Air Canada has published its official second quarter results, previewed two weeks ago in a preliminary statement. The airline is still seeing strong demand, but yields and load factors are down slightly, driven by strong competition in international markets.
The biggest storm cloud on AC’s horizon is finding a way to make its pilots happy. After their counterparts at major U.S. legacy airlines achieved historic pay raises over the past couple of years, Air Canada's pilots have fallen sharply behind. Despite negotiations that began in June 2023, the two sides have yet to reach an agreement.
Operating revenues for the quarter topped $5.5 billion and adjusted EBITDA was $914 million. Excluding one-time items, adjusted earnings were $369 million, slightly higher than analyst estimates. Operating income declined to $466 million from $802 million last year.
Air Canada president and CEO Michael Rousseau (Photo Credit: Air Canada Media License)
“We saw healthy demand, with load factors remaining above historical averages. We remained sharply focused on our customers and operations throughout the quarter and experienced a 10-percentage point year-over-year improvement in our on-time performance, even with the increased flying,” said President and CEO Michael Rousseau.
"When compared to the second quarter of 2023, we increased our capacity 6.5% in the period. Our adjusted unit cost was well contained, increasing 1.7%. This was supported through rigorous cost discipline, which is always a top priority for us. We will continue to adapt to market conditions, manage capacity proactively and contain costs through productivity and other initiatives.”
Developments during the quarter included new services to Singapore, Stockholm and India. Air Canada also secured an additional eight Boeing 737-8 aircraft through leasing arrangements. Those planes will enter service next year.
Here are some key metrics from AC’s results:
· Operating revenues of $5.519 billion increased $92 million or 2% on 6.5% more operated capacity.
· 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.
· Net cash flows from operating activities of $924 million, decreased $566 million.
· Free cash flow of $451 million, decreased $514 million.
For the third quarter of 2024, Air Canada plans to increase its ASM capacity between 4% and 4.5% from the same quarter in 2023.
For the full year 2024, Air Canada is confirming the following guidance, which was updated on July 22, 2024:
| Metric | 2024 Guidance |
| ASM capacity | 5.5 to 6.5% increase versus 2023 |
| Adjusted CASM | 2.5 to 3.5% increase versus 2023 |
| Adjusted EBITDA | $3.1 to $3.4 billion |
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