- Operating revenues of $5.427
billion increased 36 per cent from the second quarter of
2022
- Operating income of $802
million, with an operating margin of 14.8 per cent, compared
to an operating loss of $253 million
in the second quarter of 2022
- Adjusted EBITDA* of $1.220
billion, with adjusted EBITDA margin* of 22.5 per
cent, an improvement of over $1
billion from the second quarter of 2022
- Second quarter net cash flows from operating activities of
$1.490 billion, and free cash flow*
of $965 million
- Leverage ratio* of 1.7 at June 30,
2023, down from 3.2 at March 31,
2023
MONTREAL, Aug. 11,
2023 /PRNewswire/ - Air Canada today reported its
second quarter 2023 financial results.
"Air Canada's second quarter
results were driven by strong demand and show the effectiveness of
our plan. As a result of the hard work of our people, the appeal of
our growing global network, as well as our leading brand and
product offering, operating revenues in the quarter reached
$5.4 billion, an increase of 36 per
cent from a year ago. Operating income was $802 million, a year-over-year improvement of
over $1 billion, and our adjusted
EBITDA reached $1.2 billion with an
adjusted EBITDA margin of 22.5 per cent," said Michael Rousseau, President and Chief Executive
Officer of Air Canada.
*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 Air
Canada non-GAAP measures used in this news release to the most
comparable GAAP financial measure.
|
|
"I thank the entire team for its continued dedication to serving
our customers, including collaborating with our partners, who also
share the responsibility of ensuring a smooth customer journey. We
safely carried over 11 million customers across our global network
in the quarter, a year-over-year increase of about 23 per cent.
However, despite having more trained resources than last summer and
improved tools, our operations in June and July were not at
expected levels. We are increasing our efforts to protect the
customer journey from disruption, regardless of the cause.
This includes using any influence we have, in such instances as
pilot attrition at our principal regional partner or global supply
chain issues, or working to mitigate the effects of situations
beyond our control, such as disruptive storm activity in our key
hubs and markets. We are confident that our efforts will generate
positive outcomes.
"We are particularly pleased with our international performance,
propelling nearly 70 per cent of the year-over-year increase in
passenger revenues. Air Canada Vacations continued to see high
demand for leisure travel packages, and Aeroplan added compelling
new partners and grew its membership. Our cargo business, like
others in the industry, experienced lower demand and yields than
expected. Based on current passenger booking patterns, we see
prevailing strength in travel demand over the second half of 2023,
giving us confidence to increase the lower end of our adjusted
EBITDA guidance range. We continue to focus intently on cost
discipline and liquidity management. We ended the quarter with more
than $9.6 billion in cash, cash
equivalents and investments. This will enable us to further invest
in our business, deleverage our balance sheet and ensure our
company maintains the resiliency and adaptability needed for
long-term success and to navigate through evolving market
conditions," said Mr. Rousseau.
Second Quarter 2023 Financial Results
- Second quarter operating revenues of $5.427 billion increased $1.446 billion from the same quarter in 2022,
driven by a 42 per cent year-over-year increase in passenger
revenues. Operated capacity increased 21 per cent from the second
quarter of 2022, one percentage point lower than the projection
provided in Air Canada's May 12,
2023, news release.
- Operating expenses of $4.625
billion increased $391 million
or 9 per cent from the second quarter of 2022, driven by increases
in nearly all line items reflecting higher operated capacity and
traffic year –over year, partially offset by a 31.4 per cent
decrease in jet fuel prices.
- Operating income of $802 million,
with an operating margin of 14.8 per cent, an improvement of over
$1 billion from an operating loss of
$253 million in the second quarter of
2022.
- Adjusted EBITDA of $1.220
billion, with an adjusted EBITDA margin of 22.5 per cent, an
increase of $1.066 billion and of
18.6 percentage points, respectively, from the second quarter of
2022.
- Net income of $838 million
improved $1.224 billion from the
second quarter of 2022. Diluted earnings per share of $2.34 compared to a diluted loss per share of
$1.60 in the second quarter of
2022.
