Air Canada (AC) Q4 2024 earnings summary

Executive summary

• Achieved record full-year revenue of CAD 22.3 billion (USD 22.3 billion), up 2% year-over-year, with Q4 revenues over CAD 5.4 billion, up 4% year-over-year.

• Transported approximately 47 million passengers in 2024 and completed the buyback and cancellation of over 35 million shares, finishing the NCIB program.

• Adjusted EBITDA reached CAD 3.6 billion, slightly above guidance, with Free Cash Flow of CAD 1.3 billion and Adjusted Pre-tax Income of CAD 1.4 billion.

• Delivered strong Q4 results despite labor uncertainty, with operational improvements including an eight-point gain in on-time performance and a new pilot agreement.

• Adapted to market conditions and improved operational resilience.

Financial highlights

• Full year operating income was $1.263 billion, down $1.016 billion year-over-year; adjusted EBITDA was $3.586 billion, down $396 million.

• Q4 Adjusted EBITDA was CAD 696 million (12.9% margin), up CAD 175 million and nearly 3 percentage points year-over-year.

• Full year net income was $1.720 billion (down from $2.276 billion), with diluted EPS of $4.72; adjusted net income was $1.335 billion, with adjusted EPS of $3.55.

• Free cash flow for 2024 was $1.294 billion, down $1.462 billion year-over-year; Q4 free cash flow was negative $495 million.

• Leverage ratio increased to 1.4 from 1.1 at year-end 2023; net debt rose to $4.918 billion.

Outlook and guidance

• 2025 guidance: adjusted EBITDA of $3.4–$3.8 billion, ASM capacity up 3–5%, adjusted CASM of 14.25–14.50¢, and free cash flow around break-even (+/- $200 million).

• Early 2025 booking trends and yield signals are positive, especially for Q2 and Q3.

• Strategic targets for 2028 include ~$30 billion in operating revenue, at least 17% Adjusted EBITDA margin, and ~5% Free Cash Flow margin.

• No impact from potential tariffs assumed in current guidance; economic environment and FX volatility are being closely monitored.

• Assumptions include moderate Canadian GDP growth, C$1.40/USD exchange rate, and jet fuel at C$0.95/litre.