“Effectively Managing Through A Turbulent Period” – AC Reports 2025 Q1 Results

In reporting Air Canada’s first quarter 2025 financial results, the company’s President and Chief Executive Officer, Michael Rousseau observed: “Our first quarter 2025 results show Air Canada is effectively managing through a turbulent period.”

Rousseau reported that: “Total operating revenues of nearly $5.2 billion were stable year-over-year on similar capacity. Our revenue diversification strategy remains sound; sixth freedom revenues grew, and Air Canada Cargo and Air Canada Vacations delivered solid results in the period. We recorded adjusted EBITDA of $387 million.”

Air Canada’s boss continued: “Winter is always a challenging test, yet in the quarter we made progress in on-time performance, baggage delivery and customer satisfaction. Most importantly, we carried our nearly 10.8 million passengers safely and I thank all employees for their hard work taking care of our customers.”

Rousseau said that: “In the quarter, we reported strong cash from operations and free cash flow. Our leverage ratio decreased from the fourth quarter of 2024. Although advance ticket sales grew in line with our expectations in the period, we anticipate market conditions will remain unsteady with an uncertain economic outlook. In response, we are prudently moderating our expectations and concentrating on controllable factors such as cost management and strategic capacity adjustments to ensure strong performance in key financial metrics.”

And he noted that: “Our results demonstrate that we have a solid and diversified commercial foundation, a disciplined capital allocation strategy, and a skilled and dedicated team. We are encouraged that despite some shifts in certain markets, overall demand trends remain steady. In the quarter, we purchased and cancelled over 15 million shares to complete the normal course issuer bid program announced last November.”

Said Rousseau: “In our ongoing drive to create value, we are pleased to announce today our intention to launch a substantial issuer bid to purchase and cancel up to $500 million worth of shares. The SIB underscores our commitment, as we advance toward our 2028 financial targets, to creating significant value for shareholders and succeeding on a sustained, long-term basis for the benefit of all stakeholders.”

Highlights of the airline’s 2025 Q1 results include:

• Operating revenues of $5.196 billion for the first quarter of 2025, 1% lower year over year.
• Operating loss of $108 million and adjusted EBITDA* of $387 million with adjusted EBITDA margin* of 7.4%.
• Cash flow from operating activities of $1.526 billion and free cash flow* of $831 million, a year-over-year decrease of $66 million and $225 million respectively.
• Leverage ratio* of 1.3 at March 31, 2025, compared to 1.4 at end of 2024.
• Purchased and cancelled over 15 million shares in the quarter, completing the normal course issuer bid announced in November 2024.
• Announced intention to launch substantial issuer bid (SIB) to purchase and cancel up to $500-million of shares.

In the First Quarter 2025 Management’s Discussion and Analysis of Results of Operations and Financial Condition (posted on its website), U.S. transborder passenger revenues are covered.

It states that: “U.S. transborder passenger revenues of $991 million decreased 5% from the first quarter of 2024. As a result of lower traffic, load factors declined about 2 percentage points year over year, notably pronounced in U.S. leisure markets.”

And it continues: “The year-over-year decline in traffic was, in part, due to a weaker Canadian dollar versus the U.S. dollar and from pronouncements and uncertainty relating to the imposition of U.S. tariffs and related countermeasures. Lower transborder capacity also contributed to the year-over-year revenue decrease and was partially offset by higher yields across the transborder network.”