- Air Canada (TSX:AC) reported a Q1 2025 operating loss of C$108 million as the airline faced rising costs and a slight dip in revenue
- Cash flow from operating activities of C$1.52 billion and free cash flow of C$831 million, a year-over-year decrease of C$66 million and C$225 million respectively
- Announced intention to launch substantial issuer bid (SIB) to purchase and cancel up to C$500 million of shares
- Air Canada stock (TSX:AC) last traded at C$15.30
Air Canada (TSX:AC) reported a Q1 2025 operating loss of C$108 million, reversing its modest operating income of C$11 million in the same period last year, as the airline faced rising costs and a slight dip in revenue.
The airline’s operating revenues totalled C$5.19 billion, down 1 per cent or C$30 million year-over-year, reflecting a 0.4 per cent decline in operated capacity. Meanwhile, operating expenses rose 2 per cent to C$5.30 billion, driven by higher depreciation, increased ground package costs, and an unfavourable foreign exchange variance. These pressures were partially offset by lower jet fuel prices.
Adjusted EBITDA fell to C$387 million, down C$66 million from Q1 2024, with the adjusted EBITDA margin narrowing to 7.4 per cent from 8.7 per cent. The adjusted pre-tax loss widened to C$215 million from $94 million a year earlier.
Net loss for the quarter was $102 million, or $0.40 per diluted share, compared to a net loss of $81 million and $0.22 per share in Q1 2024. On an adjusted basis, the net loss was $150 million, or $0.45 per diluted share, versus C$96 million and $0.27 per share last year.
Unit costs also rose, with adjusted cost per available seat mile (CASM) increasing 3.5 per cent to 15.27 cents.
Cash flow from operations declined to C$1.52 billion, down C$66 million, while free cash flow dropped significantly to C$831 million, a decrease of C$225 million year-over-year.
Outlook
Looking ahead, Air Canada plans to increase its available seat mile (ASM) capacity by 2 per cent to 2.5 per cent in Q2 2025. However, the airline revised its full-year 2025 guidance downward in light of evolving market conditions and fuel price expectations.
The company now expects adjusted EBITDA between C$3.2 billion and C$3.6 billion, down from the previous range of C$3.4 billion to C$3.8 billion. ASM capacity growth is also revised to 1 per cent–3 per cent, from the earlier 3 per cent–5 per cent range. Adjusted CASM and free cash flow guidance remain unchanged.
Air Canada reaffirmed its key assumptions, including a marginal increase in Canadian GDP growth, an average exchange rate of C$1.40 per U.S. dollar, and a revised average jet fuel price of $0.88 per litre (down from $0.95).
In a move to return value to shareholders, the airline completed its normal course issuer bid by repurchasing and cancelling over 15 million shares during the quarter. It also announced plans to launch a substantial issuer bid to repurchase up to C$500 million in additional shares.
View from the cockpit
“Our first quarter 2025 results show Air Canada is effectively managing through a turbulent period. Total operating revenues of nearly C$5.2 billion were stable year-over-year on similar capacity,” the airline’s president and chief executive officer, Michael Rousseau said in a news release. “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 C$387 million. 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.”
About Air Canada
Air Canada is Canada’s largest airline with a presence in more than 180 airports in Canada, the United States and internationally across six continents.
Air Canada stock (TSX:AC) last traded at C$15.30. Though it was up 4.15 per cent this week, it has fallen 18.62 per cent since this time last year.
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