Mr. Michael Rousseau reports

AIR CANADA REPORTS FIRST QUARTER 2023 FINANCIAL RESULTS

Air Canada has released its first quarter 2023 financial results.

"Air Canada's impressive first-quarter performance reflects the strength of our brand, the very strong demand environment across all markets and the effective execution of our strategic plan. When compared to the same quarter in 2022, passenger revenues more than doubled and hit a first-quarter record of close to $4.1-billion, supported by our diversified network and our strong international franchise. Adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] surged by $554-million to $411-million, and our adjusted CASM [cost per available seat mile] fell nearly 7 per cent from a year ago," said Michael Rousseau, president and chief executive officer of Air Canada.

Mr. Rousseau added: "Our first-quarter financial results exceeded both internal and external expectations, and we expect demand to persist, supported by strong advance bookings for the remainder of the year. For this reason, as well as lower-than-expected fuel costs, we increased our 2023 adjusted EBITDA guidance last week. I thank all employees for their continued focus on improving all aspects of our company through effective and positive teamwork, and our customers for their loyalty.

"All areas of the business contributed meaningfully during the quarter. Air Canada Cargo is expanding its network and fleet, Aeroplan is gaining more members and gross billings have increased 50 per cent when compared to the first quarter of 2022, and Air Canada Vacations produced remarkable results. System yields improved approximately 9 per cent compared to the first quarter of 2022. We achieved a strong free cash flow of nearly $1-billion. This will allow us to continue investing in our future, including by further deleveraging our balance sheet."

First quarter 2023 financial results:

• First-quarter operating revenues of $4.887-billion increased $2.314-billion from the same quarter in 2022, primarily from higher passenger revenues due to increased travel demand. Compared with the first quarter of 2019, operating revenues increased about 10 per cent. Operated capacity increased about 53 per cent from the first quarter of 2022 (about 84 per cent of first quarter 2019 ASMs), in line with the projection provided in Air Canada's Feb. 17, 2023, news release.
• Operating expenses of $4.904-billion increased $1.781-billion, or 57 per cent, from the first quarter of 2022. The increase included the impact of the year-over-year capacity increase, an increase of about 83 per cent in passengers carried and an approximately 30-per-cent increase in jet fuel prices.
• Operating loss of $17-million, improved from an operating loss of $550-million in the first quarter of 2022.
• Net income of $4-million, compared with a loss of $974-million in the first quarter of 2022. Diluted loss per share totalled three cents, compared with diluted loss per share of $2.72 in the first quarter of 2022.
• Adjusted net loss of $188-million improved $559-million in the first quarter of 2022. Adjusted loss per share totalled 53 cents, compared with adjusted loss per share of $2.09 in the first quarter of 2022.
• Adjusted CASM of 14.52 cents improved 6.9 per cent from the first quarter of 2022. The unit cost improvement resulting from higher operated capacity was partially offset by a favourable maintenance cost adjustment of $159-million recorded in the first quarter of 2022. First quarter 2023 CASM of 20.38 cents increased 2.5 per cent from the first quarter of 2022, due to significantly higher fuel prices, higher ground package costs and higher passenger service costs due to higher traffic and higher selling costs, which are largely driven by revenues.
• Adjusted EBITDA of $411-million, with an adjusted EBITDA margin of 8.4 per cent, improved from a negative adjusted EBITDA of $143-million in the first quarter of 2022.
• Net cash flows from operating activities of $1.437-billion increased from $1.070-billion in the first quarter of 2022.
• Free cash flow of $987-million increased $896-million from the first quarter of 2022.

Outlook

For the second quarter of 2023, Air Canada plans to increase its ASM capacity by about 22 per cent from the same quarter in 2022. On May 4, 2023, Air Canada updated its 2023 guidance (see an attached table).

First quarter 2023 conference call

Air Canada will host its quarterly call with analysts today at 8 a.m. ET. Michael Rousseau, president and chief executive officer, Amos Kazzaz, executive vice-president and chief financial officer, and Mark Galardo, executive vice-president, revenue and network planning, will present the results and be available for analysts' questions. Immediately following the question-and-answer session, Mr. Kazzaz and Pierre Houle, vice-president and treasurer, will be available to answer questions from term loan B lenders and holders of Air Canada bonds.

Media and the public may access this call on a listen-only basis. Details are provided herein.

Telephone:  416-340-2217 or 1-800-898-3989 (toll-free)

Passcode:  9229567 followed by the pound key

Please allow 10 minutes to be connected to the conference call.

About Air Canada

Air Canada is Canada's largest airline, the country's flag carrier and a founding member of Star Alliance, the world's most-comprehensive air transportation network. Air Canada provides scheduled service directly to more than 180 airports in Canada, the United States and internationally on six continents. It holds a four-star ranking from Skytrax. Air Canada's Aeroplan program is Canada's premier travel loyalty program, where members can earn or redeem points on the world's largest airline partner network of 45 airlines, plus through an extensive range of merchandise, hotel and car rental rewards. Its freight division, Air Canada Cargo, provides air freight lift and connectivity to hundreds of destinations across six continents, using Air Canada's passenger and freighter aircraft. Air Canada has committed to a net-zero-emissions goal from all global operations by 2050.

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