"We are pleased with our fourth quarter and full year 2022 financial results. We reported record fourth-quarter passenger and operating revenues, surpassing our results from a year ago and those of the fourth quarter of 2019.
This was due to solid demand and yield environments across our network. This progress was also a result of the dedication and hard work of our employees who safely transported more than two million customers during a holiday period challenged by severe winter weather across North America, and to our entire team who successfully executed on our strategy. I warmly thank them," said Michael Rousseau, President and Chief Executive Officer of Air Canada.(*Adjusted CASM, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted pre-tax income (loss), free cash flow, leverage ratio, net debt, and return on invested capital referred to in this news release, are non-GAAP financial measures, capital management measures, non-GAAP ratios or supplementary financial measures. 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. 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.) |
"Our performance is attributable to the deep resilience we have built into our company for long-term stability. We reported positive cash flows from operations in the fourth quarter of $647 million and positive free cash flow of $320 million. We exercised diligent cost control. Our adjusted EBITDA of $389 million was $367 million better than a year ago. For the full year, we reported adjusted EBITDA of $1.457 billion and an adjusted EBITDA margin of 8.8 per cent, meeting our full-year 2022 guidance. We ended the year with total liquidity of more than $9.8 billion.
"These results also validate our strategy of diversifying our revenue sources. In our core passenger business, revenue was about two per cent higher than in the fourth quarter of 2019. Revenue from our premium cabins was about 13 per cent higher, supported in part by Aeroplan. The loyalty program's active membership is at an all-time high and continues to grow, and Air Canada Cargo revenue was up 55 per cent compared to the same quarter pre-pandemic. Similarly, Air Canada Vacations ground package revenues contributed to the growth in other revenues of $62 million, or 23 per cent higher than the fourth quarter of 2019," said Mr. Rousseau.
"We are very encouraged with the positive outlook ahead. Our quarterly ticket sales were 102 per cent of the fourth quarter of 2019, on a lower level of capacity, and we expect a solid demand environment in 2023. In anticipation, we are building out our global network, continuing our narrow-body fleet renewal, and investing in technology and customer service. More than 36 million people chose to fly with Air Canada last year. We appreciate and thank them for their loyalty. We intend to do much more to provide them with an elevated level of customer service and continuous value from our airline in 2023 and beyond."
Fourth Quarter 2022 Financial Results
- Operating capacity, measured by Available Seat Miles (ASMs) increased about 59 per cent from the fourth quarter of 2021, representing about 85 per cent of the fourth quarter of 2019 ASMs, in line with projections in Air Canada's third quarter 2022 earnings release, dated October 28, 2022.
- Record fourth quarter passenger revenues of $4.062 billion nearly doubled from the fourth quarter of 2021, or about a two per cent increase from the fourth quarter of 2019.
- Record fourth quarter operating revenues of $4.680 billion increased 71 per cent from the fourth quarter of 2021 and about six per cent from the fourth quarter of 2019.
- Operating expenses of $4.708 billion increased $1.474 billion from the fourth quarter of 2021.
- Cost per available seat mile (CASM) decreased to 21.1 cents from 23.0 cents in the fourth quarter of 2021.
- Adjusted cost per available seat mile* (adjusted CASM) of 13.7 cents, compared to fourth quarter 2021 adjusted CASM of 16.7 cents. Compared to the fourth quarter of 2019, adjusted CASM increased about 15 per cent.
- Operating loss of $28 million, significantly better than an operating loss of $503 million in the fourth quarter of 2021.
- Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $389 million, an increase from adjusted EBITDA of $22 million in the fourth quarter of 2021.
- Net income of $168 million (or $0.41 per diluted share), compared to a net loss of $493 million (or $1.38 per diluted share) in the fourth quarter of 2021. Fourth quarter 2022 net income included a foreign exchange gain of $316 million.
- Adjusted net loss* of $217 million (or $0.61 per diluted share), compared to an adjusted net loss of $577 million (or $1.61 per diluted share) in the fourth quarter of 2021.
- Net cash flows from operations of $647 million compared to net cash flows from operations of $508 million in the fourth quarter of 2021.
Full Year 2022 Financial Results
- Operating capacity, measured by Available Seat Miles (ASMs) increased two-and-a-half times from 2021, representing about 73 per cent of 2019 ASMs, in line with projections in Air Canada's third quarter 2022 earnings release, dated October 28, 2022.
- Passenger revenues of $14.238 billion more than tripled from 2021, recovering to about 83 per cent of 2019 passenger revenues.
- Operating revenues of $16.556 billion increased over two-and-a-half times from 2021, recovering to about 87 per cent of 2019 operating revenues.
- Operating expenses of $16.743 billion increased $7.294 billion or 77 per cent from 2021.
- Cost per available seat mile (CASM) decreased to 20.3 cents from 28.3 cents in 2021.
- Adjusted CASM of 13.2 cents compared to 2021 adjusted CASM of 23.3 cents. Compared to 2019, adjusted CASM increased approximately 19 per cent, one percentage point above the high-end of the range projected in Air Canada's third quarter 2022 earnings release, dated October 28, 2022. This increase was due to the impact of higher passenger traffic and yield (which increased sales and distribution costs), general inflationary pressures, including but not limited to higher catering and service costs, customer disruption costs greater than expected (largely due to weather-related disruptions in the fourth quarter of 2022), and higher employee benefits expense.
- Operating loss of $187 million significantly better than an operating loss of $3.049 billion in 2021.
- Adjusted EBITDA of $1.457 billion, compared to negative adjusted EBITDA of $1.464 billion in 2021.
- Net loss of $1.700 billion (or $4.75 per diluted share), compared to a net loss of $3.602 billion (or $10.25 per diluted share) in 2021. 2022 net loss included a foreign exchange loss of $732 million.
- Adjusted net loss of $988 million (or $2.76 per diluted share), compared to an adjusted net loss of $3.768 billion (or $10.74 per diluted share) in 2021.
- Net cash flows from operations of $2.368 billion compared to net cash used in operations of $1.502 billion in 2021.
Outlook
For the first quarter of 2023, Air Canada plans to increase its ASM capacity by about 50 per cent from the same quarter in 2022 (or approximately 84 per cent of first quarter 2019 ASM capacity).**
Air Canada is providing the following guidance for the full year 2023 and updates to its 2024 long-term targets described below.
Metric | FY 2023 Guidance | FY 2024 Targets |
ASM capacity | Increase of about 24 per cent | About 100 per cent of 2019 |
Adjusted CASM | About 13 to 15 per cent | About 8 to 10 per cent above |
Adjusted EBITDA | About $2.5 - $3.0 billion | About $3.5 - $4.0 billion |
Leverage ratio | N/A | Approaching 1.5 by year-end |
Annual Return on invested | N/A | About 15 per cent by year- |
Cumulative free cash flow* | N/A | About $2.5 billion for |
Tags: Air Canada
