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"Air Canada's solid first quarter results position our airline for a strong performance in 2024. We had operating revenues of $5.2 billion in the quarter, up $339 million from last year. Adjusted EBITDA grew by $42 million year over year to $453 million. I thank our employees for their hard work taking care of our 11 million customers and transporting them safely throughout the quarter. I also commend them for improving our operations, notably a 13 percentage-point increase in system-wide, on-time arrivals, preparing us for an anticipated busy summer period," said Michael Rousseau, President and Chief Executive Officer of Air Canada.
"We are confident in our ability to deliver on our full year 2024 guidance. As we look toward the summer, we see a continued healthy demand environment, and our customers will have a wide range of exciting travel options across Europe, Asia, and North America, for their summer holiday planning.
"In the quarter, we generated over $1 billion of free cash flow, mainly resulting from cash generated from operating activities. Our net debt-to-adjusted EBITDA ratio fell to 0.9 at the quarter's end. We also made further progress in our strategy to deleverage the balance sheet by reducing gross debt. Our accomplishments in this regard have been recognized by the credit rating agency community, more recently with S&P Global Ratings' latest upgrade to 'BB' from 'BB-' at the end of April. For the full year 2024, we remain certain of our ability to generate significant free cash flow. Our strong balance sheet will serve as the foundation on which we will grow our airline through investments in our world-class global network and the deployment of capital allocation strategies that will create sustainable, long-term value, for all of Air Canada and its shareholders," said Mr. Rousseau.
First Quarter 2024 Financial Results
- Operating revenues of $5.226 billion increased $339 million or 7% on an operated capacity growth of 11% year over year.
- Operating expenses of $5.215 billion increased $311 million or 6%. The increase was due to higher costs in nearly all line items reflecting higher operated capacity and traffic year over year, in addition to higher labour, maintenance and information technology expense. Lower fuel expense partially offset the increase.
- Operating income of $11 million, with an operating margin of 0.2%, improved $28 million.
- Adjusted EBITDA of $453 million, with an adjusted EBITDA margin* of 8.7%, improved $42 million.
- Net loss of $81 million and diluted loss per share of $0.22 compared to net income of $4 million and diluted loss per share of $0.03.
- Adjusted net loss of $96 million and adjusted loss per diluted share of $0.27 compared to adjusted net loss of $188 million and adjusted loss per diluted share of $0.53.
- Adjusted CASM of 14.76 cents compared to 14.52 cents, an increase of 1.6% mainly driven by labour, maintenance and information technology expenses.
- Net cash flows from operating activities of $1.592 billion increased $155 million, with continued strong growth in advance ticket sales consistent with seasonal trends.
- Free cash flow* of $1.056 billion increased $69 million with continued strong growth in advance ticket sales consistent with seasonal trends.
- Net debt-to-adjusted EBITDA ratio was 0.9 as at March 31, 2024, compared to 1.1 as at December 31, 2023. The improvement was driven by strong free cash flow in the first quarter of 2024.
Fleet update
Air Canada is in the process of arranging lease agreements for some additional Boeing 737 MAX 8 aircraft that would be scheduled for delivery in 2024 and enter service in 2025, upon completion of reconfiguration.
Outlook
For the second quarter of 2024, Air Canada plans to increase its ASM capacity by about 7% from the same quarter in 2023.
Air Canada is reiterating the full year 2024 guidance provided in its news release dated February 16, 2024, as described below.
