Annual report 2024
Typographical error corrected on page 23.
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
2
| 2024 Annual Report
Summary
About forward-looking information
Certain disclosures contained or incorporated by reference in this Annual Report may include forward-looking statements
within the meaning of applicable securities laws. These statements may involve, but are not limited to, comments relating to
strategies, expectations, goals, targets, commitments, planned operations or future actions, including those relating to financial,
operational, business, climate and other sustainability matters. Forward-looking statements, by their nature, are based on
assumptions, are subject to important risks and uncertainties and cannot be relied upon due to, amongst other things, changing
external events and general uncertainties of the business. Actual results may differ materially from results indicated in forward-
looking statements due to a number of factors, including the factors identified in Section 18 of Air Canada’s MD&A for the year
ended December 31, 2024.
The forward-looking statements contained or incorporated by reference in this Annual Report represent Air Canada’s
expectations as of the date of this Annual Report (or as of the date they are otherwise stated to be made) and are subject to
change after such date. However, Air Canada disclaims any intention or obligation to update or revise any forward-looking
statements, whether because of new information, future events or otherwise, except as required under applicable securities
regulations.
About non-GAAP measures
Certain disclosures contained or incorporated by reference in this Annual Report may include references to non-GAAP measures.
These measures include adjusted CASM, adjusted EBITDA, adjusted net income, free cash flow and leverage ratio. 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 measures used in this Annual Report 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 we believe 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 performance and may allow a more meaningful
comparison to other airlines or companies.
We provide an explanation of the composition of certain of Air Canada’s non-GAAP financial measures and non-GAAP ratios
referred to in this Annual Report and a reconciliation to the most comparable GAAP financial measure in our public disclosure file
available at www.sedarplus.ca and, in particular sections 8.2 (Net Debt) and 20 (Non-GAAP Financial Measures) of Air Canada’s
2024 MD&A, which sections are incorporated by reference herein.
3
| 2024 Annual Report
Summary
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
What’s inside
About forward-looking
information
2
About non-GAAP measures 2
Message from the President
and Chief Executive Officer 4
2024 Business highlights
6
Key industry awards
7
Fund our future
9
Reach new frontiers
10
Elevate our customers
12
Lift each other up
15
Our climate-related initiatives
21
Board of directors and
committees
25
Executive officers
26
Investor and shareholder
information
27
2024
28
1.
Selected financial
metrics and statistics 29
2. Introduction and key
assumptions
30
3. About Air Canada
32
4. Overview
33
5. Results of operations –
2024 versus 2023
35
6. Results of operations –
Q4 2024 versus
Q4 2023
39
7. Fleet
42
8. Financial and capital
management
44
9. Quarterly financial
data
49
10. Annual information
50
11. Financial instruments
and risk management 50
12. Accounting policies
52
13. Critical accounting
estimates and
judgments
52
14. Off-balance sheet
arrangements
55
15. Related party
transactions
55
16. Sensitivity of results
55
17. Enterprise risk
management and
governance
56
18. Risk factors
57
19. Controls and
procedures
64
20. Non-GAAP financial
measures
64
21. Glossary
68
Statement of management’s
responsibility for financial
reporting
70
Independent auditor’s
report
71
Consolidated Statements
of Financial Position
74
Consolidated Statements
of Operations
75
Consolidated Statements
of Comprehensive Income 75
Consolidated Statements
of Changes in Equity
76
Consolidated Statements
of Cash Flow
77
1.
General information
77
2. Basis of presentation
and summary of
material accounting
policies
78
3. Critical accounting
estimates and
judgments
85
4. Investments, deposits
and other assets
86
5. Property and
equipment
87
6. Intangible assets
89
7. Goodwill
90
8. Long-term debt
and lease liabilities
91
9. Pensions and other
benefit liabilities
94
10. Provisions for other
liabilities
99
11. Income taxes
99
12. Share capital
102
13. Share-based
compensation
103
14. Earnings per share
105
15. Commitments
106
16. Financial instruments
and risk management 107
17. Contingencies,
guarantees and
indemnities
112
18. Capital disclosures
113
19. Revenue
113
20. Other operating
expenses
115
21. Related party
transactions
115
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Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
4
| 2024 Annual Report
Summary
Our comprehensive strategy and competitive advantages
allowed us to deliver solid results in 2024. We also owe
these results to improved operational and customer service
metrics, an excellent balance sheet with excess liquidity,
effective risk management and investment practices and a
strong focus on cost management. Our operating revenues
increased to $22.3 billion in 2024 from $21.8 billion in 2023
in a competitive environment. In late 2024 and early 2025,
we repurchased over 35 million shares under our buyback
plan, providing direct value to all shareholders. We met key
financial objectives and furthered our operational goals
for the year. We refined and enhanced our offerings and
customer experience through deliberate measures and
targeted investments. Throughout the year, we strived
to make a positive contribution to the people and the
communities we serve.
New frontiers
In 2024, we expanded our reach, as the largest provider
of scheduled passenger services in the Canadian, Canada-
U.S. transborder and international markets to and from
Canada. Our 1,032 daily flights, on average, reached
188 direct destinations on six continents, carrying over
47 million passengers — up from some 46 million in 2023. We
introduced new routes and new destinations, contributing
to a 30 per cent growth in capacity last summer into Asia-
Pacific and a 25 per cent increase to key destinations in
Southern Europe from 2023.
We also continued to invest strategically in best-in-class
aircraft in 2024. Our growth from these fleet investments will
drive network scale and deliver increased productivity and
more long-term sustainable growth and profitability. We are
acquiring the Boeing 787-10 and extra-long Airbus A321XLR
aircraft, and we exercised options for additional A220s and
are adding more 737 MAX aircraft to the fleet. The new
aircraft will help us offer an enhanced travel experience for
our customers. Our six cargo freighters in service also offer
complementary revenue diversification and optimization.
We also further invested in product enhancements and
sophisticated technologies to offer our customers more of
the high-quality services for which Air Canada is known. This
included improving our on-time performance (OTP) through a
schedule optimizer tool, contributing to an eight-percentage-
point increase in OTP in 2024 over 2023 and a 17 percentage-
point increase from 2022. Our digital identification boarding
option program was expanded for nearly all domestic flights
from Vancouver.
We gave our customers more travel options through
expanded air-to-rail connections across Europe and the U.K.,
as well as in South Korea. We are focused on pursuing and
facilitating intermodal and multimodal travel options for
our customers.
Aeroplan, our award-winning loyalty program, marked its
40th anniversary, growing to over nine million members
and offering new, exclusive benefits to them. Aeroplan
enhanced its partnership with Marriott Bonvoy, added new
hotel properties to HotelSavers and partnered with Manulife,
enabling members to earn points via its health programs.
Message from the President and
Chief Executive Officer
I am pleased to present Air Canada’s 2024 Annual Report. We are Canada’s flag
carrier and take great pride in bringing the best of Canada to the world as we
connect people and bring them safely to their destinations. As we reflect on our
2024 performance, I would like to share the many reasons our leadership team
is excited, positive and confident about the future of our airline. We are proud of
our accomplishments and remain steadfast in progressing toward our goals and
objectives to create sustainable value for all our stakeholders.
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
5
| 2024 Annual Report
Summary
Focusing on people
People are at the heart of our business. Our
highest priority is the safety and well-being
of our customers and colleagues. We provide
the tools, resources and training for our over
41,000 employees to succeed and thrive safely.
We serve our customers with care and class and
are proud to provide services in both English and
French and in 24 route languages. In 2024, we
concluded a four-year collective agreement with
our pilots without disruption.
We continued to develop our relationships
with organizations that contribute to their
communities. We worked with the Air Canada
Foundation, which supports 360 Canadian
charitable organizations dedicated to the health
and well-being of children and distributed
both monetary and in-kind donations to
240 organizations across the country through
community partnerships. The Foundation
raised a record $1.4 million (net) from its annual
golf tournament and, through its Hospital
Transportation program, provided flights to more
than 400 children to secure their access to critical
medical care.
In 2024, our inclusion initiatives progressed,
and we continued to foster a holistic approach
to community outreach, representation and
inclusion and engagement.
We published our accessibility progress report in
2024 and grew the Hidden Disabilities Sunflower
program. We invested in more equipment for
our Canadian airports to improve the travel
experience for customers with a disability and
established an Accessibility Advisory Committee
to gather input from customers to help us map
out our path and vision.
Looking toward the future
In 2024, we further pursued our climate-related
ambition, whose medium- and long-term
emission reduction goals are aspirational and
contingent on many external factors including
new infrastructure and advancements in
technology. We also published our 2023
Taskforce on Climate-related Financial Disclosures
(TCFD) summary, which outlines Air Canada’s
climate governance, strategy, risks and
performance. There are significant challenges
ahead to address climate change and the impacts
arising from the aviation industry’s activities.
We are committed to meeting our ambitions in
helping meet these challenges.
I want to express my gratitude to our customers,
employees and partners for their ongoing
dedication. I also want to convey my appreciation
to our shareholders for their investment and
to the Board for its guidance. With the end of
Michael Wilson’s term on the Board, I take this
opportunity to reiterate the thanks that were
extended to him by our Board Chair and fellow
Board members for his commitment, leadership
and guidance through an unprecedented period
of global crisis and uncertainty, helping position
Air Canada to reach new frontiers.
We look forward to continue working hard to
deliver strong results. Thank you for your trust.
Michael Rousseau
The Air Canada Foundation supported
360 Canadian charitable organizations
dedicated to the health and well-being of
children and distributed monetary and
in-kind donations to 240 organizations
across the country through community
partnerships. The Foundation raised a
record $1.4 million (net) from its annual
golf tournament and provided flights
to more than 400 children through its
Hospital Transportation program to
secure their access to critical medical care.
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
6
| 2024 Annual Report
Summary
1) Leverage ratio is net debt to trailing 12-month Adjusted EBITDA. Adjusted EBITDA and leverage ratio are non-GAAP financial measures. Such measures are not
recognized measures for financial statement presentation under generally accepted accounting principles in Canada (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. Please refer to
section 20 “Non-GAAP Financial Measures” of Air Canada’s 2024 MD&A (which section is incorporated by reference herein), which is available under Air Canada’s
profile on SEDAR+ at www.sedarplus.ca, for an explanation of the composition of these non-GAAP measures, an explanation of how they provide useful
information to investors and the additional purposes for which management uses them, as well as a reconciliation to the most directly comparable GAAP measure.
2024 Business highlights
Operating capacity +5% with
significant growth in the Pacific
TOTAL LIQUIDITY
$9.154B at Dec. 31, 2024
$10.29B at Dec. 31, 2023
LEVERAGE RATIO1
1.4x at Dec. 31, 2024
1.1x at Dec. 31, 2023
NETWORK GROWTH
1,032 average daily flights
vs. about 1,025 in 2023
Over
41,000 employees end-2024
compared to about 39,000 in 2023
Welcomed over 47.3M passengers
vs. about 46.2M in 2023
ADJUSTED EBITDA1
$3.586B
vs. $3.982B
ADJUSTED EBITDA MARGIN1
16.1%
vs. 18.2% in 2023
FREE CASH FLOW1
$1.3B
vs. $2.8B in 2023
OPERATING REVENUES
Record $22.255B
vs. $21.833B in 2023
OPERATING INCOME
$1.263B
$2.279B in 2023
DIRECT DESTINATIONS
188 direct destinations on
6 continents
deep Canadian network and established international presence
16 new routes
launched
About 104B ASMs
vs. around 99.0B in 2023
Improved operational performance
with an 8-percentage-point increase
in on-time performance
Hosted 2024 Investor Day to announce
long-term plan
PILOT AGREEMENT
Concluded four-year collective agreement
with our pilot group
2024-25 NCIB
Bought back more than 35.8M voting
shares, addressing some of the effects of
dilutive financings in 2020 and in 2021
FLEET RENEWAL
Ordered 5 additional Airbus A220s,
bringing firm orders to 65, and leased
7 Boeing 737 MAX 8 aircraft
2025 SAF TARGETS
Significant SAF procurement on pace to
meet our 1% target of our estimated jet fuel
use in 2025
ACCESSIBILITY REQUESTS
Over 1.4M accessibility requests received
CARGO
• $991M in revenues
vs. $924M in 2023
• 6 freighters in
service
• Added freighter
service to Chicago,
connecting
Air Canada Cargo’s
global hub in Toronto
with its self-handled
warehouse operation
in the U.S. city
AIR CANADA
VACATIONS
Launched new guided
tour packages to:
• Asia
• Australia
• Colombia
• Dubai
• India
• New Zealand
• Celebrated its 40th
anniversary with
record membership
surpassing 9 million
members
• New and expanded
partnerships
Languages
• 2 official languages
• 24 route languages
• 80+ languages spoken globally by our employees
Intermodal strategy
Expanded in Europe, launched air-to-rail connections in South
Korea, supporting current and future connectivity with other
modes of transport
Free Wi-Fi
Announced fast, free Bell-sponsored Wi-Fi on North America and
sun flights from May 2025, with long-haul international routes to
follow in 2026
Customer service excellence
ECX initiatives delivered such as baggage tracking and e-gates
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
7
| 2024 Annual Report
Summary
Key industry awards
Award-winning airline
Skytrax World Airline Awards:
• The World’s Best Business Class Airline Lounge
Catering
• The Best Cabin Crew in Canada
• The Most Family Friendly Airline in North
America
• Best Premium Economy Class Onboard
Catering in North America
• Cleanest Airline in North America
Airline Passenger Experience
Association (APEX):
• Passenger-Rated Five Star Global Airline Award
at APEX 2025 Awards
• 2024 APEX Best in Entertainment Award in
North America
Global Traveler magazine:
• Best Premium-Economy Class for 6th
consecutive year
• Best Airline for Onboard Entertainment for 6th
consecutive year
• Outstanding Environmental Initiatives
Trazee Awards:
• Favourite Airline in North American for 6th
consecutive year
World Travel Awards
• World’s Leading Airline to North America 2024
ATW Airline Industry Achievement
Awards
• 2024 Cargo Operator of the Year, Air Canada
Cargo is 1st Canadian operator to win
Project Green YVR Annual Summit
• Environmental stewardship
Seattle-Tacoma International
Airport
• 2024 Fly Quiet Award
Travvy Awards
• Best Airline - International – Gold level
Award-winning employer
Mediacorp Canada
• One of Canada’s top employers for young
people by Mediacorp Canada Inc.
