, except per share data or |
Second Quarter |
First Six Months |
||||
Financial Performance Metrics |
2024 |
2023 |
$ Change |
2024 |
2023 |
$ Change |
Operating revenues |
5,519 |
5,427 |
92 |
10,745 |
10,314 |
431 |
Operating income |
466 |
802 |
(336) |
477 |
785 |
(308) |
Operating margin (1) (%) |
8.4 |
14.8 |
(6.4) pp (8) |
4.4 |
7.6 |
(3.2) pp |
Adjusted EBITDA (2) |
914 |
1,220 |
(306) |
1,367 |
1,631 |
(264) |
Adjusted EBITDA margin (2) (%) |
16.6 |
22.5 |
(5.9) pp |
12.7 |
15.8 |
(3.1) pp |
Income before income taxes |
404 |
796 |
(392) |
339 |
773 |
(434) |
Net income |
410 |
838 |
(428) |
329 |
842 |
(513) |
Adjusted pre-tax income (2) |
371 |
656 |
(285) |
277 |
462 |
(185) |
Adjusted net income (2) |
369 |
664 |
(295) |
273 |
476 |
(203) |
Total liquidity (3) |
10,203 |
10,551 |
(348) |
10,203 |
10,551 |
(348) |
Net cash flows from operating activities |
924 |
1,490 |
(566) |
2,516 |
2,927 |
(411) |
Free cash flow (2) |
451 |
965 |
(514) |
1,507 |
1,952 |
(445) |
Net debt (2) |
3,608 |
5,330 |
(1,722) |
3,608 |
5,330 |
(1,722) |
Diluted earnings per share |
1.04 |
2.34 |
(1.30) |
0.87 |
2.35 |
(1.48) |
Adjusted earnings per share – diluted (2) |
0.98 |
1.85 |
(0.87) |
0.73 |
1.33 |
(0.60) |
Operating Statistics (4) |
2024 |
2023 |
Change |
2024 |
2023 |
Change |
Revenue passenger miles (RPMs) (millions) |
22,449 |
21,617 |
3.8 |
42,969 |
40,195 |
6.9 |
Available seat miles (ASMs) (millions) |
26,203 |
24,606 |
6.5 |
50,540 |
46,513 |
8.7 |
Passenger load factor % |
85.7 % |
87.9 % |
(2.2) pp |
85.0 % |
86.4 % |
(1.4) pp |
Passenger revenue per RPM (Yield) (cents) |
22.2 |
22.7 |
(2.0) |
22.0 |
22.4 |
(2.0) |
Passenger revenue per ASM (PRASM) (cents) |
19.0 |
19.9 |
(4.4) |
18.7 |
19.3 |
(3.4) |
Operating revenue per ASM (TRASM) (cents) |
21.1 |
22.1 |
(4.5) |
21.3 |
22.2 |
(4.1) |
Operating expense per ASM (CASM) (cents) |
19.3 |
18.8 |
2.6 |
20.3 |
20.5 |
(0.8) |
Adjusted CASM (cents) (2) |
13.5 |
13.3 |
1.7 |
14.1 |
13.9 |
1.8 |
Average number of full-time-equivalent (FTE) |
37.2 |
35.9 |
3.5 |
37.1 |
35.2 |
5.3 |
Aircraft in operating fleet at period-end |
356 |
354 |
0.6 |
356 |
354 |
0.6 |
Seats dispatched (thousands) |
14,213 |
13,390 |
6.1 |
27,692 |
25,683 |
7.8 |
Aircraft frequencies (thousands) |
97.9 |
93.5 |
4.7 |
188.9 |
178.7 |
5.7 |
Average stage length (miles) (6) |
1,844 |
1,838 |
0.3 |
1,825 |
1,811 |
0.8 |
Fuel cost per litre (cents) |
104.3 |
101.1 |
3.2 |
104.9 |
114.2 |
(8.2) |
Fuel litres (thousands) |
1,273,467 |
1,162,714 |
9.5 |
2,458,185 |
2,229,799 |
10.2 |
Revenue passengers carried (thousands) (7) |
11,588 |
11,287 |
2.7 |
22,339 |
21,256 |
5.1 |
(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 |
(3) |
Total liquidity refers to the sum of cash, cash equivalents, short- and long-term investments, and the amounts available under |
(4) |
Except for the reference to average number of FTE employees, operating statistics in this table include third-party carriers operating under capacity purchase agreements with |
(5) |
Reflects FTE employees at |
(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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