Air Canada reports record revenues in 2024, but operating profit declines

Air Canada has released its fourth-quarter and full-year 2024 financial results, reporting record operating revenues but lower profitability compared to the previous year.

The airline recorded $5.404 billion in operating revenues for the fourth quarter of 2024, a 4% increase from the same period in 2023. Full-year operating revenues reached $22.255 billion, up 2% from the previous year.

According to Michael Rousseau, president and CEO of Air Canada, these results were driven by a 5% increase in capacity compared to 2023. The airline carried approximately 47 million passengers in 2024 and improved on-time performance by eight percentage points year over year.

“We executed our plan, making adjustments where necessary, achieving nearly $3.6 billion in annual adjusted EBITDA and free cash flow of $1.3 billion,” Rousseau said.

Decline in Operating Profit

Despite record revenues, operating income fell by $1.016 billion to $1.263 billion for the year. Adjusted EBITDA also declined by $396 million, totaling $3.586 billion.

Cash flow from operating activities dropped by $390 million to $3.930 billion, while free cash flow fell by $1.462 billion to $1.294 billion.

Air Canada also repurchased and cance;led 35,783,842 shares in 2024, including more than 20 million shares under its normal course issuer bid program.

2025 Outlook

Air Canada has maintained its guidance for fiscal 2025, projecting:

• Capacity (ASM) growth of 3% to 5% compared to 2024
• Adjusted EBITDA between $3.4 billion and $3.8 billion
• Free cash flow balance at approximately $200 million

The company based its forecast on moderate economic conditions, expecting weak Canadian GDP growth, an average exchange rate of C$1.40 per US$1 and aviation fuel prices at C$0.95 per litre.

Long-Term Targets for 2028 and 2030

In December 2024, Air Canada outlined its long-term financial targets for 2028, including:

• Operating revenues of approximately $30 billion
• Adjusted EBITDA margin of 17% or higher
• Free cash flow margin of 5%

By 2030, the company aims to exceed $30 billion in revenues and achieve a return on invested capital of 12% or more.

Air Canada noted that these targets are strategic objectives and may be adjusted based on evolving economic and market conditions.

Financial summary for the 2024 financial year:

• Operating revenues: $22.255 billion, up $422 million (+2%), with a 5% increase in capacity compared to the previous year.
• Operating expenses: $20.992 billion, up $1.438 billion (+7%), primarily due to increased capacity, personnel, maintenance and technology costs, as well as the one-time past service cost of $490 million recorded in Q4 2024.
• Operating income: $1.263 billion, with an operating margin of 5.7%, down $1.016 billion and 4.7 points from 2023.
• Adjusted EBITDA: $3.586 billion, with a margin of 16.1%, down $396 million and 2.1 points, but higher than forecast by around $3.5 billion.
• Adjusted profit before tax: $1.397 billion, down $296 million.
• Net income: $1.720 billion ($4.72 per share), compared to $2.276 billion ($5.96 per share) in 2023. Net income for 2024 includes a deferred tax asset of $1.154 billion.
• Adjusted net income: $1.335 billion ($3.55 per share), compared to $1.713 billion ($4.56 per share) in 2023.
• Adjusted CESMO: 13.80 cents, up 2.3%.
• Net cash flow from operating activities: $3.930 billion, down $390 million.
• Free cash flow: $1.294 billion, down $1.462 billion.
• Net debt-to-adjusted EBITDA ratio: 1.4 as of December 31, 2024, compared to 1.1 as of December 31, 2023.

Summary of financial results for the fourth quarter of 2024:

• Operating revenue: $5.404 billion, up $229 million (+4%), with a 2% increase in capacity.
• Operating expenses: $5.658 billion, up $562 million (+11%), due to a one-time $490 million pension cost under a new agreement with ALPA, as well as increased personnel and maintenance costs.
• Operating loss: $254 million, including the one-time cost of $490 million, compared to operating income of $79 million in Q4 2023.
• Adjusted EBITDA: $696 million, with a margin of 12.9%, up $175 million and 2.8 percentage points.
• Adjusted profit before tax: $135 million, up $182 million.
• Net loss: $644 million (loss per share of $1.81), compared to net income of $184 million (earnings per share of $0.41).
• Adjusted net income: $93 million, or $0.25 per share, compared to an adjusted net loss of $44 million (-$0.12 per share).
• Adjusted CESMO: 15.05 cents, up 5.7% from 14.25 cents.
• Net cash flow from operating activities: $677 million, down $308 million.
• Free cash flow: -$495 million, compared to +$669 million in Q4 2023.

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