Excellence Canada
• Gold Level certification for Mental Health at
Work from Excellence Canada
Montréal’s Top Employers Awards
• One of Montréal’s top employers for the 11th
consecutive year
Achievers
• One of the Achievers 50 Most Engaged
Workplaces for the 6th consecutive year
One of Canada’s Best Employers
2023 by Forbes for the 9th
consecutive year
Winner of 2023 HRD Innovative HR
Teams Award for Forward-Thinking
HR Programs
Best Global Mental Health
Programme from InsideOut Awards
Award-winning loyalty
program
Freddie Awards
• Airline Program of the Year and Best
Promotion and Best Redemption
Ability for Aeroplan
Point.Me
• Aeroplan is 1 of 5 best rewards
programs on the planet
• Ease of Earning Miles
• Redemption Rates
• Partner Availability
• Routing Rules
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Summary
8
| 2024 Annual Report
Rise Higher
Rise Higher aims to elevate everything about our business — domestically and
internationally. Rise Higher is centred around revenue enhancement and cost
transformation, leveraging our international network, customer engagement and culture
change. Our activities and goals align with our four priorities: Fund Our Future, Reach New
Frontiers, Elevate Our Customers and Lift Each Other Up.
Fund Our Future
Reach New
Frontiers
Elevate our
Customers
Lift Each
Other Up
by staying vigilant
on costs, seizing
on opportunities
and making the
right strategic
investments.
by embracing
our competitive
strengths to grow
our business,
expanding our
international reach
and exploring new
opportunities.
by supporting
the creation
of meaningful
customer
experiences
and human
connections, such
as by leveraging
innovations in
technology, loyalty
program and
products.
by fostering a
collaborative
workplace that
respects all
cultures and
contributions to
society.
In 2024, we held our biennial Investor Day outlining our long-term plans and announcing our
2028 key financial targets and 2030 aspirations. These long-term strategies are guided by
Air Canada’s corporate strategy framework, Rise Higher.
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Summary
9
| 2024 Annual Report
Rise Higher
Fleet
• We continued to renew and simplify our fleet,
adding more fuel-efficient aircraft and making
our cost structure more efficient. By the end
of 2024, we had 212 aircraft in the Air Canada
mainline operating fleet (i.e., 90 wide-
bodies (70 Boeing, 20 Airbus, six Boeing 767
freighters), 122 narrow-bodies (41 Boeing
and 81 Airbus narrow-bodies)). Air Canada
Rouge had an operating fleet of 37 Airbus
narrow-body aircraft, and the Air Canada
Express fleet consisted of 105 aircraft:
35 Mitsubishi regional jets, 45 De Havilland
Dash-8 turboprop aircraft and 25 Embraer
175 aircraft.
• Air Canada ordered five additional A220s,
bringing firm orders to 65. We also have
purchase options for 10 additional Boeing
737 MAX aircraft and entered into lease
agreements for 12 additional Boeing 737
MAX 8 aircraft that are scheduled to enter
the operating fleet in 2025 and 2026. These
aircraft will help support Air Canada’s short-
term capacity requirements and long-term
fleet planning.
• Air Canada announced in 2023 that we are
acquiring 18 Boeing 787-10 aircraft, with
deliveries scheduled to begin in 2026. We
are acquiring 30 extra-long-range A321XLRs,
with deliveries scheduled to begin in the
first quarter of 2026, and the final aircraft
scheduled to arrive in 2029. The purchase
agreement includes options for 12 additional
Boeing 787-10 aircraft.
Fund our future
Technology
• We launched an on-time performance (OTP)
schedule optimizer tool that uses simulations
and machine learning to evaluate potential
network schedules, predicting at high
and low levels its expected OTP. The tool
highlights stress points in a given schedule,
allowing for pre-emptive action by a change
in the schedule months before it operates,
in the aircraft rotation or in the operational
execution. This results in improved overall
OTP.
• We further evolved Air Canada’s digital
experience with the expansion of our
digital identification program as a boarding
option for almost all domestic flights
at Vancouver International Airport (YVR)
following a successful pilot project on
select flights. The digital ID technology is
conveniently available on the Air Canada app
and allows for fast boarding while securely
confirming passenger identification.
• We upgraded our airline operations control
system with NetLine/Ops++, an AI-driven
cloud-hosted platform that helps streamline
and improve airline operations through real-
time data analysis.
• We launched an AirTag and Find My app
partnership with Apple.
• We broadened baggage tracking options
in our mobile app to help customers easily
follow their items on connecting Star Alliance
flights.
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Summary
10
| 2024 Annual Report
Rise Higher
Reach new frontiers
Expanded network
Air Canada operated 1,032 average daily flights, against 1,025 in 2023, to 188 direct
destinations on six continents. We carried over 47 million passengers compared to about
46 million in 2023. In 2024, our total operated capacity, measured in available seat miles,
increased by 5 per cent from 2023. With 104.38 billion available seat miles in 2024, this
remained below 2019 levels (112.81 billion ASMs).
Asia
We introduced new seasonal routes, enabling
customers to explore and experience a broader
range of destinations like our new four-times-
weekly, year-round Pacific route from Vancouver
to Singapore. The only non-stop flight linking
Canada and Singapore is complemented
by connections across North America via
Vancouver and to Southeast Asia, Southern
India and Western Australia. The route, nearly
13,000 kilometres long, is Air Canada’s longest
flight measured by distance.
In addition, we increased capacity to Hong Kong,
Osaka and Seoul. We resumed seasonal service
to Auckland from Vancouver, operating four times
weekly between December and March.
On the East Coast we began seasonal service
from Toronto to Osaka and increased capacity
to Tokyo, while from Montréal, Air Canada began
seasonal service to Seoul, complementing
enhanced capacity to Tokyo.
We also resumed our daily non-stop services
between Canada and Beijing and are increasing
our flights between Canada and Shanghai, both
from Vancouver, reflecting the importance of
these markets in Air Canada’s global network. We
announced four-times-weekly, year-round service
between Vancouver and Manila, beginning in the
spring of 2025.
San Juan
San Juan
Orange County
Orange County
New York
New York
Monterrey
Monterrey
Kahului/Maui
Kahului/Maui
Kona/Hawaii
Kona/Hawaii
Honolulu/Oahu
Honolulu/Oahu
Guanacaste
Guanacaste
Belize City
Belize City
Tulum
Tulum
Charleston
Charleston
Panama City
Panama City
San Jose
San Jose
North America
In North America, new routes were offered from Toronto, Montréal and Québec to Tulum,
from Toronto to Charleston and from Montréal to St. Louis, Austin and New Orleans.
Within Canada, Ottawa-Calgary and Halifax-Vancouver flights resumed, including frequency
or capacity increases, between Toronto and Saskatoon, Regina, Victoria, Sydney and
Gander, as well as between Montréal and Regina, Saskatoon,
Victoria, Edmonton, Moncton, Fredericton and Deer Lake.
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Summary
11
| 2024 Annual Report
Rise Higher
Europe and India
From Montréal and Toronto, Air Canada launched new non-stop routes to Stockholm and
increased capacity to Greece, Italy and Spain. From Montréal, we also launched year-round
service to Madrid. Air Canada significantly expanded its service to India for winter 2024–25 and
began offering the only non-stop Canada-Mumbai route, operating four times weekly from
Toronto. The connectivity from Western Canada to India increased with new daily seasonal
Calgary-Delhi flights via London Heathrow and daily Montréal-Delhi flights.
Future
Our strategic expansion of our network within our Pacific hub was bolstered with the launch
of new transborder routes between Vancouver and Tampa, Raleigh and Nashville beginning
in 2025. Additionally, more capacity will be added between Vancouver and Austin, Denver
and Miami in 2025, improving the connection with Air Canada’s international network and
supporting our sixth freedom traffic strategy.
We expanded intermodality in Europe and Asia, supporting current and future
connectivity with other modes of transport.
Air Canada Cargo
Air Canada Vacations
Launched new guided tour packages to Asia, Australia,
Colombia, Dubai, India and New Zealand
REVENUE
$991M
vs. $924M in 2023
FREIGHTERS IN SERVICE
6
Added freighter service
to Chicago, connecting
Air Canada Cargo’s global
hub in Toronto with its
self-handled warehouse
operation in the U.S. city.
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Summary
12
| 2024 Annual Report
Rise Higher
Elevate our customers
Aeroplan
Air Canada’s award-winning, premier travel loyalty
program enables members to accumulate points
through travel on Air Canada as well as through the
purchase of products and services from participating
partners and suppliers. Members can redeem Aeroplan
points for various travel, merchandise, gift cards
and other rewards, provided directly by participating
partners or made available through Aeroplan’s
suppliers. It recognizes Aeroplan Members with a range
of priority travel services and membership benefits. In
2024, Aeroplan:
• Marked its 40th anniversary by offering 40 prizes of
one million points and exclusive offers to save and
earn big on flights, hotels and everyday purchases.
• Celebrated its 10th anniversary partnership with TD.
• Launched an expanded partnership with Marriott
Bonvoy, offering status match and two-way currency
transfer, providing elevated value and enhanced
benefits to travellers.
• Expanded redemption opportunities by adding over
2,000 new hotel properties to HotelSavers
• Partnered with Manulife, enabling members to link
their Aeroplan account with their Manulife group
benefits digital account to start earning points for
completing health programs and initiatives within the
Manulife digital experience.
• Increased its active membership base to more than
nine million
Service excellence and product
offerings
With technology enhancements, strengthened
employee training programs and customer
engagement through surveys, focus groups and
other means, we targeted service excellence
and product offerings to elevate the customer
experience and improve our operational reliability.
In 2024, Air Canada:
• Announced a comprehensive upgrade of its
award-winning menus for all customers, with
100+ new rotating seasonal recipes showcasing
bigger, bolder flavours alongside new snacks and
beverages.
• Launched complimentary snacks on all flights and
expanded the selection of complimentary beer and
wine, plus $5 spirits, to flights within Canada and
the U.S.
• Introduced new sports channels to live TV service.
• Launched musical travel guides on Air Canada’s
enRoute website and on Spotify, highlighting the
music that artists Charlotte Cardin, Alexandra
Stréliski and Sarahmée listen to while visiting three
European cities: Amsterdam, Barcelona and Paris.
Consolidated
financial statement
and notes
Management
discussion and
analysis
Governance
Our climate-related
ambition
Summary
13
| 2024 Annual Report
Rise Higher
• Announced complimentary Wi-Fi service, sponsored by
Bell, for Aeroplan Members beginning in May 2025 for
flights within North American and sun markets.
• Expanded its customer bag and mobility aid tracking
feature to U.S. flights.
• Extended its carry-on baggage enhancements to
customers checking in via the Air Canada web check-in
page.
• Introduced the Global Proactive Customer Care team to
take prompt and practical action to deliver a seamless
travel experience and recover customer journeys in the
moment.
• Partnered with the Greater Toronto Airports Authority
and Power Stow to install a new piece of equipment
at Toronto Pearson to enhance the efficiency of our
baggage handling.
• Unveiled its 2024 Top 10 Best New Restaurants in
Canada, shining a spotlight on Canada’s culinary scene.
• Advanced self-service options for disrupted customers
with pilot projects that include notifications for meal
vouchers and/or hotel/transportation arrangements once
a rebooking is triggered for eligible customers.
Free Wi-Fi
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Safeguarding your information
Safety First, Always, extends to privacy and cybersecurity.
Privacy and information security require ongoing care and
attention for a business of our scale and complexity. We are
committed to protecting our customers’ and employees’
personal information and are subject to an expanding
range of obligations as new privacy and data protection
laws are enacted in Canada and around the world.
Air Canada maintains privacy policies that describe how we
collect, use, keep and share personal information as well as
the rights of individuals over that information. Air Canada’s
Privacy Office provides guidance on projects involving
personal information and ensures compliance with privacy
and data protection laws.
We focus on cybersecurity and safeguarding our systems,
information and ability to operate. We have developed a
cybersecurity framework and continually seek to advance
privacy maturity and cybersecurity resilience. Using our
cybersecurity framework, we proactively manage risk,
allocate resources effectively and enhance the overall
security posture to prioritize risk mitigation efforts and
adjust security strategies. Our investments in security
programs include technology, processes, resourcing,
training, disaster recovery and regular testing and
benchmarking.
Our cybersecurity investments target areas of
advancement so that we stay ahead of evolving and
growing threats including from hackers, organized
criminals and state-sponsored actors. Using best practices
and mature standards, we integrate cybersecurity
requirements into technology projects to help ensure a
stable and secure baseline of systems, processes and
training. These requirements encompass all dimensions
of cybersecurity resilience including the ability to identify,
protect, detect, respond and recover. We are also focused
on ensuring that suppliers and other third parties we deal
with have effective cybersecurity and privacy controls that
are aligned with our policies and standards.
Consolidated
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and notes
Management
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Lift each other up
Safety First, Always
In everything we do, we dedicate ourselves to Safety
First, Always, our overarching priority for ourselves,
our customers and our industry. Safety management
is a critical responsibility and affects virtually every
operational decision made by Air Canada.
We support and promote effective employee training as
well as the continued development and integration of
safety data analytics and artificial intelligence into our
Safety Management System (SMS); continually assess
and manage safety risks associated with the introduction
of new equipment, new routes and new programs or
projects; and reinforce and promote safety reporting,
protecting safety critical information in order to inform its
decisions going forward.
Our Occupational Health and Safety (OHS) program
is designed to protect employees from occupational
hazards and to minimize risks to their health and well-
being. Through our program, we establish procedures
for dealing with workplace hazards and for meeting our
obligations under applicable laws and regulations.
We also engage with other aviation organizations and
authorities around the world to promote safety and to
share best safety practices.
