Second quarter operating revenues of $5.5 billion, increased 2% year over yearOperating income of $466 million, decreased $336 million year over yearAdjusted EBITDA* of $914 million, decreased $306 million year over yearLeverage ratio* of 1.0 as at June 30, 2024, compared to 1.1 at end of 2023
Operating revenues of $5.519 billion increased $92 million or 2% on 6.5% more operated capacity. The year-over-year capacity increase was in line the projection provided in Air Canada's May 2, 2024, news release. Operating expenses of $5.053 billion increased $428 million or 9%. Operating income of $466 million, with an operating margin of 8.4%, decreased $336 million. Adjusted EBITDA of $914 million, with an adjusted EBITDA margin of 16.6%, declined $306 million. Net income of $410 million or $1.04 diluted earnings per share, compared to $838 million or $2.34 respectively. Adjusted net income of $369 million or $0.98 adjusted earnings per diluted share, compared to $664 million or $1.85 respectively. Adjusted CASM of 13.53 cents increased 1.7% year-over-year, driven by labour, maintenance and information technology expenses increasing at a higher rate than capacity. Net cash flows from operating activities of $924 million, decreased $566 million. Free cash flow* of $451 million, decreased $514 million. Net debt-to-adjusted EBITDA ratio was 1.0 at June 30, 2024, compared to 1.1 at December 31, 2023.
Adjusted CASM is reconciled to GAAP operating expense as follows:
(Canadian dollars in millions, except | Second Quarter | First Six Months | ||||||||||
2024 | 2023 | Change | 2024 | 2023 | Change | |||||||
Operating expense – GAAP | $ | 5,053 | $ | 4,625 | $ | 428 | $ | 10,268 | $ | 9,529 | $ | 739 |
Adjusted for: | ||||||||||||
Aircraft fuel | (1,333) | (1,187) | (146) | (2,587) | (2,562) | (25) | ||||||
Ground package costs | (137) | (126) | (11) | (472) | (444) | (28) | ||||||
Freighter costs (excluding fuel) | (38) | (39) | 1 | (73) | (70) | (3) | ||||||
Operating expense, adjusted for the | $ | 3,545 | $ | 3,273 | $ | 272 | 7,136 | 6,453 | 683 | |||
ASMs (millions) | 26,203 | 24,606 | 6.5 % | 50,540 | 46,513 | 8.7 % | ||||||
Adjusted CASM (cents) | ¢ | 13.53 | ¢ | 13.30 | ¢ | 0.23 | ¢ | 14.12 | ¢ | 13.87 | ¢ | 0.25 |
EBITDA and Adjusted EBITDA
Selected Financial Metrics and Statistics
The financial and operating highlights for Air Canada for the periods indicated are as follows:
(Canadian dollars in millions, except per share data or | Second Quarter | First Six Months | ||||
Financial Performance Metrics | 2024 | 2023 | $ Change | 2024 | 2023 | $ Change |
Operating revenues | 5,519 | 5,427 | 92 | 10,745 | 10,314 | 431 |
Operating income | 466 | 802 | (336) | 477 | 785 | (308) |
Operating margin (1) (%) | 8.4 | 14.8 | (6.4) pp (8) | 4.4 | 7.6 | (3.2) pp |
Adjusted EBITDA (2) | 914 | 1,220 | (306) | 1,367 | 1,631 | (264) |
Adjusted EBITDA margin (2) (%) | 16.6 | 22.5 | (5.9) pp | 12.7 | 15.8 | (3.1) pp |
Income before income taxes | 404 | 796 | (392) | 339 | 773 | (434) |
Net income | 410 | 838 | (428) | 329 | 842 | (513) |
Adjusted pre-tax income (2) | 371 | 656 | (285) | 277 | 462 | (185) |
Adjusted net income (2) | 369 | 664 | (295) | 273 | 476 | (203) |
Total liquidity (3) | 10,203 | 10,551 | (348) | 10,203 | 10,551 | (348) |
Net cash flows from operating activities | 924 | 1,490 | (566) | 2,516 | 2,927 | (411) |
Free cash flow (2) | 451 | 965 | (514) | 1,507 | 1,952 | (445) |
Net debt (2) | 3,608 | 5,330 | (1,722) | 3,608 | 5,330 | (1,722) |
Diluted earnings per share | 1.04 | 2.34 | (1.30) | 0.87 | 2.35 | (1.48) |
Adjusted earnings per share – diluted (2) | 0.98 | 1.85 | (0.87) | 0.73 | 1.33 | (0.60) |
Operating Statistics (4) | 2024 | 2023 | Change | 2024 | 2023 | Change |
Revenue passenger miles (RPMs) (millions) | 22,449 | 21,617 | 3.8 | 42,969 | 40,195 | 6.9 |
Available seat miles (ASMs) (millions) | 26,203 | 24,606 | 6.5 | 50,540 | 46,513 | 8.7 |
Passenger load factor % | 85.7 % | 87.9 % | (2.2) pp | 85.0 % | 86.4 % | (1.4) pp |
Passenger revenue per RPM (Yield) (cents) | 22.2 | 22.7 | (2.0) | 22.0 | 22.4 | (2.0) |
Passenger revenue per ASM (PRASM) (cents) | 19.0 | 19.9 | (4.4) | 18.7 | 19.3 | (3.4) |
Operating revenue per ASM (TRASM) (cents) | 21.1 | 22.1 | (4.5) | 21.3 | 22.2 | (4.1) |
Operating expense per ASM (CASM) (cents) | 19.3 | 18.8 | 2.6 | 20.3 | 20.5 | (0.8) |
Adjusted CASM (cents) (2) | 13.5 | 13.3 | 1.7 | 14.1 | 13.9 | 1.8 |
Average number of full-time-equivalent (FTE) | 37.2 | 35.9 | 3.5 | 37.1 | 35.2 | 5.3 |
Aircraft in operating fleet at period-end | 356 | 354 | 0.6 | 356 | 354 | 0.6 |
Seats dispatched (thousands) | 14,213 | 13,390 | 6.1 | 27,692 | 25,683 | 7.8 |
Aircraft frequencies (thousands) | 97.9 | 93.5 | 4.7 | 188.9 | 178.7 | 5.7 |
Average stage length (miles) (6) | 1,844 | 1,838 | 0.3 | 1,825 | 1,811 | 0.8 |
Fuel cost per litre (cents) | 104.3 | 101.1 | 3.2 | 104.9 | 114.2 | (8.2) |
Fuel litres (thousands) | 1,273,467 | 1,162,714 | 9.5 | 2,458,185 | 2,229,799 | 10.2 |
Revenue passengers carried (thousands) (7) | 11,588 | 11,287 | 2.7 | 22,339 | 21,256 | 5.1 |
(1) | Operating margin is a supplementary financial measure and is defined as operating income (loss) as a percentage of operating revenues. |
(2) | Adjusted pre-tax income (loss), adjusted net income (loss), adjusted earnings (loss) per share, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted EBITDA margin, free cash flow, net debt 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 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 June 30, 2024, of $10,203 million consisted of $8,869 million in cash, cash equivalents, short- and long-term investments and $1,334 million available under undrawn credit facilities. As at June 30, 2023, total liquidity of $10,551 million consisted of $9,556 million in cash, cash equivalents, short- and long-term investments, and $995 million available under undrawn credit facilities. Total liquidity also includes funds ($181 million as at |
(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 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. |