Air Canada (AC) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenues reached CAD 5.6 billion ($5.632 billion), with operating income of CAD 418 million and adjusted EBITDA of CAD 909 million, reflecting a 16.1% margin.

• Premium revenues increased 5% year-over-year, with 11.6 million passengers carried, up 2.5% year-over-year.

• Strong performance in transatlantic, premium, and diversified segments, with notable contributions from Aeroplan, Cargo, and Vacations.

• Strategic network expansion included new international routes and enhanced connectivity, supporting growth in sixth freedom traffic and high-demand markets.

• Recognized as Best Airline in North America and among the global top 20 at the 2025 Skytrax World Airline Awards.

Financial highlights

• Net income was CAD 186 million, with diluted EPS of CAD 0.51; adjusted net income was CAD 207 million, with adjusted EPS of CAD 0.60.

• Operating expenses rose 3% year-over-year, driven by higher labor costs and capacity growth, partially offset by a 16% decrease in jet fuel prices.

• Free cash flow for Q2 was CAD 183 million, down CAD 268 million year-over-year due to higher planned CapEx.

• Total liquidity stood at CAD 8.4 billion at quarter-end, with a stable leverage ratio of 1.4 as of June 30, 2025.

• Operating margin was 7.4%, down 1.0 percentage point year-over-year; adjusted EBITDA margin was 16.1%.

Outlook and guidance

• Full-year 2025 guidance reaffirmed: adjusted EBITDA between CAD 3.2–3.6 billion, adjusted CASM-ex of CAD 0.1425–0.145, and free cash flow breakeven ±CAD 200 million.

• Capacity expected to grow 3.25–3.75% in Q3 and 1–3% for the full year.

• 2028 targets: operating revenues of ~CAD 30 billion, adjusted EBITDA margin ≥17%, free cash flow margin ~5%, ROIC ≥12%, and fully diluted share count below 300 million.

• Anticipates stable demand and yield environment for fall, with premium cabin strength offsetting slight pressure in economy yields.

• Jet fuel hedged for 17% of Q3 needs at below spot prices.