Fire Evacuation
First Aid
Power Failure
Elevator
Malfunction
Severe Weather
Earthquakes
Tsunami
Floods
Suspicious
Package
Bomb Threats
Suspicious
Behaviour
Workplace Violence
and Harassment
Threats
Active Attacker
Demonstrations/
Civil Unrest
Gas Leak
Cybersecurity
Mental Health
Emergency
Personal
Preparedness
1
| EMERGENCY HANDBOOK 2024
Emergency Handbook
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234 UBY ambassadors
4,750 UBY Wellness Days attendants
504 UBY Running Club members
>5,150 UBY Wellness Centres members
Employee wellness and Unlock the
Best in You (UBY)
Unlock the Best in You (UBY) is Air Canada’s unique award-
winning well-being program that offers personalized
programs to employees and equips them with resources,
tools and expert advice on health and wellness; mental health
awareness; financial well-being and attendance support.
UBY’s wellness platform empowers and educates employees
on topics like fitness, food, nutrition and general physical
health and well-being. In 2024, more than 83 per cent of
employees used the UBY portal.
Highlights of UBY’s well-being resources and initiatives for
2024 include:
• Growing its online community to over 32,000 unique visitors.
Employees were actively engaged on internal social media
channels by posting daily photos and videos and by sharing
their wellness progress with other members.
• Expanding its ambassador program to 234 ambassadors,
strengthening our well-being community.
• Launching several campaigns and webinars featuring
experts on topics such as caregiving, parenting, self-care,
self-acceptance, menopause, men’s health, adapting to
change, managing anxiety, conflict management and
resolution in the workplace.
• Opening a UBY Resources Centre in Vancouver and a
serenity room in Montréal to offer employees an accessible
and quiet space to decompress, reflect, meditate or pray.
This is in addition to three serenity rooms at Air Canada
locations in Ontario.
• Promoting a healthy lifestyle to meet a daily step goal with
“Running the Race to Unlock the Best in You” challenge, with
504 employees participated in the first-ever UBY 5K run.
Consolidated
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Representation and inclusion
Air Canada’s representative and inclusive workforce is a
strength that helps attract and retain the best available
global talent as our many thousands of colleagues deliver
our services to more than 47 million passengers. We work
collaboratively to nurture an inclusive work environment,
making our employees feel welcome, providing a safe
working environment for them to express their identities
and thrive in helping us rise higher and demonstrating
our appreciation for their contributions. Air Canada
is proud of the fact that customers and stakeholders
can see themselves and their backgrounds reflected in
our employees around the world. We believe this is a
fundamental aspect of our business operations, in which
people are at the centre of everything we do.
We further strengthened our inclusion initiatives in 2024,
including our structural pillars: DEI Executive Council, DEI
Steering Committee, Employee Resource Groups (ERG) and
DEI Champions. We held regular meetings with members of
these pillars to ensure accountability.
We are a merit-based employer and do not discriminate in
recruiting, hiring, training, performance management or
promoting on any basis protected by law. We are subject to
Canadian laws relating to equitable compensation practices
and “designated group” disclosures and elimination of
employment barriers for designated groups. We monitor
our initiatives, practices, policies, and goals as appropriate
to ensure compliance. Our approach with respect to the
representation and inclusion of “designated” and other
underrepresented groups accordingly reflects careful
determinations, seeking to implement the ways to promote
compliance and support our colleagues across Canada and
around the world.
Air Canada follows a holistic framework to embed and
foster an intersectional approach within our strategy called
CARE: Community outreach, Accountability, Representation,
Engagement and belonging. By leveraging CARE in 2024,
we met aspirational goals and strengthened our efforts to
continue delivering on our commitments:
Community outreach
Air Canada’s goal to attract, engage and retain from the
broadest ranges of talent pools are supported by the
education of underrepresented youth, promotion of careers
in aviation through its AC Aviation Spark program and
championing of underrepresented groups that wish to
pursue a career in aviation through Air Canada scholarships
and key partnerships via the AC Take Off program. We also
aim to create a more inclusive aviation sector by working
with key aviation community partners and attending events
that target underrepresented groups: women in traditionally
male dominated aviation roles; Black and visible minority
candidates and persons with disabilities and Indigenous
youth candidates.
Accountability
Air Canada recognizes it must earn the trust of all internal
and external stakeholders involved in work concerning
representation and inclusion within our company. In 2024,
we emphasized training and sensitization at various levels
through seminars and e-learning methods and developed
tools to reinforce the content of seminars and trainings. We
held Listening Circles with employees to understand areas of
interest about the Indigenous experience and ways in which
we can support reconciliation, and we celebrated all our
passengers and ensured our services and products reflect
our entire customer base.
Representation
Air Canada explores innovative ways to reach and attract
the broadest ranges of talent pools. In 2024, we attended
15 career fairs and collaborated with several community
organizations targeting underrepresented groups. In relation
to supporting internal talent, in 2024, Air Canada launched
a mentoring program that connected senior leaders with
employees for growth and development support, with a
focus on underrepresented groups.
Engagement and belonging
Air Canada recognizes the intersection between wellness
and identity. In 2024, our six ERGs organized 55 events
with an identity-driven lens aimed at raising awareness,
fostering connections, providing professional development
and supporting employee wellness. We also believe that
effective communication and engagement is crucial in
implementing our strategy and leading cultural changes
within an organization.
LEARN MORE Indigenous Sacred and
Ceremonial Items Policy
and Indigenous
inclusivity
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Accessibility
Air Canada is committed to being a leader in accessible travel
and employment and investing in accessibility. Our multi-year
accessibility plan reaffirms our commitment to enhancing
accessibility and related services for employees and customers
with disabilities. The plan outlines our 2023-26 roadmap to
become a more accessible organization and contribute to
Canada’s objective to be barrier-free by 2040. It includes
145 initiatives identified after research, expert consultations
and feedback from travellers with disabilities who took over
220 flights. We were also a key participant in drafting the
“Canadian Transport Agency’s Mobility Aids and Air Travel
Final Report” and were one of the first airlines to waive liability
limits in international treaties to pay the full cost for damaged
mobility equipment.
We believe in designing our product and service offerings and
employment experience with accessibility in mind and are
committed to improving all aspects of employee interactions
with customers with disabilities, including understanding
customer experiences in air travel. In 2024, Air Canada:
• Invested more than $6 million into equipment for
our Canadian airports to further our commitment to
customer accessibility.
• Enhanced accessibility training for Airport employees with
additional content to their annual recurrent training to ensure
the delivery of customer service excellence to customers
requiring accessibility support. Around 10,000 Air Canada
Airport employees will receive training as part of a new
annual, recurrent training program.
• Established an Accessibility Advisory Committee that will
provide input from the perspective of our customers with
disabilities to help guide Air Canada’s path and vision on
accessibility.
• Recognized Autism Acceptance Month in April to address the
barriers faced by people with non-visible disabilities.
• Installed disposal containers for sharp items in Air Canada
work locations, ensuring access to safe disposal methods for
medical equipment.
7 full-time people, with support of 41,000 global workforce,
driving accessibility improvements at Air Canada
1.4M accessibility requests received and
handled (visible and non-visible disabilities)
Over 32,300 wheelchairs transported
Increased awareness and understanding of accessibility
and disability through training, presentations and
communications
Improved onboard seating, boarding processes
and equipment for customers needing transfer
assistance
Improved stowage procedures and tracking for
mobility aids
Integrated accessibility standards into the
planning phase of new infrastructure projects
Adopted the Hidden Disabilities
Sunflower program
36 Air Canada Canadian airports with
Eagle Lifts
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>20,000 hours of
language training
>19,000 language
tests performed
>7M words translated
(vs. >6M in 2023)
Languages in Action
at Air Canada: 2024-27
Official and other
languages
Air Canada is proud to be
one of the few Canadian
private sector companies
to offer services in both
official languages across
Canada. We are the only
airline required to do this in
Canada. We have done so
with steadfast commitment
for more than 50 years,
in a highly complex
industry and on a scale
and geographic breadth
that is unmatched among other major Canadian companies.
Over time, we have developed unique expertise and have
been leaders in implementing sustained initiatives to deliver
services in both official languages in multiple locations and
route combinations, and in promoting the use of both official
languages in the workplace.
Our services are offered in a variety of settings but most visibly at the airport and aboard
our aircraft, carrying more than 47 million passengers on about 377,000 flights in 2024
that are split roughly evenly among flights within Canada and flights connecting Canada
with the 56 countries we serve. We are one of few airline companies in the world that
serve customers in English and in French on the scale we do, and we are proud to reflect
Canada in that way both within and outside its borders. The diverse linguistic abilities of
our public-facing employees have enabled us to designate 24 route languages other than
our official languages. These designations are based on internal criteria including minimum
service requirements on the relevant flights. We are dedicated to meeting our linguistic
commitments. Employees may also choose to self-report the languages they speak in
which case their self-assessments are recorded. Based on the testing and self-reporting
data we have in respect of about 37,500 employees:
• More than 80 languages globally are spoken by our employees with some level of tested
or self-reported proficiency.
• More than half of our employees, as well as of our public facing employees, can
communicate with some level of tested or self-reported proficiency in both official
languages.
• About 40 per cent of our employees speak at least one route language.
• The most spoken route language among our public facing employees is Spanish, with
other prominent languages including Hindi, Punjabi and Mandarin.
Both official languages of Canada are used in our corporate, customer and employee
communications and are commonly used in everyday interactions in many of our
operations. We are committed to promoting both official languages of Canada across the
country and have policies, programs, procedures and tools to help our employees learn
and improve their language skills.
We care about all the communities in which we live and work, including Quebec where
our Montréal head office is located. We will continue to work with all our stakeholders to
see how we can meet their expectations, while honouring individual rights and our legal
obligations. In 2023, we announced our voluntary registration with the Office québécois de
la langue française under the Charter of the French language, and have since finalized a
francisation program that has been approved by the Office and will now be implemented,
reflecting our aim to contribute to the protection, promotion and reach of the French
language, while complying with the Official Languages Act that applies to us.
Our Official Languages department has responsibility for implementing our Linguistic
Action Plan and official languages initiatives. It reports on progress to executive
management on a regular basis. An Official Languages Committee, composed of
senior management from key functions, supports the Official Languages department
by facilitating the implementation of official languages initiatives throughout our
organization. A network of Official Languages Supporters helps implement initiatives at
each airport and in-flight service base. A Comité de francisation is also in place focusing on
activities in Quebec.
Progress on our official languages and Linguistic Action Plan initiatives are reported
quarterly to the Governance and Nominating Committee of the Board.
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Air Canada helped
welcome 50 new
Canadians from
20 different countries
during a citizenship
ceremony at Calgary’s
GlobalFest.
Community involvement
Air Canada’s Community Partnerships program supported
more than 240 organizations with 357 projects and
287 events in 2024. In addition, through its Aeroplan
donation platform and other means, over 94 million points
were donated to 124 charities.
The Air Canada Foundation provides financial or fundraising
support to Canadian-registered charities that seek to
improve children’s health and well-being. Since its creation
in 2012, the Air Canada Foundation has raised more than
$10 million. In 2024, the Foundation:
• Supported 409 charities and donated $1.8 million across
Canada.
• Donated over 2,200 airline tickets to support fundraising
efforts and charitable program development.
• Raised more than $2.2 million, including a record-breaking
amount of $1.4 million (net) at its 12th annual golf
tournament, the Foundation’s largest fundraising event.
• Provided over 370 flights to more than 129 patients to
access the medical care they need away from home.
• Raised 49 million Aeroplan points for the Hospital
Transportation program and donated 400 airline tickets to
pediatric hospitals.
• Launched AviACTION, Air Canada’s new volunteer
and community engagement program, and facilitated
community volunteer opportunities for more than 1,500
Air Canada employees.
• Operated eight Dreams Take Flight, for more than
900 children.
LEARN MORE Air Canada Foundation website
Consolidated
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Management
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Our climate-related
ambition
Our climate-related initiatives
Air Canada’s efforts related to greenhouse gas emissions are aimed to
align with the Government of Canada’s Aviation Climate Action Plan
stated vision net-zero emissions by 2050, the International Air Transport
Association (IATA) 2021 resolution for the global air transport industry
to achieve net-zero carbon emissions by 2050 and the International Civil
Aviation Organization (ICAO) member states’ collective long-term global
aspirational goal of net-zero carbon emissions by 2050. These ambitions
were announced after the Paris Agreement and, to succeed, they will
require the co-ordinated efforts of the entire airline industry (e.g., airlines,
airports, air navigation service providers, manufacturers) and significant
government support.
In March 2021, we announced our own ambitious plan setting out mid-
term targets in support of our long-term aspirational goal of net-zero GHG
emissions by 2050. Those mid-term targets are (a) 20% GHG net reductions
from our air operations compared to a 2019 baseline by 2030, (b) 30% GHG
net reductions from our ground operations compared to a 2019 baseline by
2030, and (c) a $50 million investment fund for new technologies such as
SAF as well as new aircraft or carbon reduction and removal technologies.
Our ambitions, particularly our net reduction target for our air operations,
are heavily dependent on the progress of new technologies and the
availability of sufficient sustainable aviation fuels (SAF) and other
renewable energies, which continue to present serious challenges. IATA
estimated that SAF production volumes only accounted for 0.3% of global
jet fuel production in 2024. Although Air Canada is proud of the progress
it is making, we cannot achieve our ambitions alone; governments play an
essential role in these efforts. Industry and other participants in our supply
chain or otherwise must each play their part.
Air Canada’s initiatives relating to GHG emissions build on existing value
streams and activities based on four key carbon reduction pillars that are
central to the advancement of our objectives and position us to leverage
emerging opportunities: Fleet and operations; Innovation; SAF and
renewable energy; Carbon reductions and removals.
The aviation industry includes many
participants, many of which can play a
meaningful role in reducing GHG emissions.
Air Canada is accordingly engaged with other
stakeholders in the air transport system to
advance and explore opportunities. For more
information, see Air Canada’s 2023 TCFD
summary.