- Adjusted net income* of $664
million improved $1.119
billion from the second quarter of 2022. Adjusted earnings
per diluted share* of $1.85 compared
to an adjusted loss per diluted share of $1.12 in the second quarter of 2022, an
improvement of $2.97 per diluted
share.
- Adjusted CASM* (adjusted cost per available seat mile) of
13.3 cents increased 1.6 per cent from the second quarter of
2022. The unit cost was impacted by higher passenger service costs
due to higher traffic and higher selling costs, which are largely
driven by revenues, and by a 24 per cent increase in wages,
salaries and benefits resulting from a 22 per cent year-over-year
increase in the number of average full-time-equivalent (FTE)
employees. Second quarter 2023 CASM of 18.8
cents decreased 9.7 per cent from the second quarter of 2022
mainly due to lower fuel prices and higher capacity year over
year.
- Net cash flows from operating activities of $1.490 billion increased $426 million from the second quarter of
2022.
- Free cash flow of $965 million
increased $537 million from the
second quarter of 2022.
- Net debt-to-adjusted EBITDA ratio* was 1.7 at June 30, 2023, an improvement from 3.2 at
March 30, 2023, and 5.1 at
December 31, 2022, due to growth in
adjusted EBITDA and the reduction in net debt.
Outlook
For the third quarter of 2023, Air Canada plans to
increase its ASM capacity by about 11 per cent from the same
quarter in 2022. Air Canada is
providing the following update for the full year 2023 guidance as
described below.
Metric
|
Full Year
2023
|
Prior 2023
Guidance
(Provided on May 12, 2023)
|
Updated 2023
Guidance
(Provided on August 11, 2023)
|
ASM
capacity
|
About 23 per cent
increase versus
2022
|
About
21 per
cent increase versus
2022
|
Adjusted
CASM
|
About 0.5 to 2.5 per
cent below
2022 levels
|
About 0.5 to 1.5 per
cent above
2022 levels
|
Adjusted
EBITDA
|
About $3.5 - $4.0
billion
|
About
$3.75 - $4.0 billion
|
Major Assumptions
Air Canada made assumptions in
preparing its updated guidance and making forward-looking
statements, including moderate Canadian GDP growth for 2023, that
the Canadian dollar will trade, on average, at C$1.34 per U.S. dollar for the full year 2023,
and that the price of jet fuel will average C$1.08 per litre for the full year 2023.
Air Canada is modifying its
2023 adjusted CASM guidance to reflect the change in full year ASM
capacity guidance, as well as adjustments to various expense items
related to the ongoing cost environment.
The revised guidance for full year adjusted EBITDA reflects
expected earnings stemming from anticipated traffic and yield and a
continued strong demand environment.
Air Canada is not updating its
2024 targets at this time and will continue evaluating them as it
progresses with its plans and executes on its strategic
priorities.
Non-GAAP Financial Measures
Below is a description of certain non-GAAP financial measures
and ratios used by Air Canada to provide readers with additional
information on its financial and operating performance. 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.
Adjusted CASM
Air Canada uses adjusted CASM
to assess the operating and cost performance of its ongoing airline
business without the effects of aircraft fuel expense, the cost of
ground packages at Air Canada Vacations, impairment of assets, and
freighter costs as these items may distort the analysis of certain
business trends and render comparative analysis across periods less
meaningful and their exclusion generally allows for a more
meaningful analysis of Air Canada's operating expense performance
and a more meaningful comparison to that of other airlines.
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 Canada/U.S. currency exchange rates. Air
Canada also incurs expenses that
are related to ground packages at Air Canada Vacations, which some
airlines, without comparable tour operator businesses, may not
incur. In addition, these costs do not generate ASMs and,
therefore, excluding these costs from operating expense results
provides for a more meaningful comparison across periods when such
costs may vary.
Air Canada also incurs expenses
that are related to the operation of freighter aircraft, which some
airlines, without comparable cargo businesses, may not incur. Air
Canada had six Boeing 767
dedicated freighter aircraft in its operating fleet as at
June 30, 2023, compared to four
Boeing 767 dedicated freighter aircraft as at June 30, 2022. These costs do not generate ASMs
and, therefore, excluding these costs from operating expense
results provides for a more meaningful comparison of the passenger
airline business across periods.
