Air Canada has reported operating revenues of $6.344bn, up by 19 per cent from the third quarter of 2022, with an operating income of $1.415bn and an operating margin of 22.3%, increased $771 million year over year.
On an adjusted basis, Air Canada’s EBITDA was $1.830bn, with adjusted EBITDA margin of 28.8%, an improvement of over $773 million year over year.
Air Canada’s third quarter net cash flows from operating activities were $408 million, and free cash flow was $135 million.
“Air Canada performed strongly in the third quarter, generating solid operating revenues of more than $6.3 billion, a 19 per cent increase over the same period last year,” said Michael Rousseau, President and Chief Executive Officer at Air Canada. “Our focus on growing our international network, building scale at our hubs and leveraging our solid partnerships is delivering strong results… We managed costs prudently, with operating expenses rising 5 per cent, on a 10 per cent increase in capacity. We have continued to pay down debt in the quarter, lowering our leverage ratio to 1.4 from 5.1 at the end of last year, while also maintaining a healthy level of liquidity, which stood at nearly $10 billion at the quarter’s end.”
Rousseau added that there were headwinds building that could impact its strategy to grow back the airline and improve operational stability, not least geopolitical uncertainty, inflation and the volatile fuel price environment, increased competition and dealing with supply chain, and the evolving regulatory environment. “Our demonstrated adaptability, combined with a stable demand environment, give us every confidence for the rest of the year and into 2024 despite the inevitable headwinds to which our global industry is prone,” he said. “We will continue to manage our business with diligence. We remain confident with our full year adjusted EBITDA guidance and at this point in time, expect to land in the higher range of our full year guidance.”
Air Canada grew its operated capacity by 10% from the third quarter of 2022, with operating expenses growing by $251 million to $4.929bn reflecting higher traffic and capacity year over year and general inflationary pressures. Lower aircraft fuel expense resulting from 23% lower jet fuel prices year over year partially offset the increase.
For the fourth quarter of 2023, Air Canada plans to increase its ASM capacity by about 10% from the same quarter in 2022.