Our four key carbon reduction pillars
Fleet and
operations
We will continue
deploying more energy-
efficient aircraft through
our fleet renewal
program. We will also
continue to integrate
climate-related factors in
route and fleet planning.
On the ground, we
expect to phase out
carbon-intensive ground
equipment and plan
on further advancing
electric vehicles use and
seek other electrification
opportunities.
Innovation
We will, over time,
evaluate the viability,
safety and performance
of new electric, hydrogen
or hybrid propulsion
technologies and will
look for other innovative
opportunities elsewhere
in our operations.
SAF and renewable
energy
To further our work on
sustainable aviation
fuels, we are investing
in SAF and other low
carbon aviation fuel
(LCAF) technology
development and are
actively evaluating the
practical applications
of renewable energy
sources such as
renewable natural gas
(RNG) and renewable
electricity and energy
transition measures.
Air Canada firmly
believes that a concrete
action plan is required
in Canada to establish a
competitive investment
climate and to capture
the economic added
value of SAF that is
made in Canada.
Carbon reductions
and removals
We are exploring carbon
negative emission
technologies and
other direct emission
reduction and removal
strategies in addition to
further developing our
regulatory carbon offset
credit requirements and
customer offerings.
Looking toward the future
20%
GHG net reductions
30%
GHG net reductions
$50M
investment fund
The achievement of our carbon emission-related targets and long-term aspirations reflects
our current strategy and assumptions as of the reporting date, and may be revised over
time to reflect progress, shifts in external conditions or changes in strategy.
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Management
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Governance
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Summary
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| 2024 Annual Report
Our climate-related
ambition
Air Canada’s climate initiatives build on existing value streams and activities based on
these four key carbon reduction pillars:
Fleet and operations
We are proud to be building a modern and more fuel-efficient fleet. We are working on
improving fuel efficiency by investing billions in state-of-the-art fuel-efficient aircraft and
by adopting innovative fleet-related modifications in our wide- and narrow-body aircraft.
Over the years, we have acquired increasingly fuel-efficient aircraft including:
• 8 Boeing 787-8 and 32 787-9 Dreamliners
• 34 Airbus A220-300s
• 45 737 MAX 8s
By optimizing our operations and adopting next generation aircraft, we continuously work
toward improving the carbon intensity of the flights carrying the people and freight we
connect around the world.
Innovation
In 2022, Air Canada agreed to purchase 30 ES-30 electric-hybrid aircraft under
development by Heart Aerospace and invested US$5 million in this Swedish company.
In 2023, it announced it strengthened its financial investment in Heart Aerospace with
an additional US$5 million to advance the ES-30 aircraft toward type certification. The
regional aircraft are expected to generate fewer GHG emissions when flying on battery
power, yield significant operational savings and benefits and provide low-emission
connectivity to local communities over the long term. The purchase remains subject to
conditions including in relation to the design and specifications of the aircraft.
SAF and renewable energy
SAF is an important component for reducing our GHG emissions from our air operations.
However, the availability of a sufficient and cost-effective supply of sustainable aviation
fuels presents challenges, requiring policy intervention and investment to support
development and scale. Air Canada currently sources SAF through various suppliers across
the world. We are at the forefront of pivotal Canadian aviation initiatives supporting and
advancing the research and commercialization of SAF within an ecosystem consisting of
airlines, airports, fuel suppliers, technology providers, feedstock producers, aerospace
manufacturers, academia, finance and government.
Air Canada has supported the development of SAF in Canada and has committed to
investing in SAF. We have engaged with government and other stakeholders to accelerate
the research, development and establishment of a SAF supply chain in Canada, including
as a founding member of C-SAF, a not-for-profit organization that seeks to accelerate the
commercial production and deployment of SAF in Canada.
53% new generation
aircraft in the fleet by
2030
Fleet and operations
Leave Less Travel Program
from air operations
by 2030 (compared to
2019 baseline)
Target: 20%
GHG net reductions
Air Canada offers corporate
customers and cargo freight
forwarders the opportunity to
purchase Scope 3 environmental
attributes associated with
SAF, carbon offset credits or a
combination of both related to
their own business air travel or
cargo shipments on Air Canada.
This program is one of the many
initiatives being implemented to
help customers with their own
environmental sustainability goals.
Consolidated
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Management
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Governance
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Summary
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| 2024 Annual Report
Our climate-related
ambition
Innovation
Committed to purchase 30 ES-30 hybrid-
electric regional aircraft under development
by Heart Aerospace and invested
US$10 million into the company
• In 2024, Air Canada purchased around 101,000 litres of Canada’s first batch of low carbon
aviation fuel, produced by Parkland at its Burnaby refinery, marking a major step toward the
production of a Canadian-made solutions that can help lower aviation sector emissions, foster
economic growth and support low-carbon ambitions.
• Air Canada procured nearly 78 million litres of Neste MY Sustainable Aviation Fuel™.
• Air Canada purchased about 12 million US gallons of SAF in 2024 compared to about
1.5 million US gallons1 of SAF in 2023. We estimate the need for SAF to be roughly 25 million
US gallons in 2025.
• RNG in our Montréal-owned facilities was about 15 per cent of overall volumes in 2024, and
we also started adding volumes in our owned facilities in Vancouver. In 2023, we began
purchasing renewable energy certificates for all electricity consumption across Canada (except
Quebec, B.C. and Manitoba, as their respective electricity carbon intensity is already low).
Carbon reductions and removals
Air Canada engages with its customers on its booking website through its voluntary program
that allows travellers to purchase carbon offset credits, a service provided by Chooose, in an
amount that is equivalent to the estimated GHG impact of their flight(s).
When customers book a flight using Aeroplan points or a combination of points and cash,
Air Canada offsets its estimated Scope 1 GHG emissions for the customer’s flight using carbon
offset credits provided by Chooose. The total carbon offset credits retired are equivalent to
an estimate of the GHG emissions associated with the portion of the itinerary operated by
Air Canada (including Air Canada Rouge and Air Canada Express), once the flight is completed.
These projects support many climate initiatives including forest management in Canada and
mangrove restoration in Pakistan. All projects offer strong co-benefits and align with UN
Sustainable Development Goals (SDG). Air Canada and Chooose jointly select the certified
projects after a thorough due-diligence review process. The projects issuing these carbon
offset credits are certified to internationally recognized carbon certification standards that
set requirements for the design and implementation of projects such as the Verified Carbon
Standard, Gold Standard, ACR (formerly the American Carbon Registry) and BC Carbon
Registry. Independent, third-party verifications are performed by accredited verifiers and follow
best practices and specific verification criteria indicated for each standard. standard.
Air Canada purchased more than 854,500 tCO2e from nine carbon offset projects around the
world. In collaboration with Chooose, our carbon offset project portfolio grows with four new
projects:
• Quinte Forestry
• Doyon Native Community Forest
• Refrigerant Management Canada ODS Destruction
• Microfinance for Clean Energy Product Line
SAF and renewable energy
In 2024, Air Canada:
• Purchased roughly
101,000 litres of
Canada’s first
batch of low carbon
aviation fuel.
• Procured nearly
78 million litres
of Neste MY
Sustainable
Aviation Fuel™.
Progressing toward
1% SAF target
by 2025
1) Corrected to indicate that 1.5 million US gallons were purchased in 2023 (and not 12 million US gallons as indicated in the
original version of the annual report).
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Our climate-related
ambition
Ground operations
Along with the significant investments we are making for our air operations, we continue to
move forward with investments in our ground operations as well. The deployment of new
generation electric ground equipment (e-GSE) and retirement of older equipment began in
2019. In 2024, 287 new e-GSE units were added to the fleet across Canada. We deployed Phase
1 of our ground support equipment upgrade in Montréal as part of our multi-year investment
in new GSE, which includes 30 modern generation Charlatte electric baggage tractors.
Additionally, we deployed another six new Power Stow belt loaders that are already showing
promising results in operational efficiency and injury reduction. We also included two new
container loaders, 11 new aircraft electric tractors, additional tow bars and some new support
vehicles. These upgrades replace and replenish older generation diesel tractors, reducing our
reliance on fossil fuels.
from ground operations
by 2030 (compared to
2019 baseline)
Target: 30%
GHG net reductions
287 new e-GSE
units added
Ground operations
Our road to 2030 aims at electrifying
100% electrification
of baggage
tractors
Goal: 745 units
100%
electrification at
Canadian stations
Goal: 18 units
2
Electric cargo
equipment
Goal: 16 units
Electric conversion
of existing GSEs
Goal: 150 units
1
4
3
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Governance
Board of directors and committees
Air Canada is governed by a 12-member Board of Directors. The Air Canada Board of Directors has four standing committees, all of
which are composed of independent directors. The roles and responsibilities of each committee are set out in formal written charters.
These charters are reviewed annually to ensure that they reflect best practices as well as applicable regulatory requirements.
Audit, Finance
and Risk
Committee
Governance
and
Nominating
Committee
Human
Resources,
Compensation
and Pension
Committee
Safety, Health,
Environment
and Security
Vagn Sørensen
Chair of the Board, Air Canada
Ex officio member of all committees
London, U.K.
Amee Chande
Corporate Director
British Columbia, Canada
Member
Member
Christie J.B. Clark
Corporate Director
Ontario, Canada
Chair
Member
Gary A. Doer
Corporate Director
Manitoba, Canada
Member
Member
Rob Fyfe
Corporate Director
Auckland, New Zealand
Member
Chair
Michael M. Green
Chief Executive Officer and
Managing Director, Tenex Capital
Management
Florida, U.S.
Member
Member
Audit, Finance
and Risk
Committee
Governance
and
Nominating
Committee
Human
Resources,
Compensation
and Pension
Committee
Safety, Health,
Environment
and Security
Jean Marc Huot
Partner, Stikeman Elliott LLP
Quebec, Canada
Chair
Member
Claudette McGowan
Chief Executive Officer,
Protexxa Inc.
Ontario, Canada
Member
Member
Madeleine Paquin
Corporate Director
Quebec, Canada
Member
Member
Michael Rousseau
President and Chief Executive
Officer, Air Canada
Ex officio member of all committees
Quebec, Canada
Kathleen Taylor
Corporate Director
Ontario, Canada
Member
Member
Chair
Annette Verschuren
Chair and Chief Executive Officer,
NRStor Inc.
Ontario, Canada
Member
Member
Consolidated
financial statement
and notes
Management
discussion and
analysis
Our climate-related
ambition
Rise Higher
Summary
26
| 2024 Annual Report
Governance
Executive officers
Michael Rousseau
President and
Chief Executive Officer
Mark Nasr
Executive Vice President and
Chief Operations Officer
Marc Barbeau
Executive Vice President,
Chief Legal Officer and
Corporate Secretary
Arielle Meloul-
Wechsler
Executive Vice President,
Chief Human Resources Officer
and Public Affairs
John Di Bert
Executive Vice President and
Chief Financial Officer
Kevin O’Connor
Senior Vice President,
Global Airports and Operations
Control
Mark Galardo
Executive Vice President and
Chief Commercial Officer and
President, Cargo
Murray Strom
Senior Vice President,
Flight Operations and Maintenance
Craig Landry
Executive Vice President and
Chief Innovation Officer and
President of Aeroplan
Consolidated
financial statement
and notes
Management
discussion and
analysis
Our climate-related
ambition
Rise Higher
Summary
27
| 2024 Annual Report
Governance
Investor and shareholder information
TSX price range and trading volume of Air Canada variable voting shares and voting shares (AC)
LOW
HIGH
VOLUME
First quarter
$17.37
$19.80
140,554,093
Second quarter
$16.62
$20.47
135,284,024
Third quarter
$14.47
$18.07
136,935,458
Fourth quarter
$15.98
$26.18
241,551,573
Full year
$14.47
$26.18
654,325,148
Restrictions on voting securities
The Canada Transportation Act limits the permitted level of foreign ownership of Canadian
air carriers to 49 per cent and caps the voting rights of any single non-Canadian and of the
aggregate of non-Canadian air carriers to 25 per cent.
For further information, see section 10 of Air Canada’s 2024 Annual Information Form dated
March 28, 2025.
SHAREHOLDER RELATIONS
Telephone: +1 514-422-6644
Facsimile: +1 514-422-0296
Email: shareholders.actionnaires@aircanada.ca
INVESTOR RELATIONS
Telephone: +1 514-422-7849
Facsimile: +1 514-422-7877
Email: investors.investisseurs@aircanada.ca
HEAD OFFICE
Air Canada Centre
7373 Côte-Vertu Boulevard West,
Saint-Laurent, Que., H4S 1Z3
Internet: aircanada.com
Air Canada is listed on the Toronto Stock Exchange and
governed by its rules.
