Air Canada (AC) investor relations material

Executive summary

• Q3 2025 delivered solid results despite a significant labor disruption, with 12.2 million passengers carried, a 4% year-over-year decline, and rapid operational recovery supported by strong customer initiatives.

• The labor disruption had a $375 million net negative impact on Q3 operating income and adjusted EBITDA, but bookings rebounded quickly and continued into Q4.

• Operational performance and customer satisfaction improved year-over-year, with premium and corporate revenues outperforming.

Financial highlights

• Q3 2025 operating revenues were $5.8 billion, down 5% year-over-year, with operating income of $284 million and adjusted EBITDA of $961 million (16.6% margin).

• Passenger revenue was $5.2 billion, cargo $239 million, and other revenue $291 million; premium cabin revenues outperformed economy by 6 percentage points.

• Adjusted diluted EPS was $0.75, and diluted EPS was $0.88, both down year-over-year.

• Free cash flow for Q3 was $211 million, with year-to-date free cash flow at $1.2 billion, aided by payment timing.

• Ended Q3 with $8.3 billion in liquidity and a leverage ratio of 1.6x; net debt stood at $4.83 billion.

Outlook and guidance

• 2025 capacity expected to increase by 0.75% versus 2024, with adjusted CASM guidance at 14.60–14.70¢ and adjusted EBITDA of $2.95–$3.05 billion.

• Free cash flow for 2025 is expected between break-even and $200 million, with Q4 seeing cash outflows as delayed payments are processed.

• Q4 CapEx anticipated at approximately $900 million; full-year CapEx just under $3 billion.

• Cost reduction program of $150 million on track for 2025, with recurring savings expected in 2026.

• Long-term targets for 2028 include operating revenues of ~$30 billion, adjusted EBITDA margin ≥17%, and free cash flow margin ~5%.