Air Canada (AC) Q4 2025 earnings summary

Executive summary

• Achieved record 2025 results with Q4 revenues of CAD 5.8B ($5.8B), up nearly 7% year-over-year, and record Q4 Adjusted EBITDA of CAD 867M ($867M), a 25% increase, driven by strong premium and international demand despite labor and geopolitical challenges.

• Full-year revenues reached CAD 22.4B ($22.37B), a 1% increase, with Adjusted EBITDA totaling CAD 3.12B, exceeding guidance due to late-year demand and commercial strategy.

• Maintained high operational standards, improved on-time performance, and received multiple Skytrax and industry awards, including Best Airline in North America.

• Managed shifting demand, labor disruptions, and macroeconomic/geopolitical uncertainty while maintaining operational reliability and cost discipline.

• Returned over CAD 850M ($850M) to shareholders via share repurchases and invested CAD 2.9B in capital expenditures while maintaining a solid balance sheet.

Financial highlights

• Q4 Adjusted EBITDA reached CAD 867M ($867M, 15% margin), up CAD 171M from Q4 2024.

• Full-year Adjusted EBITDA exceeded CAD 3.12B (14% margin), surpassing guidance.

• Free cash flow for 2025 was CAD 747M ($747M), with cash from operations at CAD 3.7B ($3.7B), reflecting over 100% conversion from Adjusted EBITDA.

• Liquidity at year-end was CAD 7.5B ($7.5B), with net leverage at 1.7x and net debt at $5.411B.

• Adjusted CASM for 2025 was CAD 0.147 (14.72¢), up 6.7% year-over-year, driven by labor, depreciation, and non-recurring port stoppages.

Outlook and guidance

• 2026 capacity expected to grow 3.5%-5.5% year-over-year, with continued focus on international and premium markets.

• 2026 Adjusted EBITDA guidance: CAD 3.35B–3.75B ($3.35–$3.75B); free cash flow expected between CAD 400M–800M ($400–$800M).

• Adjusted CASM for 2026 guided to CAD 0.1505–0.1535 (15.05–15.35¢), reflecting labor renewals and fleet transition.

• Net CapEx for 2026 expected at 12% of revenues, including CAD 1B ($1B) in sale-leasebacks.

• 2028 target: ~$30B operating revenues, adjusted EBITDA margin ≥17%; 2030 aspiration: exceed $30B revenues, adjusted EBITDA margin 18–20%.