TRANSFER AGENT AND REGISTRAR
TSX Trust
1701 – 1190 Avenue des Canadiens-de-Montréal
Montréal, Que., H3B 0G7
Telephone: 1-800-387-0825
(Canada and United States)
+1 416-682-3860 (other countries)
Email: shareholderinquiries@tmx.com
Web: tsxtrust.com
2024
Management’s
Discussion
and Analysis
of Results of
Operations
and Financial
Condition
February 13, 2025
Consolidated
financial statement
and notes
Governance
Our climate-related
ambition
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Summary
Management
discussion and
analysis
1. Selected financial metrics and statistics
The financial and operating highlights for Air Canada for the periods indicated are as follows:
(Canadian dollars in millions, except per share data or where indicated)
Fourth Quarter
Full Year
Financial Performance Metrics
2024
2023
$ Change
2024
2023
$ Change
Operating revenues
5,404
5,175
229
22,255
21,833
422
Operating income (loss)
(254)
79
(333)
1,263
2,279
(1,016)
Operating margin(1) (%)
(4.7)
1.5
(6.2) pp (8)
5.7
10.4
(4.7) pp
Adjusted EBITDA (2)
696
521
175
3,586
3,982
(396)
Adjusted EBITDA margin (2) (%)
12.9
10.1
2.8 pp
16.1
18.2
(2.1) pp
Income (loss) before income taxes
(721)
122
(843)
515
2,212
(1,697)
Net income (loss)
(644)
184
(828)
1,720
2,276
(556)
Adjusted pre-tax income (loss) (2)
135
(47)
182
1,397
1,693
(296)
Adjusted net income (loss) (2)
93
(44)
137
1,335
1,713
(378)
Total liquidity (3)
9,154
10,290
(1,136)
9,154
10,290
(1,136)
Net cash flows from operating activities
677
985
(308)
3,930
4,320
(390)
Free cash flow (2)
(495)
669
(1,164)
1,294
2,756
(1,462)
Net debt (2)
4,918
4,567
351
4,918
4,567
351
Diluted earnings (loss) per share
(1.81)
0.41
(2.22)
4.72
5.96
(1.24)
Adjusted earnings (loss) per share (2)
0.25
(0.12)
0.37
3.55
4.56
(1.01)
Operating Statistics (4)
2024
2023
Change %
2024
2023
Change %
Revenue passenger miles (RPMs) (millions)
20,573
20,405
0.8
88,643
85,802
3.3
Available seat miles (ASMs) (millions)
24,949
24,439
2.1
104,381
99,012
5.4
Passenger load factor %
82.5%
83.5%
(1.0) pp
85.0%
86.7%
(1.7) pp
Passenger revenue per RPM (Yield) (cents)
23.0
22.3
3.0
22.3
22.6
(1.0)
Passenger revenue per ASM (PRASM) (cents)
18.9
18.6
1.7
18.9
19.6
(3.4)
Operating revenue per ASM (cents)
21.7
21.2
2.3
21.3
22.1
(3.3)
Operating expense per ASM (CASM) (cents)
22.7
20.9
8.8
20.1
19.8
1.8
Adjusted CASM (cents) (2)
15.1
14.2
5.7
13.8
13.5
2.3
Average number of full-time-equivalent (FTE) employees (thousands) (5)
37.1
36.4
1.9
37.1
35.7
4.0
Aircraft in operating fleet at period-end
354
361
(1.9)
354
361
(1.9)
Seats dispatched (thousands)
13,796
13,636
1.2
56,745
54,026
5.0
Aircraft frequencies (thousands)
94.5
93.4
1.2
387.9
373.1
4.0
Average stage length (miles) (6)
1,808
1,792
0.9
1,839
1,833
0.4
Fuel cost per litre (cents)
94.6
117.6
(19.6)
100.6
111.6
(9.9)
Fuel litres (thousands)
1,225,281
1,178,926
3.9
5,082,636
4,751,692
7.0
Revenue passengers carried (thousands) (7)
10,929
10,899
0.3
45,886
44,790
2.4
(1) Operating margin is a supplementary financial measure and is defined
as operating income (loss) as a percentage of operating revenues.
(2) Adjusted EBITDA (earnings before interest, taxes, depreciation, and
amortization), adjusted EBITDA margin, adjusted pre-tax income (loss),
adjusted net income (loss), free cash flow, net debt, adjusted earnings
(loss) per share, and adjusted CASM 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 section 20 “Non-GAAP
Financial Measures” of this MD&A for descriptions of Air Canada’s
non-GAAP financial measures and for a quantitative reconciliation of
Air Canada’s non-GAAP financial measures to the most comparable
GAAP measure.
(3) Total liquidity refers to the sum of cash, cash equivalents, short
and long-term investments, and the amounts available under
Air Canada’s credit facilities. Total liquidity, as at December 31, 2024,
of $9,154 million consisted of $7,752 million in cash, cash equivalents,
short- and long-term investments and $1,402 million available
under undrawn credit facilities. As at December 31, 2023, total
liquidity of $10,290 million consisted of $9,295 million in cash, cash
equivalents, short- and long-term investments and $995 million
available under undrawn credit facilities. These amounts also include
funds ($346 million as at December 31, 2024 and $393 million as
at December 31, 2023) held in trust by Air Canada Vacations in
accordance with regulatory requirements governing advance sales for
tour operators.
(4) Except for the reference to average number of full-time equivalent
(FTE) employees, operating statistics in this table include third
party carriers operating under capacity purchase agreements with
Air Canada.
(5) Reflects FTE employees at Air Canada and its subsidiaries. Excludes
FTE employees at third party carriers operating under capacity
purchase agreements with Air Canada.
(6) Average stage length is calculated by dividing the total number of
available seat miles by the total number of seats dispatched.
(7) Revenue passengers are counted on a flight number basis (rather
than by journey/itinerary or by leg) which is consistent with the IATA
definition of revenue passengers carried.
(8) “pp” denotes percentage points and refers to a measure of the
arithmetic difference between two percentages.
Consolidated
financial statement
and notes
Governance
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| 2024 Annual Report
Management
discussion and
analysis
This MD&A provides the reader with a review and analysis,
from the perspective of management, of Air Canada’s
financial results for the fourth quarter and full year 2024.
This MD&A should be read in conjunction with Air Canada’s
2024 annual audited consolidated financial statements and
notes dated February 13, 2025. All financial information
has been prepared in accordance with generally accepted
accounting principles in Canada (GAAP), as set out in the
CPA Canada Handbook – Accounting (CPA Handbook), which
incorporates International Financial Reporting Standards
(IFRS), as issued by the International Accounting Standards
Board (IFRS Accounting Standards), except for any non-
GAAP measures and any financial information specifically
denoted otherwise.
Except as otherwise noted, monetary amounts are
stated in Canadian dollars. For an explanation of certain
terms used in this MD&A, refer to section 21 “Glossary”
of this MD&A. Except as otherwise noted or where the
context may otherwise require, this MD&A is current as of
February 13, 2025.
Forward-looking statements are included in this MD&A.
See “Caution Regarding Forward-Looking Information” below
for a discussion of risks, uncertainties and assumptions
relating to these statements. For a description of risks
relating to Air Canada, refer to section 18 “Risk Factors” of
this MD&A. Air Canada issued a news release dated February
13, 2025 reporting on its results for the fourth quarter and
full year 2024. This news release is available on Air Canada’s
website at aircanada.com and on SEDAR+ website at
www.sedarplus.ca. For further information on Air Canada’s
public disclosures, including Air Canada’s Annual Information
Form, consult SEDAR+ at www.sedarplus.ca.
Caution regarding forward-looking
information
Air Canada’s public communications may include forward-
looking statements within the meaning of applicable
securities laws. Forward-looking statements relate
to analyses and other information that are based on
forecasts of future results and estimates of amounts not
yet determinable. These statements may involve, but are
not limited to, comments relating to guidance, strategies,
expectations, planned operations or future actions. Forward-
looking statements are identified using terms and phrases
such as “preliminary”, “anticipate”, “believe”, “could”,
“estimate”, “expect”, “intend”, “may”, “plan”, “predict”,
“project”, “will”, “would”, and similar terms and phrases,
including references to assumptions.
Forward-looking statements, by their nature, are based
on assumptions including those described herein and are
subject to important risks and uncertainties. Forward-looking
statements cannot be relied upon due to, among other
things, changing external events and general uncertainties
of the business of Air Canada. Actual results may differ
materially from results indicated in forward-looking
statements due to a number of factors, including those
discussed below.
Factors that may cause results to differ materially from
results indicated in forward-looking statements include
economic conditions, statements or actions by governments
relating to the imposition of (or threats to impose) tariffs
on Canadian exports or imports and their resulting
consequences, geopolitical conditions such as the military
conflicts in the Middle East and between Russia and Ukraine,
Air Canada’s ability to successfully achieve or sustain positive
net profitability, industry and market conditions and the
demand environment, competition, Air Canada’s dependence
on technology, cybersecurity risks, interruptions of service,
climate change and environmental factors (including weather
systems and other natural phenomena and factors arising
from anthropogenic sources), Air Canada’s dependence on
key suppliers (including government agencies and other
stakeholders supporting airport and airline operations),
employee and labour relations and costs, Air Canada’s ability
to successfully implement appropriate strategic and other
important initiatives (including Air Canada’s ability to manage
operating costs), energy prices, Air Canada’s ability to pay its
indebtedness and maintain or increase liquidity, Air Canada’s
dependence on regional and other carriers, Air Canada’s
ability to attract and retain required personnel, epidemic
diseases, changes in laws, regulatory developments or
proceedings, terrorist acts, war, Air Canada’s ability to
successfully operate its loyalty program, casualty losses,
Air Canada’s dependence on Star Alliance® and joint
ventures, Air Canada’s ability to preserve and grow its brand,
pending and future litigation and actions by third parties,
currency exchange fluctuations, limitations due to restrictive
covenants, insurance issues and costs, and pension plan
obligations as well as the factors identified in Air Canada’s
public disclosure file available at www.sedarplus.ca and, in
particular, those identified in section 18 “Risk Factors” of this
MD&A.
Air Canada has and continues to establish targets, make
commitments and assess the impact regarding climate
change, and related initiatives, plans and proposals that
Air Canada and other stakeholders (including government,
regulatory and other bodies) are pursuing in relation to
climate change and carbon emissions. The achievement of
our commitments and targets depends on many factors,
including the combined actions of governments, industry,
suppliers and other stakeholders and actors, as well as the
development and implementation of new technologies.
2. Introduction and key assumptions
In this Management’s Discussion and Analysis of Results of Operations and Financial Condition
(“MD&A”), Air Canada refers, as the context may require, to Air Canada alone or Air Canada
and one or more of its subsidiaries, including its wholly owned operating subsidiaries, Aeroplan
Inc. (Aeroplan), Touram Limited Partnership, doing business under the brand name Air Canada
Vacations® (Air Canada Vacations), and Air Canada Rouge LP, doing business under the brand
name Air Canada Rouge® (Air Canada Rouge), or to one or more of such subsidiaries.
Consolidated
financial statement
and notes
Governance
Our climate-related
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Summary
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| 2024 Annual Report
Management
discussion and
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In particular, our 2030 carbon emission-related targets
and our related 2050 aspiration are ambitious and heavily
dependent on new technologies, renewable energies and
the availability of a sufficient supply of sustainable aviation
fuels (SAF), which continues to present serious challenges. In
addition, Air Canada has incurred, and expects to continue to
incur, costs to achieve its goal of net-zero carbon emissions
and to comply with environmental sustainability legislation
and regulation and other standards and accords. The
precise nature of future binding or non-binding legislation,
regulation, standards and accords, on which local and
international stakeholders are increasingly focusing, cannot
be predicted with any degree of certainty, nor can their
financial, operational or other impact. There can be no
assurance of the extent to which any of our climate goals
will be achieved or that any future investments that we
make in furtherance of achieving our climate goals will
produce the expected results or meet increasing stakeholder
environmental, social and governance expectations.
Moreover, future events could lead Air Canada to prioritize
other nearer-term interests over progressing toward our
current climate goals based on business strategy, economic,
regulatory and social factors, and potential pressure from
investors, activist groups or other stakeholders. If we are
unable to meet or properly report on our progress toward
achieving our climate change goals and commitments, we
could face adverse publicity and reactions from investors,
customers, advocacy groups or other stakeholders, which
could result in reputational harm or other adverse effects to
Air Canada.
The forward-looking statements contained or incorporated
by reference in this MD&A represent Air Canada’s
expectations as of the date of this MD&A (or as of the date
they are otherwise stated to be made) and are subject to
change after such date. However, Air Canada disclaims any
intention or obligation to update or revise any forward-
looking statements, whether because of new information,
future events or otherwise, except as required under
applicable securities regulations.
Key assumptions
Assumptions were made by Air Canada in preparing
and making forward-looking statements. As part of its
assumptions, Air Canada assumes moderate Canadian GDP
growth for 2025. Air Canada also assumes that the Canadian
dollar will trade, on average, at C$1.40 per U.S. dollar for
the full year 2025 and that the price of jet fuel will average
C$0.95 per litre for the full year 2025.
Intellectual property
Air Canada owns or has rights to trademarks, service marks
or trade names used in connection with the operation of its
business. In addition, Air Canada’s names, logos and website
names and addresses are owned or licensed by Air Canada.
Air Canada also owns or has the rights to copyrights that
also protect the content of its products and/or services.
Solely for convenience, the trademarks, service marks, trade
names and copyrights referred to in this MD&A may be listed
without the ©, ® and TM symbols, but Air Canada reserves
all rights to assert, to the fullest extent under applicable law,
its rights or the rights of the applicable licensors to these
trademarks, service marks, trade names and copyrights.
This MD&A may also include trademarks, service marks or
trade names of other parties. Air Canada’s use or display of
other parties’ trademarks, service marks, trade names or
products is not intended to, and does not imply a relationship
with, or endorsement or sponsorship of Air Canada by, the
trademark, service mark or trade name owners or licensees.
Incorporation of other information
No information contained on or accessed via Air Canada’s
websites (or any other website referred to in this MD&A), and
no document referred to in this MD&A, is incorporated into
or forms part of this MD&A, except if it is expressly stated in
this MD&A to be incorporated into this MD&A.
Consolidated
financial statement
and notes
Governance
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| 2024 Annual Report
Management
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3. About Air Canada
Air Canada is the largest provider of scheduled passenger services in the Canadian market, the Canada-U.S. transborder market, and in the
international market to and from Canada. Its mission is connecting Canada and the world.
Air Canada enhances its domestic and transborder network
through commercial agreements with regional carriers,
including a capacity purchase agreement (CPA) with Jazz
Aviation LP (Jazz), a wholly owned subsidiary of Chorus
Aviation Inc., operating flights on behalf of Air Canada under
the Air Canada Express brand. Regional flying forms an
integral part of the airline’s international network strategy,
providing valuable traffic feed to Air Canada and Air Canada
Rouge routes.
Air Canada is a founding member of the Star Alliance®
network. Through the member airline network, Air Canada
offers its customers access to a wide global network, as
well as reciprocal participation in frequent flyer programs, a
seamless travel experience and improved customer service,
including the use of airport lounges and other common
airport facilities.
Air Canada’s Aeroplan program is Canada’s premier travel
loyalty program. The Aeroplan program allows individuals to
enrol as members and accumulate Aeroplan points through
travel on Air Canada and select partners, as well as through
the purchase of products and services from participating
partners and suppliers. Members can redeem Aeroplan
points for a variety of travel, merchandise, gift cards and
other rewards provided directly by participating partners or
made available through Aeroplan’s suppliers. Aeroplan Elite
Status recognizes Air Canada’s frequent flyers, as well as
Aeroplan’s most engaged members, with a range of priority
travel services and membership benefits.