Adjusted CASM is reconciled to GAAP operating expense as
follows:
(Canadian dollars in
millions, except
where indicated)
|
Second
Quarter
|
First Six
Months
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
Operating expense –
GAAP
|
$
|
4,625
|
$
|
4,234
|
$
|
391
|
$
|
9,529
|
$
|
7,357
|
$
|
2,172
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft
fuel
|
|
(1,187)
|
|
(1,450)
|
|
263
|
|
(2,562)
|
|
(2,200)
|
|
(362)
|
Ground package
costs
|
|
(126)
|
|
(102)
|
|
(24)
|
|
(444)
|
|
(231)
|
|
(213)
|
Impairment of
assets
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(4)
|
|
4
|
Freighter costs
(excluding fuel)
|
|
(39)
|
|
(22)
|
|
(17)
|
|
(70)
|
|
(33)
|
|
(37)
|
Operating expense,
adjusted for the
above-noted items
|
$
|
3,273
|
$
|
2,660
|
$
|
613
|
|
6,453
|
|
4,889
|
|
1,564
|
ASMs
(millions)
|
|
24,606
|
|
20,331
|
|
21.0 %
|
|
46,513
|
|
34,628
|
|
34.3 %
|
Adjusted CASM
(cents)
|
¢
|
13.30
|
¢
|
13.09
|
¢
|
0.21
|
¢
|
13.87
|
¢
|
14.12
|
¢
|
(0.25)
|
EBITDA and Adjusted EBITDA
EBITDA (earnings before interest, taxes, depreciation and
amortization) is commonly used in the airline industry and is used
by Air Canada as a means to assess operating results before
interest, taxes, depreciation and amortization as these costs can
vary significantly among airlines due to differences in the way
airlines finance their aircraft and other assets. In calculating
adjusted EBITDA, Air Canada excludes impairment of assets as this
may distort the analysis of certain business trends and render
comparative analysis across periods or to other airlines less
meaningful.
Adjusted EBITDA Margin
Adjusted EBITDA margin (adjusted EBITDA as a percentage of
operating revenues) is commonly used in the airline industry and is
used by Air Canada as a means to assess the operating margin before
interest, taxes, depreciation and amortization as these costs can
vary significantly among airlines due to differences in the way
airlines finance their aircraft and other assets.
EBITDA, adjusted EBITDA and adjusted EBITDA margin are
reconciled to GAAP operating income (loss) as follows:
|
Second
Quarter
|
First Six
Months
|
(Canadian dollars in
millions, except
where indicated)
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
Operating income
(loss) – GAAP
|
$
|
802
|
$
|
(253)
|
$
|
1,055
|
$
|
785
|
$
|
(803)
|
$
|
1,588
|
Add
back:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
418
|
|
407
|
|
11
|
|
846
|
|
810
|
|
36
|
EBITDA
|
$
|
1,220
|
$
|
154
|
$
|
1,066
|
$
|
1,631
|
$
|
7
|
$
|
1,624
|
Remove:
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4
|
|
(4)
|
Adjusted
EBITDA
|
$
|
1,220
|
$
|
154
|
$
|
1,066
|
$
|
1,631
|
$
|
11
|
$
|
1,620
|
Operating
revenues
|
$
|
5,427
|
$
|
3,981
|
$
|
1,446
|
$
|
10,314
|
$
|
6,554
|
$
|
3,760
|
Operating margin
(%)
|
|
14.8
|
|
(6.4)
|
|
21.2
pp
|
|
7.6
|
|
(12.3)
|
|
19.9
pp
|
Adjusted EBITDA
margin (%)
|
|
22.5
|
|
3.9
|
|
18.6
pp
|
|
15.8
|
|
0.2
|
|
15.6
pp
|
Adjusted Pre-tax Income (Loss)
Adjusted pre-tax income (loss) is used by Air Canada to assess
the overall pre-tax financial performance of its business without
the effects of impairment of assets, foreign exchange gains or
losses, net interest relating to employee benefits, gains or losses
on financial instruments recorded at fair value, gains or losses on
the sale and leaseback of assets, gains or losses on disposal of
assets, and gains or losses on debt settlements and modifications,
as these items may distort the analysis of certain business trends
and render comparative analysis across periods or to other airlines
less meaningful.
