Air Canada Reports First Quarter 2024 Financial Results
-
Total
operating
revenues of
$5.2 billion increased 7% year over year -
Operating income of
$11 million and adjusted EBITDA * of$453 million - Double-digit on-time arrivals improvement from the first quarter of 2023
-
Leverage ratio* of 0.9 as at
March 31, 2024 - Reiterating 2024 guidance for capacity, adjusted CASM* and adjusted EBITDA*
"
"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
"In the quarter, we generated over
*
Adjusted CASM, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted EBITDA margin, leverage ratio, net debt, adjusted pre-tax income (loss), adjusted net income (loss), adjusted earnings (loss) per share, and free cash flow are referred to in this news release. Such measures are non-GAAP financial measures, non-GAAP ratios, or supplementary financial 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 the "Non-GAAP Financial Measures" section of this news release for descriptions of these measures, and for a reconciliation of |
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 to14.52 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 atDecember 31, 2023 . The improvement was driven by strong free cash flow in the first quarter of 2024.
Fleet update
Outlook
For the second quarter of 2024,
Metric |
2024 Guidance |
ASM capacity |
6 to 8 % increase versus 2023 |
Adjusted CASM |
2.5 to 4.5 % increase versus 2023 |
Adjusted EBITDA |
|
Major Assumptions
Non-GAAP Financial Measures
Below is a description of certain non-GAAP financial measures and ratios used by
Adjusted CASM
In calculating adjusted CASM, aircraft fuel expense is excluded from operating expense results as it fluctuates widely depending on many factors, including international market conditions, geopolitical events, jet fuel refining costs and
Adjusted CASM is reconciled to GAAP operating expense as follows:
(in millions, except where indicated) |
First Quarter |
|||||
2024 |
2023 |
Change |
||||
Operating expense – GAAP |
$ |
5,215 |
$ |
4,904 |
$ |
311 |
Adjusted for: |
|
|
|
|
|
|
Aircraft fuel |
|
(1,254) |
|
(1,375) |
|
121 |
Ground package costs |
|
(335) |
|
(318) |
|
(17) |
Freighter costs (excluding fuel) |
|
(35) |
|
(31) |
|
(4) |
Operating expense, adjusted for the above-noted items |
$ |
3,591 |
$ |
3,180 |
$ |
411 |
ASMs (millions) |
|
24,337 |
|
21,907 |
|
11.1 % |
Adjusted CASM (cents) |
¢ |
14.76 |
¢ |
14.52 |
¢ |
0.24 |
EBITDA and Adjusted EBITDA
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is commonly used in the airline industry and is used by
Adjusted EBITDA margin (adjusted EBITDA as a percentage of operating revenues) is commonly used in the airline industry and is used by
Adjusted EBITDA and adjusted EBITDA margin are reconciled to GAAP operating income (loss) as follows:
|
First Quarter |
|||||
(in millions, except where indicated) |
2024 |
2023 |
Change |
|||
Operating income (loss) – GAAP |
$ |
11 |
$ |
(17) |
$ |
28 |
Add back: |
|
|
|
|
|
|
Depreciation and amortization |
|
442 |
|
428 |
|
14 |
Adjusted EBITDA |
$ |
453 |
$ |
411 |
$ |
42 |
Operating revenues |
$ |
5,226 |
$ |
4,887 |
$ |
339 |
Operating margin (%) |
|
0.2 |
|
(0.3) |
|
0.5 pp |
Adjusted EBITDA margin (%) |
|
8.7 |
|
8.4 |
|
0.3 pp |
Adjusted Pre-tax Income (Loss)
Adjusted pre-tax income (loss) is used by
Adjusted pre-tax income (loss) is reconciled to GAAP income (loss) before income taxes as follows:
|
First Quarter |
|||||
(in millions) |
2024 |
2023 |
Change |
|||
Loss before income taxes – GAAP |
$ |
(65) |
$ |
(23) |
$ |
(42) |
Adjusted for: |
|
|
|
|
|
|
Foreign exchange gain |
|
(59) |
|
(127) |
|
68 |
Net interest relating to employee benefits |
|
(5) |
|
(6) |
|
1 |
Gain on financial instruments recorded at fair value |
|
(11) |
|
(38) |
|
27 |
Loss on debt settlement |
|
46 |
|
- |
|
46 |
Adjusted pre-tax loss |
$ |
(94) |
$ |
(194) |
$ |
100 |
Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share – Diluted
Adjusted net income (loss) and adjusted earnings (loss) per shares are reconciled to GAAP net income as follows:
|
First Quarter |
|||||
(in millions, except per share figures) |
2024 |
2023 |
Change |
|||
Net income (loss) – GAAP |
$ |
(81) |
$ |
4 |
$ |
(85) |
Adjusted for: |
|
|
|
|
|
|
Foreign exchange gain |
|
(59) |
|
(127) |
|
68 |
Net interest relating to employee benefits |
|
(5) |
|
(6) |
|
1 |