Air Canada Cargo, a division of Air Canada, is a global cargo
service provider, offering cargo services on passenger flights
and on dedicated Boeing 767 freighter aircraft.
Air Canada Vacations is a leading Canadian tour operator,
developing, marketing and distributing vacation travel
packages, including flight and hotel packages, car rentals
and travel-related activities in the outbound leisure travel
market (Caribbean, Mexico, U.S., Europe, Central and South
America, Asia, Oceania, Middle East), and the leisure travel
market to destinations within Canada and offering flight and
cruise packages for worldwide destinations including North
America, Europe, the Caribbean, Japan and Dubai.
Air Canada Rouge is Air Canada’s leisure carrier, primarily
operating short- and medium-haul flights to leisure
destinations in the Caribbean, the U.S., and Canada.
Air Canada Rouge leverages the strengths of Air Canada,
including its extensive network with enhanced connection
options, operational expertise and frequent flyer program,
and also gives Air Canada the ability to compete against low-
cost carriers and ultra-low-cost carriers.
Consolidated
financial statement
and notes
Governance
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Management
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4. Overview
During 2024, Air Canada saw supply and demand for air travel stabilize, leading to year-over-year declines in load factors and yields, most notably
in international markets during the second and third quarters of 2024. Coming out of the COVID-19 pandemic, 2023 had been characterized by a
very fast and strong increase in demand at a time when aircraft availability was still limited, leading to exceptionally high load factors and yields.
During 2024, Air Canada continued to execute on its strategic priorities, leveraging the solid
foundation it has built over the past several years to continue to restore and rebuild toward its
ambitions. Highlights for 2024 included that Air Canada:
• Reached record revenues of $22,255 million, a two per cent increase from 2023.
• Operated capacity increased five per cent, with significant growth in the Pacific. The capacity
growth was in line with the expected capacity increase communicated by news release on
December 17, 2024.
• Improved operational performance, including an 8-percentage-point increase in on-time
performance.
• Concluded a four-year collective agreement with the Air Line Pilots Association (ALPA),
which was ratified by the membership in October 2024.
• Repurchased over 20 million shares under its normal course issuer program.
With the ratification of the collective agreement with ALPA, which is effective as of September
30, 2023, Air Canada recorded a one-time pension past service cost of $490 million in wages,
salaries and benefits expense in the fourth quarter of 2024 as a result of certain pension plan
amendments made in conjunction with the collective agreement.
The following is an overview of Air Canada’s results of operations and financial position for the
fourth quarter and full year 2024 compared to the same periods in 2023. Refer to sections 5
“Results of Operations 2024 versus 2023” and 6 “Results of Operations Q4 2024 versus Q4
2023” for additional information on factors impacting the year-over-year performance.
Fourth quarter 2024 financial summary
• Record operating revenues of $5,404 million increased $229 million or four per cent on an
operated capacity growth of two per cent year over year.
• Operating expenses of $5,658 million increased $562 million or 11 per cent. The increase was
largely due to the one-time pension past service cost of $490 million recorded in the fourth
quarter of 2024 discussed above and to higher labour and maintenance costs.
• Operating loss of $254 million, which included the one-time pension past service cost of
$490 million, compared to an operating income of $79 million in the same period in 2023.
• Adjusted EBITDA of $696 million, with an adjusted EBITDA margin of 12.9 per cent, increased
$175 million and 2.8 percentage points, respectively.
• Adjusted pre-tax income of $135 million, increased $182 million.
• Net loss of $644 million and diluted loss per share of $1.81 compared to a net income of
$184 million and diluted earnings per share of $0.41.
• Adjusted net income of $93 million and adjusted earnings per diluted share of $0.25
compared to an adjusted net loss of $44 million and adjusted loss per diluted share of $0.12.
• Adjusted CASM of 15.05 cents compared to 14.25 cents, an increase of 5.7 per cent.
• Net cash flows from operating activities of $677 million decreased $308 million.
• Negative free cash flow of $495 million decreased $1,164 million.
Consolidated
financial statement
and notes
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Full year 2024 financial summary
• Operating revenues of $22,255 million increased $422 million or two per cent on
an operated capacity growth of five per cent year over year.
• Operating expenses of $20,992 million increased $1,438 million or seven per
cent. The increase was largely due to higher costs in most line items due to
capacity growth, higher labour, maintenance and IT expenses and the one-time
$490 million pension past service cost recorded in the fourth quarter of 2024.
• Operating income of $1,263 million, with an operating margin of 5.7 per cent,
decreased $1,016 million and 4.7 percentage points, respectively.
• Adjusted EBITDA of $3,586 million, with an adjusted EBITDA margin of 16.1 per
cent, decreased $396 million and 2.1 percentage points, respectively. This
result was above the expected adjusted EBITDA of approximately $3.5 billion
communicated by news release on December 17, 2024.
• Adjusted pre-tax income of $1,397 million, decreased $296 million.
• Net income of $1,720 million and diluted earnings per share of $4.72 compared
to a net income of $2,276 million and diluted earnings per share of $5.96 in
2023. Net income in 2024 included the recognition of $1,154 million of previously
unrecognized deferred income tax assets.
• Adjusted net income of $1,335 million and adjusted earnings per diluted share
of $3.55 compared to an adjusted net income of $1,713 million and adjusted
earnings per diluted share of $4.56.
• Adjusted CASM of 13.80 cents compared to 13.49 cents, an increase of 2.3 per
cent. This result was in line with the expected growth in adjusted CASM
communicated by news release on December 17, 2024.
• Net cash flows from operating activities of $3,930 million decreased
$390 million.
• Free cash flow of $1,294 million decreased $1,462 million.
• Net debt-to-adjusted EBITDA ratio was 1.4 as at December 31, 2024 compared to
1.1 as at December 31, 2023.
Consolidated
financial statement
and notes
Governance
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Summary
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| 2024 Annual Report
Management
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Welcomed
passengers
47M
Full year 2024
Highlights of our financial results
See our full financial results at
Air Canada’s Investor Relations
website: aircanada.com/investors
Total operating
revenues
*Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is a non-GAAP financial measure. Adjusted diluted earnings (loss) per share and leverage ratio are non-GAAP financial ratios.
These 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 section 20 “Non-GAAP Financial Measures” of Air Canada’s Q4 2024 MD&A, available at aircanada.com/investors, for descriptions of Air Canada’s
non-GAAP financial measures and for a quantitative reconciliation to the most comparable GAAP financial measure.
$3.55
Adjusted
diluted earnings
per share*
1.4x
Leverage ratio* at Dec. 31, 2024
$4.72
Diluted earnings
per share
$3.59B
Adjusted EBITDA*
$1.26B
Operating income
+5.4%
Capacity – ASM
(Available Seat Miles)
Year-over-year
$22.26B
5. Results of operations – 2024 versus 2023
The table and discussion below provide and compare Air Canada’s results for the periods indicated.
Full Year
(Canadian dollars in millions, except where indicated)
2024
2023
$ Change
% Change (1)
Operating revenues
Passenger
$ 19,760
$ 19,403
357
2
Cargo
991
924
67
7
Other
1,504
1,506
(2)
-
Total operating revenues
22,255
21,833
422
2
Operating expenses
Aircraft fuel
5,118
5,318
(200)
(4)
Wages, salaries and benefits
4,880
3,955
925
23
Depreciation and amortization
1,799
1,703
96
6
Airport and navigation fees
1,487
1,418
69
5
Aircraft maintenance
1,237
1,083
154
14
Sales and distribution costs
1,085
1,097
(12)
(1)
Capacity purchase fees
860
858
2
-
Ground package costs
782
720
62
9
Communications and information technology
649
555
94
17
Catering and onboard services
637
628
9
1
Other
2,458
2,219
239
11
Total operating expenses
20,992
19,554
1,438
7
Operating income
1,263
2,279
(1,016)
Non-operating income (expense)
Foreign exchange gain (loss)
(400)
389
(789)
Interest income
431
416
15
Interest expense
(763)
(944)
181
Interest capitalized
32
14
18
Financial instruments recorded at fair value
28
115
(87)
Loss on debt settlements and modifications
(8)
(10)
2
Other
(68)
(47)
(21)
Total non-operating expense
(748)
(67)
(681)
Income before income taxes
515
2,212
(1,697)
Income tax recovery
1,205
64
1,141
Net income
$
1,720
$ 2,276
$
(556)
Basic earnings per share
$
4.81
$
6.35
$
(1.54)
Diluted earnings per share
$
4.72
$
5.96
$
(1.24)
Adjusted EBITDA (2)
$ 3,586
$ 3,982
$
(396)
Adjusted pre-tax income (2)
$
1,397
$
1,693
$
(296)
Adjusted net income (2)
$
1,335
$
1,713
$
(378)
Adjusted earnings per share – diluted (2)
$
3.55
$
4.56
$
(1.01)
(1) Percentage change amounts in the table above may not calculate
exactly due to rounding.
(2) Adjusted EBITDA, adjusted pre-tax income (loss), adjusted net income
(loss), and adjusted earnings (loss) per share are non-GAAP financial
measures or non-GAAP financial ratios. Refer to section 20 “Non-
GAAP Financial Measures” of this MD&A for additional information.
Consolidated
financial statement
and notes
Governance
Our climate-related
ambition
Rise Higher
Summary
35
| 2024 Annual Report
Management
discussion and
analysis
System passenger revenues
In 2024, passenger revenues were $19,760 million, a year-over-year increase of $357 million
or two per cent driven by increased traffic and capacity in the Pacific and North American
markets. Year over year, system load factor and yield declined 2 percentage points and
one per cent, respectively.
The main contributors for the year-over-year variance were:
• Pacific capacity increased 28 per cent year over year due to the restoration of services to
Asia Pacific regions.
• The yield environment was strong in North American markets, growing one per cent and
two per cent for Domestic and Transborder services, respectively.
• Demand for premium products was solid in 2024. Premium cabin revenues grew five per
cent year over year, reaching 29 per cent of total revenues, a one percentage point
expansion from 2023.
• Sixth freedom traffic continued to perform well, with sixth freedom revenues growing 12 per
cent from 2023.
In September 2024, Air Canada concluded a four-year collective agreement with ALPA
representing more than 5,200 pilots at Air Canada and Air Canada Rouge. The agreement,
which is effective as of September 30, 2023, was ratified in October 2024. Leading up to the
announcement of this agreement and with the possibility of labour disruptions, Air Canada
introduced a flexible rebooking policy that allowed customers to change or cancel their
itineraries without change or cancellation fees. The labour uncertainty resulted in an elevated
number of cancellations and passengers choosing to modify their travel plans or fly with other
airlines for close-in itineraries, particularly in September and to a lesser extent in the first half
of October 2024, with most of the impact in the Domestic market.
Throughout 2023, the rapid growth in demand for travel, most notably internationally, and the
constrained capacity environment led to exceptionally higher yields and load factors.
The table below provides passenger revenues by geographic region for the periods indicated.
Full Year
(Canadian dollars in millions)
2024
2023
$ Change % Change (1)
Canada
$ 5,255
$
5,106
$
149
2.9
U.S. transborder
4,275
4,123
152
3.7
Atlantic
5,754
6,049
(295)
(4.9)
Pacific
2,792
2,380
412
17.3
Other
1,684
1,745
(61)
(3.5)
System
$ 19,760
$ 19,403
$
357
1.8
(1) Percentage change amounts in the table above may not calculate exactly due to rounding.
The table below provides year-over-year percentage changes in passenger revenues and
operating statistics for the periods indicated.
Full Year 2024 versus Full Year 2023
Passenger
Revenue
% Change
Capacity
(ASMs)
% Change
Traffic
(RPMs)
% Change
Passenger
Load Factor
pp Change
Yield
% Change
PRASM
% Change
Canada
2.9
3.8
2.0
(1.5)
0.9
(0.8)
U.S. transborder
3.7
3.0
1.7
(1.1)
2.0
0.6
Atlantic
(4.9)
0.6
(2.5)
(2.7)
(2.4)
(5.4)
Pacific
17.3
28.0
25.2
(2.0)
(6.3)
(8.4)
Other
(3.5)
(0.2)
(1.3)
(0.9)
(2.2)
(3.3)
System
1.8
5.4
3.3
(1.7)
(1.0)
(3.4)
Domestic passenger revenues
Domestic passenger revenues increased three per cent resulting from a growth of two per
cent in traffic and one per cent in yield, partially offset by lower load factor. As described
above, revenues in the late third quarter and early fourth quarter of 2024 were impacted by
the labour uncertainty in advance of reaching an agreement with ALPA. The full year results
reflected good demand for air travel within a competitive marketplace.
U.S. transborder passenger revenues
U.S. transborder passenger revenues increased four per cent as driven by capacity growth and
yield expansion versus 2023. The capacity increase was driven by new, restored and increased
U.S. transborder services, supporting traffic between the U.S. and Canada and providing
connection opportunities with Air Canada’s international network driving Air Canada’s sixth
freedom traffic strategy.
Atlantic passenger revenues
Atlantic passenger revenues decreased five per cent as a result of lower traffic and
lower yields year over year. This was largely the result of increased industry capacity and
competitive pressures in the market, which primarily impacted the results in the second and
third quarters of 2024.
Impact from the geopolitical instability in the Middle East and major events that took place in
Europe during 2024 contributed to the traffic and yield pressures versus 2023.
Pacific passenger revenues
Pacific passenger revenues increased 17 per cent driven by 28 per cent more capacity year
over year. The increases were driven by increased capacity due to the restoration of services
to Asia Pacific regions, most notably in Japan, Korea and Hong Kong, and the launch of the
Vancouver-Singapore route. The year-over-year revenue increase was limited by lower yields
and load factors in the region as the traffic increase lagged the added capacity.
Other passenger revenues
Other passenger revenues declined three per cent as a result of lower capacity and traffic in
South America and lower yield in the Caribbean and Central America.