Adjusted pre-tax income (loss) is reconciled to GAAP income
(loss) before income taxes as follows:
(Canadian dollars in
millions)
|
Second
Quarter
|
First Six
Months
|
2023
|
2022
|
$
Change
|
2023
|
2022
|
$
Change
|
Income (loss) before
income taxes –
GAAP
|
$
|
796
|
$
|
(352)
|
$
|
1,148
|
$
|
773
|
$
|
(1,166)
|
$
|
1,939
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4
|
|
(4)
|
Foreign exchange (gain)
loss
|
|
(251)
|
|
196
|
|
(447)
|
|
(378)
|
|
97
|
|
(475)
|
Net interest relating
to employee benefits
|
|
(6)
|
|
(4)
|
|
(2)
|
|
(12)
|
|
(8)
|
|
(4)
|
(Gain) loss on
financial instruments
recorded at fair value
|
|
115
|
|
(287)
|
|
402
|
|
77
|
|
(114)
|
|
191
|
Loss on debt
settlement
|
|
2
|
|
-
|
|
2
|
|
2
|
|
-
|
|
2
|
Adjusted pre-tax
income (loss)
|
$
|
656
|
$
|
(447)
|
$
|
1,103
|
$
|
462
|
$
|
(1,187)
|
$
|
1,649
|
Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per
Share – Diluted
Air Canada uses adjusted net
income (loss) and adjusted earnings (loss) per share — diluted
as a means to assess the overall financial performance of its
business without the after-tax effects of impairment of assets,
foreign exchange gains or losses, net financing expense relating to
employee benefits, gains or losses on financial instruments
recorded at fair value, gains or losses on the sale and leaseback
of assets, gains or losses on debt settlements and modifications,
and gains or losses on disposal of assets as these items may
distort the analysis of certain business trends and render
comparative analysis to other airlines less meaningful.
Adjusted net income (loss) and adjusted earnings (loss) per
share are reconciled to GAAP net income as follows:
(Canadian dollars in
millions)
|
Second
Quarter
|
First Six
Months
|
2023
|
2022
|
$
Change
|
2023
|
2022
|
$
Change
|
Net income (loss) –
GAAP
|
$
|
838
|
$
|
(386)
|
$
|
1,224
|
$
|
842
|
$
|
(1,360)
|
$
|
2,202
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
assets
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4
|
|
(4)
|
Foreign exchange (gain)
loss
|
|
(251)
|
|
196
|
|
(447)
|
|
(378)
|
|
97
|
|
(475)
|
Net interest relating
to employee benefits
|
|
(6)
|
|
(4)
|
|
(2)
|
|
(12)
|
|
(8)
|
|
(4)
|
(Gain) loss on
financial instruments
recorded at fair value
|
|
115
|
|
(287)
|
|
402
|
|
77
|
|
(114)
|
|
191
|
Loss on debt
settlement
|
|
2
|
|
-
|
|
2
|
|
2
|
|
-
|
|
2
|
Income tax, including
for the above
reconciling items (1)
|
|
(34)
|
|
26
|
|
(60)
|
|
(55)
|
|
179
|
|
(234)
|
Adjusted net income
(loss)
|
$
|
664
|
$
|
(455)
|
$
|
1,119
|
$
|
476
|
$
|
(1,202)
|
$
|
1,678
|
Weighted average number
of outstanding
shares used in computing diluted income
per share (in millions)
|
|
358
|
|
407
|
|
(49)
|
|
358
|
|
358
|
|
-
|
Adjusted income
(loss) per share –
diluted
|
$
|
1.85
|
$
|
(1.12)
|
$
|
2.97
|
$
|
1.33
|
$
|
(3.36)
|
$
|
4.69
|
(1)
|
In 2023, the
deferred income tax expense recorded in other comprehensive income
related to remeasurements on employee benefit liabilities is offset
by a deferred income tax recovery that was recorded through Air
Canada's consolidated statement of operations. This recovery is
removed from adjusted net income (loss). In comparison, a deferred
income tax expense was removed from adjusted net income (loss) for
the year 2022.
