MONTRÉAL, Sept. 24, 2025 /CNW/ - Air Canada today provided certain estimated results for the third quarter of 2025 and updated full year 2025 guidance, which was suspended in August 2025. Air Canada also provided an estimate of the financial impact of the labour disruption in August by the Canadian Union of Public Employees (CUPE), the union representing cabin crew.

Q3 2025 Estimated Results

Air Canada anticipates, for the quarter ending September 30, 2025:

   -- Operated capacity to decline by approximately 2% from the same period in 
      2024 as a result of the cancellation of more than 3,200 flights; 
 
   -- Operating income between $250 million and $300 million, which includes 
      approximately $175 million from one-time non-cash pension plan amendments 
      and other labour related charges and adjusted EBITDA* between $950 
      million and $1 billion. Air Canada's operating income totalled $1.040 
      billion and adjusted EBITDA $1.523 billion for the third quarter of 2024. 

*Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted CASM and free cash flow are referred to in this news release. Such measures are non-GAAP financial measures, non-GAAP ratios, or supplementary financial measures, are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. Refer to the "Non-GAAP Financial Measures" section of this news release for descriptions of these measures, and for a reconciliation of Air Canada non-GAAP measures used in this news release to the most comparable GAAP financial measure.

Labour Disruption Impacts

During the collective bargaining period with CUPE, Air Canada developed comprehensive plans to ensure the safe and orderly wind down and restart of its operations in the event of a labour disruption. When CUPE gave notice of its intent to strike, Air Canada acted on these contingency plans and ultimately cancelled over 3,200 flights in August 2025.

Financial impact. The financial impact of the labour disruption, which included an unlawful strike, is estimated to be $375 million in operating income and adjusted EBITDA*. This amount is derived from the combination of three components. First, the revenue impact is estimated to be $430 million, mainly due to refunds issued to customers, customer compensation and lower than expected travel bookings in August and early September. Second, $145 million in costs are estimated to have been avoided due to less flying activity, largely attributable to lower fuel expenses. Third, the cost avoidance was partially offset by an estimated $90 million of incremental costs associated with reimbursements to customers for out-of-pocket expenses and labour-related operating costs.

Affected customers. Air Canada deeply regrets the impact of the disruption on its customers and remains committed to resolving every claim submitted by affected customers quickly and accurately, having done so for more than 60,000 claims to date. Air Canada continues to update its progress and to provide information on its goodwill policies at the dashboard available at www.aircanada.com/action.

Arbitration with CUPE. Air Canada and CUPE are proceeding to arbitration to finalize the wage portion of the four-year tentative agreement. No labour disruption can be initiated by either party during the arbitration process or the term of the new agreement.

Updated Full Year 2025 Outlook

Air Canada is restoring and updating its full year 2025 financial and capacity guidance to reflect the financial and operational impact of the CUPE labour disruption and its expectations for the remainder of 2025, as follows:

 
Metric            Updated 2025 Guidance          Prior 2025 Guidance 
                                                 (Suspended on August 18, 
                                                 2025) 
Adjusted EBITDA*  $2.9 billion to $3.1 billion   $3.2 billion to $3.6 billion 
ASM capacity      0.5% to 1.5% increase versus   1% to 3% increase versus 2024 
                  2024 
Adjusted CASM*    14.60 c to 14.70 c             14.25 c to 14.50 c 
Free cash flow*   -$50 million to $150 million   Break even +/- $200 million 
 

(*Refer to the "Non-GAAP Financial Measures" section of this news release for descriptions of these measures, and for a reconciliation of Air Canada non-GAAP measures used in this news release to the most comparable GAAP financial measure.)

Major Assumptions

Air Canada made assumptions in providing its guidance--including a marginal Canadian GDP growth for 2025. Air Canada now assumes that the Canadian dollar will trade, on average, at C$1.39 per U.S. dollar for the full year 2025 and that the price of jet fuel will average C$0.92 per litre for the full year 2025.

Air Canada's estimates for the third quarter of 2025 and the guidance for the full year 2025 constitute forward-looking information within the meaning of applicable securities laws and are subject to important risks and uncertainties. Please see the discussion below under Caution Regarding Forward-looking Information.

All figures and information indicated herein with respect to the third quarter ending September 30, 2025 reflect estimates with respect to such results based on currently available information, and have not been reviewed by the auditors. Air Canada's actual results for the third quarter 2025 may vary from these estimates as the interim period is not yet complete and remains subject to completion of closing procedures, final adjustments, management's review of results and completion of the interim unaudited consolidated financial statements. Other developments may arise between now and the time the financial results are finalized, and results could be materially different than the estimates set forth herein. These estimates will be supplemented by the third quarter 2025 consolidated financial information which will be released in accordance with applicable requirements.

Non-GAAP Financial Measures

Below is a description of certain non-GAAP financial measures and ratios used by Air Canada to provide readers with additional information on its financial and operating performance. Such measures are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. The non-GAAP financial measures or ratios described in this section typically have exclusions or adjustments that include one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of past or future operating results. These items are excluded because the company believes these may distort the analysis of certain business trends and render comparative analysis across periods less meaningful and their exclusion generally allows for a more meaningful analysis of Air Canada's operating expense performance and may allow for a more meaningful comparison to other airlines.

Air Canada excludes the effect of impairment of assets, if any, when calculating adjusted CASM and adjusted EBITDA, as it may distort the analysis of certain business trends and render comparative analysis across periods or to other airlines less meaningful.

A charge of $34 million was recorded in the third quarter of 2024 in other operating expenses related to estimated costs associated with contractual lease obligations. Air Canada excluded this expense in computing adjusted CASM and adjusted EBITDA.

Air Canada recorded a one-time pension past service cost of $490 million in the fourth quarter of 2024 as a result of certain pension plan amendments made in conjunction with the ratified 2024 collective agreement with its pilots. Air Canada excluded this charge in computing adjusted CASM and adjusted EBITDA.

In the third quarter of 2025 Air Canada expects to record a one-time pension past service cost and other labour related charges of approximately $175 million, including from the pension plan amendments made in conjunction with the tentative agreement reached with CUPE. Air Canada has excluded this charge in computing its estimated third quarter 2025 adjusted EBITDA and its guidance for the full year 2025 in respect of adjusted CASM and adjusted EBITDA.

Adjusted CASM

Air Canada uses adjusted CASM to assess the operating and cost performance of its ongoing airline business without the effects of aircraft fuel expense, the cost of ground packages at Air Canada Vacations, freighter costs and other items discussed above. These items may distort the analysis of certain business trends and render comparative analysis across periods less meaningful and their exclusion generally allows for a more meaningful analysis of Air Canada's operating expense performance and may allow for a more meaningful comparison to that of other airlines.

In calculating adjusted CASM, aircraft fuel expense is excluded from operating expense results as it fluctuates widely depending on many factors, including international market conditions, geopolitical events, jet fuel refining costs and Canada/U.S. currency exchange rates. Air Canada also incurs expenses related to ground packages at Air Canada Vacations which some airlines, without comparable tour operator businesses, may not incur. In addition, these costs do not generate ASMs and therefore excluding these costs from operating expense results provides for a more meaningful comparison across periods when such costs may vary.

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