Consolidated
financial statement
and notes
Governance
Our climate-related
ambition
Rise Higher
Summary
36
| 2024 Annual Report
Management
discussion and
analysis
Cargo revenues
In 2024, Cargo revenues of $991 million increased $67 million or seven per cent from 2023.
This was the result of higher volumes of chargeable kilos and yields for belly cargo in the
Pacific and freight in the Americas. The increase was partially offset by lower cargo revenues
in the Atlantic primarily due to lower yields.
At the end of 2024, Air Canada operated six Boeing 767 freighter aircraft compared to seven
at the end of 2023.
The table below provides cargo revenues by geographic region for the periods indicated.
Full Year
(Canadian dollars in millions)
2024
2023
$ Change % Change (1)
Canada
$
106
$
94
$
12
12.6
U.S. transborder
58
45
13
26.9
Atlantic
375
432
(57)
(13.2)
Pacific
311
222
89
40.5
Other
141
131
10
7.9
System
$
991
$
924
$
67
7.3
(1) Percentage change amounts in the table above may not calculate exactly due to rounding.
Other revenues
In 2024, other revenues of $1,504 million were essentially flat year over year. Higher ground
package revenues at Air Canada Vacations were offset by lower buy on-board revenues,
miscellaneous passenger fees and non-air revenues related to the Aeroplan program.
Operating expenses
In 2024, operating expenses increased seven per cent. This was a result of cost increases in
nearly all line items mainly due to the year-over-year capacity increase, a one-time pension
past service cost of $490 million resulting from the ratification of the new ALPA collective
agreement, and higher labour and aircraft maintenance expenses. In addition, Air Canada
recorded a $34 million charge in the third quarter of 2024 reflecting the estimated costs
related to contractual lease obligations and a one-time operating expense of $20 million in the
first quarter of 2024 related to the removal of two Boeing 767 freighters from the 2024-2025
fleet plan.
The operating expense increase was limited by lower aircraft fuel expense year over year and
by certain contract-related adjustments that were recorded in the third quarter of 2024.
The more notable components of the year-over-year change in operating expenses are
described below.
Aircraft fuel
Aircraft fuel expense declined four per cent driven by a 10 per cent decrease in jet fuel prices
year over year, net of an unfavourable foreign exchange variance. The decline was partially
offset by higher volume of litres used due to the year-over-year increase in capacity and a
$54 million net loss from the settlement of jet fuel hedges ($51 million gain in 2023).
Wages, salaries and benefits
Wages, salaries and benefits expense increased 23 per cent. The increase reflected the one-
time pension past service cost of $490 million as a result of pension plan amendments made
in conjunction with the ALPA collective agreement, higher average salaries year over year and
the increased number of employees required to support the capacity growth.
Aircraft maintenance
Aircraft maintenance expense increased 14 per cent, net of a favourable contract-related
adjustment recorded in the third quarter of 2024. The increase was driven by a greater
number of scheduled engine and airframe maintenance events, higher average prices for
maintenance events and increased maintenance activity to support higher levels of flying. To a
lesser extent, an increase in maintenance provisions for leased aircraft that joined the fleet in
2024 contributed to the year-over-year increase.
Depreciation and amortization
Depreciation and amortization expense increased six per cent as a result of a larger number
of capitalized maintenance events on various fleet types and the addition of various aircraft
to the operating fleet in 2024. The increase was partially offset by assets that were fully
depreciated during the year.
Communications and information technology
Communications and information technology expense increased 17 per cent mainly due to
higher usage of certain IT services, driven by ongoing digital transformation initiatives. To a
lesser extent, higher prices for certain IT services also contributed to the increase.
Other operating expenses
Other operating expenses increased 11 per cent largely due to higher costs due to increased
flying activity year over year and certain charges recorded during the year as described below.
In the third quarter of 2024, Air Canada recorded a charge of $34 million in other operating
expenses reflecting the estimated costs related to contractual lease obligations.
In the first quarter of 2024, Air Canada adjusted its freighter capacity plans to align with
market conditions and removed the addition of two Boeing 767 freighters from its 2024-2025
fleet plan. This resulted in a one-time operating expense of $20 million recorded under other
expenses in the first quarter of 2024.
Consolidated
financial statement
and notes
Governance
Our climate-related
ambition
Rise Higher
Summary
37
| 2024 Annual Report
Management
discussion and
analysis
The following table provides a breakdown of other expenses for the periods indicated.
Full Year
(Canadian dollars in millions)
2024
2023
$ Change % Change (1)
Terminal handling
$
546
$
501
$
45
9
Crew cycle
300
266
34
13
Building rent and maintenance
323
294
29
10
Miscellaneous fees and services
254
218
36
17
Remaining other expenses
1,035
940
95
10
Total other expenses
$ 2,458
$
2,219
$
239
11
(1) Percentage change amounts in the table above may not calculate exactly due to rounding.
CASM and adjusted CASM
In 2024, unit cost or CASM, increased 1.8 per cent year over year. The increase largely reflected
the impact of the one-time pension past service cost of $490 million related to the collective
agreement with ALPA, as well as higher labour, maintenance and IT expenses. Declining jet
fuel prices, higher operated capacity and certain contractual adjustments recorded in the year
partially offset the increase.
Adjusted CASM increased 2.3 per cent driven by year-over-year increases in labour,
maintenance and information technology expenses, partially offset by the capacity growth
and certain contractual adjustments recorded in the year 2024.
The following table reconciles CASM to adjusted CASM for the periods indicated.
Full Year
(cents per ASM)
2024
2023
$ Change % Change (1)
CASM
¢
20.11
¢
19.75
¢
0.36
1.8
Remove:
Aircraft fuel expense, ground package costs, freighter
costs, pension plan amendments and provision for
contractual lease obligations
(6.31)
(6.26)
(0.05)
0.8
Adjusted CASM
¢
13.80
¢
13.49
¢
0.31
2.3
(1) Percentage change amounts in the table above may not calculate exactly due to rounding.
Non-operating expense
In 2024, non-operating expenses totalled $748 million, compared to $67 million in 2024.
Foreign exchange losses amounted to $400 million compared to gains of $389 million in 2023.
The December 31, 2024, closing exchange rate was US$1=1.4384 compared to US$1=$1.3243
at December 31, 2023. With the weakening of the Canadian dollar, the foreign exchange
remeasurement on long-term debt and lease obligations resulted in a loss of $758 million and
gains on foreign currency derivatives totalling $450 million in 2024.
Interest expense of $763 million decreased $181 million from 2023 due to lower debt levels
resulting from debt prepayments made in 2023 and 2024. The decrease was partially offset
by unfavourable foreign exchange year over year.
A loss on debt settlement of $46 million was recorded in the first quarter of 2024, related to
the write-off of unamortized debt issuance costs associated with the refinancing transaction
completed in March 2024. In November 2024, Air Canada completed a repricing of its
US$1.175 billion term loan B, reducing the interest rate by 50 basis points. Related to this
transaction, Air Canada recorded a $38 million gain on debt modifications in the fourth quarter
of 2024. For additional information on debt repayments, refer to section 8.2 “Net Debt” of this
MD&A.
Income tax
Full Year
(Canadian dollars in millions)
2024
2023
Current income tax recovery (expense)
$
(30)
$
17
Deferred income tax recovery
1,235
47
Income tax recovery
$
1,205
$
64
During the third quarter of 2024, Air Canada determined that it was probable that substantially
all of the deferred income tax assets, which include non-capital losses, other post-employment
benefits, maintenance and other temporary differences, would be realized. Accordingly,
previously unrecognized deferred income tax assets net of the origination and reversal of
temporary differences for the nine month period of $1,056 million were recognized in the
third quarter of 2024, which resulted in a tax recovery recorded in the consolidated statement
of operations of $1,154 million, tax recovery recorded in the consolidated statement of
changes in equity of $41 million and tax expense recorded in the consolidated statement
of comprehensive income of $139 million related to remeasurements on net employee
benefit liabilities.
Further information about Air Canada’s income taxes is provided in Note 11 of Air Canada’s
audited consolidated financial statements and notes for 2024.
Consolidated
financial statement
and notes
Governance
Our climate-related
ambition
Rise Higher
Summary
38
| 2024 Annual Report
Management
discussion and
analysis
6. Results of operations – Q4 2024 versus Q4 2023
The table and discussion below provide and compare Air Canada’s results for the periods indicated.
Fourth Quarter
(Canadian dollars in millions, except where indicated)
2024
2023
$ Change % Change (1)
Operating revenues
Passenger
$
4,726
$ 4,553
173
4
Cargo
293
244
49
20
Other
385
378
7
2
Total operating revenues
5,404
5,175
229
4
Operating expenses
Aircraft fuel
1,154
1,391
(237)
(17)
Wages, salaries and benefits
1,680
1,075
605
56
Depreciation and amortization
460
442
18
4
Airport and navigation fees
357
350
7
2
Aircraft maintenance
361
311
50
16
Sales and distribution costs
260
253
7
3
Capacity purchase fees
216
223
(7)
(3)
Ground package costs
208
177
31
18
Communications and information technology
162
140
22
16
Catering and onboard services
154
161
(7)
(4)
Other
646
573
73
13
Total operating expenses
5,658
5,096
562
11
Operating income (loss)
(254)
79
(333)
Non-operating income (expense)
Foreign exchange gain (loss)
(372)
72
(444)
Interest income
95
109
(14)
Interest expense
(184)
(222)
38
Interest capitalized
8
5
3
Financial instruments recorded at fair value
(38)
91
(129)
Gain (loss) on debt settlements and modifications
38
(1)
39
Other
(14)
(11)
(3)
Total non-operating income (loss)
(467)
43
(510)
Income (loss) before income taxes
(721)
122
(843)
Income tax recovery
77
62
15
Net income (loss)
$
(644)
$
184
$
(828)
Basic earnings (loss) per share
$
(1.81)
$
0.51
$ (2.32)
Diluted earnings (loss) per share
$
(1.81)
$
0.41
$ (2.22)
Adjusted EBITDA (2)
$
696
$
521
$
175
Adjusted pre-tax income (loss) (2)
$
135
$
(47)
$
182
Adjusted net income (loss) (2)
$
93
$
(44)
$
137
Adjusted earnings (loss) per share – diluted (2)
$
0.25
$
(0.12)
$
0.37
(1) Percentage change amounts in the table above may not calculate
exactly due to rounding.
(2) Adjusted EBITDA, adjusted pre-tax income (loss), adjusted net income
(loss), and adjusted earnings (loss) per share are non-GAAP financial
measures or non-GAAP financial ratios. Refer to section 20 “Non-GAAP
Financial Measures” of this MD&A for additional information.
Consolidated
financial statement
and notes
Governance
Our climate-related
ambition
Rise Higher
Summary
39
| 2024 Annual Report
Management
discussion and
analysis
System passenger revenues
In the fourth quarter of 2024, passenger revenues of $4,726 million increased $173 million or
four per cent from the fourth quarter of 2023. The increase was primarily due to growth in
operated capacity in Canada and the Pacific markets and a strong yield environment in the
Transborder market.
The revenue environment progressed favourably in the quarter, having recovered from
the impact of potential labour disruption and the flexible rebooking policy Air Canada
implemented in September and in the first half of October 2024.
The table below provides passenger revenues by geographic region for the periods indicated.
Fourth Quarter
(Canadian dollars in millions)
2024
2023
$ Change % Change (1)
Canada
$
1,305
$
1,245
$
60
4.8
U.S. transborder
1,059
993
66
6.6
Atlantic
1,263
1,259
4
0.4
Pacific
646
611
35
5.7
Other
453
445
8
1.8
System
$ 4,726
$ 4,553
$
173
3.8
(1) Percentage change amounts in the table above may not calculate exactly due to rounding.
The table below provides year-over-year percentage changes in passenger revenues and
operating statistics for the periods indicated.
Fourth Quarter 2024 versus Fourth Quarter 2023
Passenger
Revenue
% Change
Capacity
(ASMs)
% Change
Traffic
(RPMs)
% Change
Passenger
Load Factor
pp Change
Yield
% Change
PRASM
% Change
Canada
4.8
6.5
4.5
(1.6)
0.3
(1.6)
U.S. transborder
6.6
(0.9)
(0.3)
0.5
6.9
7.5
Atlantic
0.4
(4.6)
(6.3)
(1.5)
7.1
5.2
Pacific
5.7
13.2
11.3
(1.5)
(5.0)
(6.6)
Other
1.8
3.1
1.4
(1.3)
0.3
(1.3)
System
3.8
2.1
0.8
(1.0)
3.0
1.7
Domestic passenger revenues
Domestic passenger revenues increased five per cent driven by capacity growth and
favourable yields across domestic routes. These results reflected continued strength in
demand for air travel within a competitive marketplace.
U.S. transborder passenger revenues
U.S. transborder passenger increased seven per cent driven by yield gains in nearly all
transborder major route groups.
Atlantic passenger revenues
Atlantic passenger revenues were essentially flat year over year as yield gains in most routes
more than offset the traffic and capacity declines.
Pacific passenger revenues
Pacific passenger revenues increased six per cent driven by the 13 per cent capacity
expansion. The capacity growth reflected the restoration of services to Asia Pacific regions,
most notably in Japan, Korea and Hong Kong, and the launch of the Vancouver-Singapore
route.
Other passenger revenues
Other passenger revenues increased two per cent driven by capacity and yield growth in
Central America and the Caribbean.
Cargo revenues
In the fourth quarter of 2024, Cargo revenues of $293 million increased $49 million or 20 per
cent from the fourth quarter of 2023. The increase was primarily driven by yield strength
and higher volumes of chargeable kilos across all markets. The increase reflected a better
operating environment for Cargo, having recovered from lower cargo volumes and yields in
2023 and in the first six months of 2024.
The table below provides cargo revenues by geographic region for the periods indicated.