|
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:
(In millions)
|
Second Quarter
|
First Six Months
|
2023
|
2022
|
2023
|
2022
|
Weighted average number of shares
outstanding – basic
|
358
|
358
|
358
|
358
|
Effect of
dilution
|
-
|
49
|
-
|
-
|
Weighted average number of shares
outstanding – diluted
|
358
|
407
|
358
|
358
|
Free Cash Flow
Free cash flow is a non-GAAP financial measure used by Air
Canada as an indicator of the financial strength and performance of
its business, indicating how much cash it can generate from
operations after capital expenditures. Free cash flow is calculated
as net cash flows from operating activities minus additions to
property, equipment, and intangible assets, net of proceeds from
sale and leaseback transactions. Such measure is not a recognized
measure for financial statement presentation under GAAP, does not
have a standardized meaning, may not be comparable to similar
measures presented by other entities and should not be considered a
substitute for or superior to GAAP results.
The table below reconciles free cash flow to net cash flows
from (used in) operating activities for the periods
indicated.
|
Second
Quarter
|
First Six
Months
|
(Canadian dollars in
millions)
|
2023
|
2022
|
$
Change
|
2023
|
2022
|
$
Change
|
Net cash flows from
operating activities
|
$
|
1,490
|
$
|
1,064
|
$
|
426
|
$
|
2,927
|
$
|
1,431
|
$
|
1,496
|
Additions to property,
equipment, and
intangible assets
|
|
(525)
|
|
(636)
|
|
111
|
|
(975)
|
|
(912)
|
|
(63)
|
Free cash
flow
|
$
|
965
|
$
|
428
|
$
|
537
|
$
|
1,952
|
$
|
519
|
$
|
1,433
|
Net Debt
Net debt is a capital management measure and a key component of
the capital managed by Air Canada and provides management with a
measure of its net indebtedness. It refers to total long-term debt
liabilities (including current portion) less cash, cash equivalents
and short- and long-term investments.
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 Air Canada as a means to measure financial
leverage. Leverage ratio is calculated by dividing net debt by
trailing 12-month adjusted EBITDA.
(Canadian dollars in
millions)
|
June 30,
2023
|
December 31,
2022
|
Change
|
Total long-term debt
and lease liabilities
|
$
|
13,862
|
$
|
15,043
|
$
|
(1,181)
|
Current portion of
long-term debt and lease liabilities
|
|
1,024
|
|
1,263
|
|
(239)
|
Total long-term debt
and lease liabilities (including current
portion)
|
|
14,886
|
|
16,306
|
|
(1,420)
|
Less cash, cash
equivalents and short- and long-term
investments
|
|
(9,556)
|
|
(8,811)
|
|
(745)
|
Net
debt
|
$
|
5,330
|
$
|
7,495
|
$
|
(2,165)
|
Adjusted EBITDA
(trailing 12 months)
|
$
|
3,077
|
|
1,457
|
|
1,620
|
Net debt to adjusted
EBITDA ratio
|
|
1.7
|
|
5.1
|
|
(3.4)
|
For further information on Air Canada's public disclosure file,
including Air Canada's 2022 Annual Information Form, dated
March 29, 2023, consult SEDAR
at www.sedar.com.
Second Quarter 2023 Conference Call
Air Canada will host its
quarterly analysts' call today, Friday,
August 11, 2023, at 8:00 a.m.
ET. Michael Rousseau, Air
Canada President and Chief Executive Officer, John Di Bert, Executive Vice President and Chief
Financial Officer, and Mark Galardo,
Executive Vice President, Revenue and Network Planning, will
present the results and be available for analysts' questions.
Immediately following the analysts' Q&A session, Mr.
Di Bert and Pierre Houle, Vice President and Treasurer, will
be available to answer questions from term loan B lenders and
holders of Air Canada bonds.
Media and the public may access this call on a listen-only
basis. Details are as follows:
Webcast:
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https://edge.media-server.com/mmc/p/hrjy4ayc
|
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Note: This is a
listen-in audio webcast.
|
|
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By telephone:
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1-800-715-9871
(toll-free), passcode 4637742
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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 Air Canada.