Gain on financial instruments recorded at fair value |
|
(11) |
|
(38) |
|
27 |
Loss on debt settlement |
|
46 |
|
- |
|
46 |
Income tax, including for the above reconciling items (1) |
|
14 |
|
(21) |
|
35 |
Adjusted net loss |
$ |
(96) |
$ |
(188) |
$ |
92 |
Weighted average number of outstanding shares used in computing |
|
358 |
|
358 |
|
- |
Adjusted loss per share – diluted |
$ |
(0.27) |
$ |
(0.53) |
$ |
0.26 |
(1) |
In 2024, the deferred income tax recovery recorded in other comprehensive income related to remeasurements on employee benefit liabilities is offset by a deferred income tax expense which was recorded through |
The table below reflects the share amounts used in the computation of basic and diluted earnings per share on an adjusted earnings per share basis:
|
First Quarter |
|
(in millions) |
2024 |
2023 |
Weighted average number of shares outstanding – basic |
358 |
358 |
Effect of dilution |
- |
- |
Weighted average number of shares outstanding – diluted |
358 |
358 |
Free Cash Flow
The table below reconciles free cash flow to net cash flows from (used in) operating activities for the periods indicated.
|
First Quarter |
|||||
(in millions) |
2024 |
2023 |
$ Change |
|||
Net cash flows from operating activities |
$ |
1,592 |
$ |
1,437 |
$ |
155 |
Additions to property, equipment, and intangible assets |
|
(536) |
|
(450) |
|
(86) |
Free cash flow |
$ |
1,056 |
$ |
987 |
$ |
69 |
Net Debt
Net debt is a capital management measure and a key component of the capital managed by
Net Debt to Trailing 12-Month Adjusted EBITDA (Leverage Ratio)
Net debt to trailing 12-month adjusted EBITDA ratio (also referred to as "leverage ratio") is commonly used in the airline industry and is used by
The table below reconciles leverage ratio to
(in millions, except where indicated) |
|
|
Change |
|||
Total long-term debt and lease liabilities |
$ |
11,248 |
$ |
12,996 |
$ |
(1,748) |
Current portion of long-term debt and lease liabilities |
|
1,214 |
|
866 |
|
348 |
Total long-term debt and lease liabilities (including current |
|
12,462 |
|
13,862 |
|
(1,400) |
Less cash, cash equivalents and short- and long-term |
|
(8,681) |
|
(9,295) |
|
614 |
Net debt |
$ |
3,781 |
$ |
4,567 |
$ |
(786) |
Adjusted EBITDA (trailing 12 months) |
$ |
4,024 |
|
3,982 |
|
42 |
Net debt to adjusted EBITDA ratio |
|
0.9 |
|
1.1 |
|
(0.2) |
For further information on
First Quarter 2024 Conference Call
Media and the public may access this call on a listen-only basis. Details are as follows:
Webcast: |
|
|
Note: This is a listen-in audio webcast. |
By telephone: |
(647) 932-3411 or 1-800-715-9871 (toll-free), Conference ID 1413217 |
|
Please allow 10 minutes to be connected to the conference call. |
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This news release includes forward-looking statements within the meaning of applicable securities laws. Forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may involve, but are not limited to, comments relating to guidance, strategies, expectations, planned operations or future actions. Forward-looking statements are identified using terms and phrases such as "preliminary", "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions.
Forward-looking statements, by their nature, are based on assumptions including those described herein and are subject to important risks and uncertainties. Forward-looking statements cannot be relied upon due to, among other things, changing external events and general uncertainties of the business of
Factors that may cause results to differ materially from results indicated in forward-looking statements include economic conditions as well as geopolitical conditions such as the military conflicts in the
The forward-looking statements contained or incorporated by reference in this news release represent
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Selected Financial Metrics and Statistics
The financial and operating highlights for
(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 |
(3) |
Total liquidity refers to the sum of cash, cash equivalents, short- and long-term investments and the amounts available under |
(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 |
(5) |
Reflects average FTE employees at |
(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. |
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