Air Canada (AC) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered operating revenues of CAD 6.1 billion, adjusted EBITDA of CAD 1.52 billion (24.9% margin), and adjusted EPS of $2.57, both ahead of market expectations but down year-over-year.

• Net income rose to CAD 2.04 billion, driven by a CAD 1.15 billion deferred tax asset recognition; adjusted net income was CAD 969 million.

• Achieved a new four-year collective agreement with pilots, avoiding major disruptions and containing revenue impact.

• Board approved a new share buyback program to repurchase up to 10% of the public float, addressing COVID-related dilution and returning value to shareholders.

• Operational performance improved, with on-time performance up eight points year-over-year and nearly 13 million customers transported in the quarter.

Financial highlights

• Operating income reached CAD 1.04 billion; net income was CAD 2.04 billion, including a CAD 1.15 billion book tax recovery.

• Adjusted net income was CAD 969 million, or CAD 2.57 per share.

• Operating expenses rose 3% year-over-year, mainly due to capacity growth.

• Adjusted CASM decreased 0.4% year-over-year to 12.15¢; fuel expense up 1% with a CAD 8 million hedging loss.

• Free cash flow for the quarter was CAD 282 million, up CAD 147 million year-over-year; net cash from operations was CAD 737 million.

Outlook and guidance

• Full-year 2024 operated capacity expected to increase around 5% year-over-year; adjusted CASM to rise about 2%.

• Full-year adjusted EBITDA guidance is approximately $3.5 billion, reflecting updated fuel price and contract cost assumptions.

• Targeting mid-single-digit capacity growth in 2025, with continued stability in loads and yields.

• Expecting break-even to positive free cash flow in 2025 despite higher CapEx.

• Guidance assumes moderate Canadian GDP growth, C$1.36/USD FX rate, and C$1.00/litre jet fuel.