Actual results may differ materially from results indicated in
forward-looking statements due to a number of factors, including
those discussed below.
Factors that may cause results to differ materially from
results indicated in forward-looking statements include economic
and geopolitical conditions such as the military conflict between
Russia and Ukraine, Air Canada's ability to successfully
achieve or sustain positive net profitability, industry and market
conditions and the demand environment, competition, the
remaining effects from the COVID-19 pandemic, Air Canada's
dependence on technology, cybersecurity risks, Air Canada's ability
to successfully implement appropriate strategic and other important
initiatives (including Air Canada's ability to manage operating
costs), energy prices, Air Canada's ability to pay its indebtedness
and maintain or increase liquidity, interruptions of service,
climate change and environmental factors (including weather systems
and other natural phenomena and factors arising from anthropogenic
sources), Air Canada's dependence on key suppliers (including
government agencies and other stakeholders supporting airport and
airline operations), Air Canada's dependence on regional and other
carriers, Air Canada's ability to attract and retain required
personnel, the availability and onboarding of Air Canada's
workforce, other epidemic diseases, changes in laws, regulatory
developments or proceedings, employee and labour relations and
costs, terrorist acts, war, Air Canada's ability to successfully
operate its loyalty program, casualty losses, Air Canada's
dependence on Star
AllianceTM and joint ventures, Air Canada's
ability to preserve and grow its brand, pending and future
litigation and actions by third parties, currency exchange
fluctuations, limitations due to restrictive covenants, insurance
issues and costs, and pension plan obligations, as well as the
factors identified in Air Canada's public disclosure file available
at www.sedar.com and, in particular, those identified in
section 18 "Risk Factors" of Air Canada's 2022 MD&A and in
section 14 "Risk Factors" of Air Canada's second quarter 2023
MD&A.
The forward-looking statements contained or incorporated by
reference in this news release represent Air Canada's expectations
as of the date of this news release (or as of the date they are
otherwise stated to be made) and are subject to change after such
date. However, Air Canada disclaims any intention or obligation to
update or revise any forward-looking statements whether because of
new information, future events or otherwise, except as required
under applicable securities regulations.
About Air Canada
Air Canada is Canada's largest airline, the country's flag
carrier and a founding member of Star
Alliance, the world's most comprehensive air transportation
network. Air Canada provides
scheduled service directly to more than 180 airports in
Canada, the United States and Internationally on six
continents. It holds a Four-Star ranking from Skytrax. Air
Canada's Aeroplan program is
Canada's premier travel loyalty
program, where members can earn or redeem points on the world's
largest airline partner network of 45 airlines, plus through an
extensive range of merchandise, hotel and car rental rewards. Its
freight division, Air Canada Cargo, provides air freight lift and
connectivity to hundreds of destinations across six continents
using Air Canada's passenger and freighter aircraft. Air
Canada aims to achieve an ambitious net zero emissions goal from
all global operations by 2050. Air Canada shares are publicly
traded on the TSX in Canada and
the OCTQX in the US.
