Air Canada (AC) Q2 2024 earnings summary

Executive summary

• Q2 2024 operating revenues reached CAD 5.5 billion, up 2% year-over-year, with adjusted EBITDA of CAD 914 million and an adjusted EBITDA margin of 16.6%.

• Operating income for the quarter was CAD 466 million, down CAD 336 million year-over-year; net income was CAD 410 million (CAD 1.04 diluted EPS), compared to CAD 838 million (CAD 2.34 diluted EPS) in Q2 2023.

• Free cash flow year-to-date was CAD 1.5 billion, with Q2 free cash flow at CAD 451 million.

• On-time performance improved by 10 points, with 4% more operated flights, 3% more passengers, and load factors above historical averages.

• The company won multiple awards at the 2024 Skytrax World Airline Awards and saw Aeroplan active membership at an all-time high.

Financial highlights

• Adjusted net income was CAD 369 million (CAD 0.98 per diluted share), down from CAD 664 million (CAD 1.85 per diluted share) last year.

• Operating expenses increased 9% year-over-year, mainly due to 7% capacity growth, higher fuel costs (up 12%), and labor expense (up 10%).

• Maintenance expense rose 22% due to more events and higher rates.

• Adjusted CASM grew 1.7% year-over-year to 13.53 cents.

• Net debt decreased to CAD 3.6 billion from CAD 5.3 billion year-over-year; leverage ratio improved to 1.0.

Outlook and guidance

• Full-year 2024 capacity expected to increase 5.5%-6.5%.

• Full-year adjusted EBITDA guidance is CAD 3.1-3.4 billion, with PRASM expected to decline ~4% versus 2023.

• Adjusted CASM for 2024 forecast to rise 2.5%-3.5% year-over-year.

• Q3 2024 ASM capacity expected to increase 4–4.5% year-over-year.

• Assumptions include moderate Canadian GDP growth, average CAD/USD exchange rate of 1.36, and jet fuel at CAD 1.03/litre.