Air Canada Reports Fourth Quarter and Full Year 2025 Financial Results

Air Canada today reported its financial results for the fourth quarter and full year 2025 and provided its outlook for the full year 2026.

Fourth Quarter 2025 Results
- Operating revenues: C$5.77 billion (up from C$5.40 billion in Q4 2024).
- Operating income: C$324 million, margin 5.6%.
- Adjusted EBITDA: C$867 million, margin 15%.
- Net income: C$296 million (vs. a loss of C$644 million in Q4 2024).
- Diluted EPS: C$1.00.
- Free cash flow: –C$478 million (negative due to higher capital expenditures).

Full Year 2025 Results
- Operating revenues: C$22.37 billion (slightly higher than 2024).
- Operating income: C$918 million, margin 4.1%.
- Adjusted EBITDA: C$3.12 billion, margin 14%.
- Net income: C$644 million (down from C$1.72 billion in 2024).
- Diluted EPS: C$1.86.
- Free cash flow: C$747 million (down from C$1.29 billion in 2024).
- Net debt: C$5.41 billion, leverage ratio 1.7x.
- Liquidity: C$7.5 billion (down from C$9.15 billion in 2024).

Outlook for 2026
- Capacity growth: 3.5–5.5% increase in Available Seat Miles (ASM).
- Adjusted EBITDA guidance: C$3.35–3.75 billion.
- Adjusted CASM: 15.05–15.35¢.
- Free cash flow: C$400–800 million.

Assumptions:
- Canadian GDP growth modest.
- CAD/USD exchange rate ~1.36.
- Jet fuel ~C$0.90 per litre.
- Execution of C$1 billion in sale-leaseback transactions.

Long-Term Targets
- 2028: ~C$30 billion revenues, ≥17% adjusted EBITDA margin, ~5% free cash flow margin.
- 2030 aspirations: >C$30 billion revenues, 18–20% adjusted EBITDA margin, ≥12% ROIC.

Key Takeaways
Air Canada delivered record revenues in Q4 2025, but full-year profitability declined compared to 2024 due to higher costs and one-time labour-related charges. The airline remains focused on cost discipline, fleet investments, and cash generation while navigating macroeconomic and geopolitical uncertainties.