Air Canada (AC) Q1 2026 earnings summary

Executive summary

• Achieved record Q1 operating revenues of $5.8 billion (up 11% year-over-year), with strong growth in premium, international, and corporate segments, and carried 11.0 million revenue passengers, a 6% increase year-over-year.

• Adjusted EBITDA rose 61% year-over-year to $623 million, marking a record quarter and reflecting strong execution in a volatile environment.

• Generated $1.8 billion in operating cash flow and $1.6 billion in free cash flow, strengthening the balance sheet.

• CEO announced upcoming retirement after nearly two decades, with leadership transition underway.

• Successfully negotiated two new labor agreements and advanced fleet modernization, including delivery of the first Airbus A321XLR.

Financial highlights

• Operating revenues reached $5.8 billion, with $4.8 billion from passenger, $259 million from cargo, and $734 million from other sources.

• Adjusted EBITDA margin was 10.8% for Q1 2026; operating income was $117 million, and net income was $48 million.

• Adjusted loss per diluted share improved to $0.05 from $0.45 year-over-year.

• Free cash flow for Q1 was $1.6 billion, up $773 million year-over-year.

• Adjusted CASM increased to 16.11¢, mainly due to higher labor costs and operational inefficiencies.

Outlook and guidance

• Suspended full-year 2026 guidance due to jet fuel price volatility and geopolitical instability; introduced Q2 guidance.

• Q2 adjusted EBITDA expected between $575 million and $735 million; capacity to grow 0.5%-1% year-over-year.

• Expects to offset 50%-60% of incremental fuel expense in Q2 through commercial and cost actions.

• Forward yields ticketed at mid-teens above last year; strong demand seen across the booking curve into Q3 and Q4.

• Share repurchases paused in the near term to prioritize debt repayment; decision to be revisited in H2.