Internet: aircanada.com/media
Read Our Annual Report Here
Sign up for Air Canada news: aircanada.com
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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
where indicated)
|
Second
Quarter
|
First Six
Months
|
Financial
Performance Metrics
|
2023
|
2022
|
$
Change
|
2023
|
2022
|
$
Change
|
Operating
revenues
|
5,427
|
3,981
|
1,446
|
10,314
|
6,554
|
3,760
|
Operating profit
(loss)
|
802
|
(253)
|
1,055
|
785
|
(803)
|
1,588
|
Operating margin
(1) (%)
|
14.8
|
(6.4)
|
21.2 pp
(8)
|
7.6
|
(12.3)
|
19.9 pp
|
Adjusted EBITDA
(2)
|
1,220
|
154
|
1,066
|
1,631
|
11
|
1,620
|
Adjusted EBITDA margin
(2) (%)
|
22.5
|
3.9
|
18.6 pp
|
15.8
|
0.2
|
15.6 pp
|
Net income (loss)
before income taxes
|
796
|
(352)
|
1,148
|
773
|
(1,166)
|
1,939
|
Net income
(loss)
|
838
|
(386)
|
1,224
|
842
|
(1,360)
|
2,202
|
Adjusted pre-tax income
(loss) (2)
|
656
|
(447)
|
1,103
|
462
|
(1,187)
|
1,649
|
Adjusted net income
(loss) (2)
|
664
|
(455)
|
1,119
|
476
|
(1,202)
|
1,678
|
Total liquidity
(3)
|
10,551
|
10,694
|
(143)
|
10,551
|
10,694
|
(143)
|
Net cash flows from
operating activities
|
1,490
|
1,064
|
426
|
2,927
|
1,431
|
1,496
|
Free cash flow
(2)
|
965
|
428
|
537
|
1,952
|
519
|
1,433
|
Net debt
(2)
|
5,330
|
6,842
|
(1,512)
|
5,330
|
6,842
|
(1,512)
|
Diluted earnings (loss)
per share
|
2.34
|
(1.60)
|
3.94
|
2.35
|
(3.80)
|
6.15
|
Adjusted earnings
(loss) per share – diluted (2)
|
1.85
|
(1.12)
|
2.97
|
1.33
|
(3.36)
|
4.69
|
Operating Statistics
(4)
|
2023
|
2022
|
%
Change
|
2023
|
2022
|
%
Change
|
Revenue passenger miles
(RPMs) (millions)
|
21,617
|
16,371
|
32.0
|
40,195
|
25,852
|
55.5
|
Available seat miles
(ASMs) (millions)
|
24,606
|
20,331
|
21.0
|
46,513
|
34,628
|
34.3
|
Passenger load factor
%
|
87.9 %
|
80.5 %
|
7.3 pp
|
86.4 %
|
74.7 %
|
11.8 pp
|
Passenger revenue per
RPM (Yield) (cents)
|
22.7
|
21.0
|
7.9
|
22.4
|
20.7
|
8.0
|
Passenger revenue per
ASM (PRASM) (cents)
|
19.9
|
16.9
|
17.7
|
19.3
|
15.5
|
24.9
|
Operating revenue per
ASM (TRASM) (cents)
|
22.1
|
19.6
|
12.7
|
22.2
|
18.9
|
17.2
|
Operating expense per
ASM (CASM) (cents)
|
18.8
|
20.8
|
(9.7)
|
20.5
|
21.2
|
(3.6)
|
Adjusted CASM (cents)
(2)
|
13.3
|
13.1
|
1.6
|
13.9
|
14.1
|
(1.7)
|
Average number of
full-time-equivalent (FTE)
employees (thousands) (5)
|
35.9
|
29.5
|
21.7
|
35.2
|
28.4
|
23.8
|
Aircraft in operating
fleet at period-end
|
354
|
342
|
4
|
354
|
342
|
4
|
Seats dispatched
(thousands)
|
13,390
|
11,744
|
14.0
|
25,683
|
20,397
|
25.9
|
Aircraft frequencies
(thousands)
|
93.5
|
86.0
|
8.8
|
178.7
|
151.0
|
18.3
|
Average stage length
(miles) (6)
|
1,838
|
1,731
|
6.1
|
1,811
|
1,698
|
6.7
|
Fuel cost per litre
(cents)
|
101.1
|
147.3
|
(31.4)
|
114.2
|
126.1
|
(9.4)
|
Fuel litres
(thousands)
|
1,162,714
|
983,688
|
18.2
|
2,229,799
|
1,744,550
|
27.8
|
Revenue passengers
carried (thousands) (7)
|
11,287
|
9,145
|
23.4
|
21,256
|
14,580
|
45.8
|
(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 June 30, 2023, 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. As at June 30, 2022, total liquidity of
$10,694 million consisted of $9,722 million in cash and cash
equivalents, short- and long-term investments, and $972 million
available under undrawn credit facilities. Cash and cash
equivalents also include funds ($189 million as at June 30, 2023,
and $186 million as at June 30, 2022) 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 Jazz operating under its capacity purchase
agreement with Air Canada.
|
(5)
|
Reflects average FTE
employees at Air Canada and its subsidiaries. Excludes FTE
employees at Jazz, operating under the 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.
|
|
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SOURCE Air Canada