Selected Financial Metrics and Statistics
The financial and operating highlights for Air Canada for the periods indicated are as follows:
(in millions, except per share data or where indicated) | First Quarter | ||
Financial Performance Metrics | 2024 | 2023 | $ Change |
Operating revenues | 5,226 | 4,887 | 339 |
Operating income (loss) | 11 | (17) | 28 |
Operating margin (1) (%) | 0.2 | (0.3) | 0.5 pp (8) |
Adjusted EBITDA (2) | 453 | 411 | 42 |
Adjusted EBITDA margin (2) (%) | 8.7 | 8.4 | 0.3 pp |
Loss before income taxes | (65) | (23) | (42) |
Net income (loss) | (81) | 4 | (85) |
Adjusted pre-tax loss (2) | (94) | (194) | 100 |
Adjusted net loss (2) | (96) | (188) | 92 |
Total liquidity (3) | 10,001 | 10,543 | (542) |
Net cash flows from operating activities | 1,592 | 1,437 | 155 |
Free cash flow (2) | 1,056 | 987 | 69 |
Net debt (2) | 3,781 | 6,532 | (2,751) |
Diluted loss per share | (0.22) | (0.03) | (0.19) |
Adjusted loss per share – diluted (2) | (0.27) | (0.53) | 0.26 |
Operating Statistics (4) | 2024 | 2023 | Change % |
Revenue passenger miles (RPMs) (millions) | 20,520 | 18,578 | 10.5 |
Available seat miles (ASMs) (millions) | 24,337 | 21,907 | 11.1 |
Passenger load factor % | 84.3 % | 84.8 % | (0.5) pp |
Passenger revenue per RPM (Yield) (cents) | 21.7 | 22.0 | (1.6) |
Passenger revenue per ASM (PRASM) (cents) | 18.3 | 18.7 | (2.2) |
Operating revenue per ASM (TRASM) (cents) | 21.5 | 22.3 | (3.7) |
Operating expense per ASM (CASM) (cents) | 21.4 | 22.4 | (4.3) |
Adjusted CASM (cents) (2) | 14.8 | 14.5 | 1.6 |
Average number of full-time-equivalent (FTE) employees (thousands) (5) | 36.9 | 34.5 | 7.0 |
Aircraft in operating fleet at period-end | 366 | 352 | 4 |
Seats dispatched (thousands) | 13,479 | 12,293 | 9.7 |
Aircraft frequencies (thousands) | 90.9 | 85.2 | 6.7 |
Average stage length (miles) (6) | 1,805 | 1,782 | 1.3 |
Fuel cost per litre (cents) | 105.6 | 128.5 | (17.9) |
Fuel litres (thousands) | 1,184,718 | 1,067,085 | 11.0 |
Revenue passengers carried (thousands) (7) | 10,751 | 9,969 | 7.8 |
(1) | Operating margin is a supplementary financial measure and is defined as operating income (loss) as a percentage of operating revenues. |
(2) | Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted EBITDA margin, adjusted pre-tax income (loss), adjusted net income (loss), free cash flow, net debt, adjusted earnings (loss) per share, and adjusted CASM are non-GAAP financial measures, capital management measures, non-GAAP ratios or supplementary financial measures. Such measures are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. Refer to section "Non-GAAP Financial Measures" of this news release for descriptions of Air Canada's non-GAAP financial measures and for a quantitative reconciliation of Air Canada's non-GAAP financial measures to the most comparable GAAP measure. |
(3) | Total liquidity refers to the sum of cash, cash equivalents, short- and long-term investments and the amounts available under Air Canada's credit facilities. Total liquidity, as at March 31, 2024, of $10,001 million consisted of $8,681 million in cash, cash equivalents, short and long-term investments and $1,320 million available under undrawn credit facilities. As at March 31, 2023, total liquidity of $10,543 million consisted of $9,532 million in cash and cash equivalents, short and long-term investments, and $1,011 million available under undrawn credit facilities. These amounts also include funds ($229 million as at March 31, 2024, and $231 million as at March 31, 2023) held in trust by Air Canada Vacations in accordance with regulatory requirements governing advance sales for tour operators. |
(4) | Except for the reference to average number of FTE employees, operating statistics in this table include third party carriers operating under capacity purchase agreements with Air Canada. |
(5) | Reflects average FTE employees at Air Canada and its subsidiaries. Excludes FTE employees at third party carriers operating under capacity purchase agreements with Air Canada. |
(6) | Average stage length is calculated by dividing the total number of available seat miles by the total number of seats dispatched. |
(7) | Revenue passengers are counted on a flight number basis (rather than by journey/itinerary or by leg) which is consistent with the IATA definition of revenue passengers carried. |
(8) | "pp" denotes percentage points and refers to a measure of the arithmetic difference between two percentages. |
