Air Canada (AC) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was CAD 5.2 billion, down 1% year-over-year, with an operating loss of CAD 108 million and adjusted EBITDA of CAD 387 million (7.4% margin), exceeding some market expectations but down from Q1 2024.

• Net loss was CAD 102 million (diluted loss per share CAD 0.40); adjusted net loss was CAD 150 million.

• Demand weakened due to macroeconomic uncertainty, trade tensions, and a strong U.S. dollar, especially impacting transborder travel.

• The company reallocated capacity to stronger markets, maintained operational resilience, and advanced ticket sales grew by CAD 1 billion from year-end 2024.

• Strong performance in Aeroplan, Sun destinations, and vacation segments, with customer satisfaction and operational metrics improving.

Financial highlights

• Operating expenses rose to CAD 5.3 billion, mainly from higher depreciation, ground package costs, and currency effects.

• Jet fuel averaged CAD 0.98/liter, down 8% year-over-year, providing a partial cost offset.

• Q1 adjusted CASM was $0.153, up 3.5% year-over-year, with labor productivity targets met.

• Free cash flow was CAD 831 million, down CAD 225 million year-over-year, with CAD 1.5 billion in cash from operations.

• Ended Q1 with CAD 9.5 billion in liquidity and a net leverage ratio of 1.3.

Outlook and guidance

• 2025 adjusted EBITDA guidance is CAD 3.2–3.6 billion, reflecting updated revenue and fuel price expectations.

• Full-year adjusted CASM expected between CAD 0.14–0.15; cost reduction program targeting CAD 150 million in savings is on track.

• System capacity growth trimmed to 1–3% for 2025, with Q2 capacity up 2–2.5%.

• Free cash flow guidance remains break-even ±CAD 200 million.

• Guidance assumes marginal GDP growth, a CAD/USD rate of 1.40, and jet fuel at CAD 0.88/litre.