Fourth Quarter
(Canadian dollars in millions)
2024
2023
$ Change % Change (1)
Canada
$
30
$
25
$
5
18.6
U.S. transborder
17
12
5
33.1
Atlantic
110
104
6
4.8
Pacific
92
65
27
42.5
Other
44
38
6
18.4
System
$
293
$
244
$
49
19.7
(1) Percentage change amounts in the table above may not calculate exactly due to rounding.
Consolidated
financial statement
and notes
Governance
Our climate-related
ambition
Rise Higher
Summary
40
| 2024 Annual Report
Management
discussion and
analysis
Other revenues
In the fourth quarter of 2024, other revenues of $385 million increased $7 million or two per
cent from the fourth quarter of 2023. The performance was driven by higher ground package
revenues at Air Canada Vacations, partially offset by lower buy on-board revenues and
miscellaneous passenger fees.
Operating expenses
In the fourth quarter of 2024, operating expenses increased 11 per cent. This was largely the
result of the one-time pension past service cost of $490 million resulting from the ratification
of the new collective agreement with ALPA, higher labour, maintenance and information
technology expenses. Lower aircraft fuel expense year over year partially offset the increase.
The more notable components of the year-over-year change in operating expenses are
described below.
Aircraft fuel
Aircraft fuel expense declined 17 per cent as a result of a 20 per cent decline in jet fuel prices
year over year, net of an unfavourable foreign exchange variance. The decline was partially
offset by an increase in litres of jet fuel used due to higher levels of flying and a $21 million loss
in jet fuel hedges (loss of $17 million in the fourth quarter of 2023).
Wages, salaries and benefits
Wages, salaries and benefits increased 56 per cent. The increase reflected the one-time
pension past service cost of $490 million as a result of certain pension plan amendments
made in conjunction with the collective agreement with ALPA, higher average salaries year
over year and the increased number of employees required to support the capacity growth.
Aircraft maintenance
Aircraft maintenance expense increased 16 per cent driven by a greater number of scheduled
engine and airframe maintenance events, higher average prices for maintenance events and,
to a lesser extent, increased maintenance activity to support higher levels of flying.
Ground package costs
Ground package costs increased 18 per cent driven by higher prices and higher volume of
passengers year over year.
Communications and information technology
Communications and information technology expenses increased 16 per cent mainly due to
higher usage of certain IT services, driven by ongoing digital transformation initiatives, and
higher prices for certain IT services.
Other operating expenses
Other operating expenses increased 13 per cent largely due to higher costs due to increased
flying activity year over year and an unfavourable foreign exchange variance.
The year over year increase in miscellaneous fees and services included an accrual for
processing fees relating to customer compensation matters.
The following table provides a breakdown of other expenses for the periods indicated.
Fourth Quarter
(Canadian dollars in millions)
2024
2023
$ Change % Change (1)
Terminal handling
$
135
$
131
$
4
3
Crew cycle
75
68
7
10
Building rent and maintenance
82
80
2
2
Miscellaneous fees and services
78
54
24
44
Remaining other expenses
276
240
36
15
Total other expenses
$
646
$
573
$
73
13
(1) Percentage change amounts in the table above may not calculate exactly due to rounding.
CASM and adjusted CASM
In the fourth quarter of 2024, CASM increased 8.8 per cent year over year. The increase
largely reflected the impact of the one-time pension past service cost related to the collective
agreement with ALPA, as well as higher labour, maintenance and IT expenses. Declining jet
fuel prices and higher operated capacity partially offset the increase.
Adjusted CASM increased 5.7 per cent driven by the year-over-year increases in labour,
maintenance and information technology expenses, which increased at a larger rate than
capacity. This was partially offset by the capacity growth and year-over-year declines in
capacity purchase fees and catering expenses.
The following table reconciles CASM to adjusted CASM for the periods indicated.
Fourth Quarter
(cents per ASM)
2024
2023
$ Change % Change (1)
CASM
¢ 22.67
¢ 20.85
¢
1.82
8.8
Remove:
Aircraft fuel expense, ground package costs, freighter
costs and pension plan amendments
(7.62)
(6.60)
(1.02)
15.5
Adjusted CASM
¢
15.05
¢
14.25
¢
0.80
5.7
(1) Percentage change amounts in the table above may not calculate exactly due to rounding.
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Non-operating income (expense)
In the fourth quarter of 2024, non-operating expenses totalled $467 million compared to
non-operating income of $43 million in the fourth quarter of 2023.
Foreign exchange losses amounted to $372 million in the fourth quarter of 2024 compared
to gains of $72 million in the same period last year. With the weakening of the Canadian
dollar, the foreign exchange remeasurement on long-term debt and lease obligations
resulted in a loss of $537 million and gains on foreign currency derivatives totalled
$232 million in the fourth quarter of 2024.
Fourth quarter 2024 interest expense of $184 million decreased $38 million year over
year due to lower debt levels resulting from debt prepayments made in 2023 and 2024.
The decrease was partially offset by unfavourable foreign exchange year over year. For
additional information on debt repayments, refer to section 8.2 “Net Debt” of this MD&A.
In November 2024, Air Canada completed a repricing of its US$1.175 billion term loan
B, reducing the interest rate by 50 basis points. Related to this transaction, Air Canada
recorded a $38 million gain on debt modifications in the fourth quarter of 2024.
7. Fleet
The tables below provide information relating to the aircraft in the operating fleets of
Air Canada and Air Canada Rouge as well as the aircraft operated on behalf of Air Canada
by regional carriers under the Air Canada Express brand.
Mainline and Air Canada Rouge
The tables below provide information relating to the aircraft in Air Canada’s and Air Canada
Rouge’s operating fleets as at December 31, 2024.
At December 31, 2024
Air Canada
Number of
Operating
Aircraft
Total
Seats
Average
Age
Owned
Leased
Wide-body aircraft
Boeing 777-300ER
19
418
14.8
12
7
Boeing 777-200LR
6
300
17.3
4
2
Boeing 787-8
8
255
10.5
8
-
Boeing 787-9
31
298
7.6
25
6
Boeing 767-300 freighters
6
-
31.3
4
2
Airbus A330-300
20
295
18.3
10
10
Total wide-body aircraft
90
321
14.0
63
27
Narrow-body aircraft
Boeing 737 MAX 8
41
169
5.1
31
10
Airbus A321
20
183
19.7
8
12
Airbus A320
22
133
24.6
9
13
Airbus A319
5
126
28.0
5
-
Airbus A220-300
34
137
3.9
34
-
Total narrow-body aircraft
122
154
11.6
87
35
Total Mainline
212
222
12.6
150
62
At December 31, 2024
Air Canada Rouge
Number of
Operating
Aircraft
Total
Seats
Average
Age
Owned
Leased
Narrow-body aircraft
Airbus A321
14
203
9.7
4
10
Airbus A320
5
168
17.8
-
5
Airbus A319
18
136
26.8
15
3
Total Air Canada Rouge
37
166
19.1
19
18
Total Mainline & Rouge
249
215
13.6
169
80
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The tables below provide the number of aircraft in Air Canada’s and Air Canada Rouge’s
operating fleet for the dates indicated. The table also provides the planned Air Canada and
Air Canada Rouge fleet as at the future dates indicated.
Air Canada
Actual
Planned
Dec. 31,
2023
2024
Fleet
Changes
Dec. 31,
2024
2025
Fleet
Changes
Dec. 31,
2025
2026
Fleet
Changes
Dec. 31,
2026
Wide-body aircraft
Boeing 777-300ER
19
-
19
-
19
-
19
Boeing 777-200LR
6
-
6
-
6
-
6
Boeing 787-8
8
-
8
-
8
-
8
Boeing 787-9
30
1
31
1
32
-
32
Boeing 787-10
-
-
-
-
-
3
3
Boeing 767-300ER
-
-
-
2
2
-
2
Boeing 767-300 freighters
7
(1)
6
-
6
-
6
Airbus A330-300
18
2
20
-
20
-
20
Total wide-body aircraft
88
2
90
3
93
3
96
Narrow-body aircraft
Boeing 737 MAX 8
40
1
41
6
47
5
52
Airbus A321XLR
-
-
-
2
2
11
13
Airbus A321
16
4
20
-
20
-
20
Airbus A320
19
3
22
-
22
-
22
Airbus A319
7
(2)
5
(3)
2
-
2
Airbus A220-300
33
1
34
10
44
16
60
Total narrow-body aircraft
115
7
122
15
137
32
169
Total Mainline
203
9
212
18
230
35
265
Air Canada Rouge
Actual
Planned
Dec. 31,
2023
2024
Fleet
Changes
Dec. 31,
2024
2025
Fleet
Changes
Dec. 31,
2025
2026
Fleet
Changes
Dec. 31,
2026
Narrow-body aircraft
Airbus A321
17
(3)
14
-
14
-
14
Airbus A320
5
-
5
-
5
-
5
Airbus A319
18
-
18
-
18
-
18
Total Air Canada Rouge
40
(3)
37
-
37
-
37
Total Mainline & Rouge
243
6
249
18
267
35
302
Air Canada Express
The table below provides the number of aircraft operated on behalf of Air Canada by regional
carriers under the Air Canada Express brand, for the dates indicated. The table also provides
the planned Air Canada Express fleet as at the future dates indicated.
Air Canada Express
Actual
Planned
Dec. 31,
2023
2024
Fleet
Changes
Dec. 31,
2024
2025
Fleet
Changes
Dec. 31,
2025
2026
Fleet
Changes
Dec. 31,
2026
Embraer 175
25
-
25
-
25
-
25
Mitsubishi CRJ-200 (1)
15
(15)
-
-
-
-
-
Mitsubishi CRJ-900
35
-
35
-
35
-
35
De Havilland Dash 8-400
43
2
45
(8)
37
-
37
Total Air Canada Express
118
(13)
105
(8)
97
-
97
(1) Excluded from the operating fleet at December 31, 2024, are 15 Mitsubishi CRJ-200 aircraft that are in long-term storage.
40
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8. Financial and capital
management
8.1 Liquidity
Liquidity risk management
Air Canada manages its liquidity needs through a variety of strategies, including by seeking to
sustain and improve cash from operations and free cash flow, sourcing committed financing
for new and existing aircraft, and through other financing activities.
Liquidity needs are primarily related to meeting obligations associated with financial
liabilities, capital commitments, ongoing operations, contractual and other obligations,
which are further discussed in sections 8.5 “Capital Expenditures and Related Financing
Arrangements”, 8.6 “Pension Funding Obligations”, and 8.7 “Contractual Obligations” of
this MD&A. Air Canada monitors and manages liquidity risk by preparing rolling cash flow
forecasts for a minimum period of at least twelve months after each reporting period,
including under various scenarios and assumptions, monitoring the condition and value
of assets available to be used as well as those assets being used as security in financing
arrangements, seeking flexibility in financing arrangements, and establishing programs
to monitor and maintain compliance with terms of financing agreements. In addition,
Air Canada monitors its financial leverage as measured by the net debt to adjusted EBITDA
ratio, as further described in section 8.2 “Net Debt” of this MD&A
At December 31, 2024, total liquidity was $9,154 million comprised of cash and cash
equivalents, short-term and long-term investments of $7,752 million, and $1,402 million
available under undrawn credit facilities. Cash and cash equivalents included $346 million
related to funds held in trust by Air Canada Vacations in accordance with regulatory
requirements governing advance sales for tour operators. Over the next 12 months,
Air Canada expects to meet its liquidity needs with cash from operations as well as with
available cash and cash equivalents and short- and long-term investments. Liquidity
needs, including those related to obligations associated with financial liabilities and capital
commitments, may also be supported through new financing arrangements.
8.2 Net debt
The table below reflects Air Canada’s net debt balances as at December 31, 2024, and as at
December 31, 2023.
(Canadian dollars in millions)
December 31,
2024
December 31,
2023
Change
Total long-term debt and lease liabilities
$
10,915
$
12,996
$ (2,081)
Current portion of long-term debt and lease liabilities
1,755
866
889
Total long-term debt and lease liabilities (including current
portion)
12,670
13,862
(1,192)
Less cash, cash equivalents and short and long-term investments
(7,752)
(9,295)
1,543
Net debt (1)
$
4,918
$
4,567
$
351
Adjusted EBITDA (trailing 12 months)
$
3,586
3,982
(396)
Net debt to adjusted EBITDA ratio (1)
1.4
1.1
0.3
(1) Net debt is a capital management measure and a key component of the capital managed by Air Canada and provides
management with a measure of its net indebtedness. Net debt to adjusted EBITDA ratio (also referred to as “leverage
ratio” in this MD&A) is a non-GAAP financial ratio and is used by Air Canada to measure financial leverage. For additional
information on net debt, refer to section 20 “Non-GAAP Financial Measures” of this MD&A.
The decrease in total debt and liabilities reflects nearly $2.4 billion in repayments of debt
and lease liabilities, including $1.475 billion (US$1.09 billion) in repayments made in the first
quarter of 2024 in connection with the refinancing transaction completed in March 2024 as
discussed below. The decrease was offset by higher foreign currency debt and lease liabilities,
which were unfavorably impacted by the weakening in the Canadian dollar that resulted in a
$758 million foreign exchange revaluation loss for the year ended December 31, 2024.
Net debt increased $351 million reflecting a decrease in the liquidity balance, which was due
to the financing transactions described above, the use of $473 million for the purchase of
shares for cancellation in 2024 (as discussed in section 8.8 “Share Information” of this MD&A,
partially offset by free cash flow of $1,294 million in 2024.
Net debt to adjusted EBITDA ratio was 1.4 at December 31, 2024, compared to 1.1 at December 31,
2023, with the increase due to the increase in net debt and the decrease in adjusted EBITDA.
In March 2024, Air Canada entered into US$2.15 billion senior secured credit facilities, comprising
a US$1.175 billion term loan B maturing in 2031 and a US$975 million revolving credit facility
maturing in 2029. The aggregate gross proceeds of the new term loan, together with cash from
Air Canada’s balance sheet of US$1.090 billion, were applied to refinance all of Air Canada’s
indebtedness outstanding under its previous US$2.3 billion term loan B maturing in 2028. The
new revolving facility, which is the result of an increase and extension of Air Canada’s previous
US$600 million revolving credit facility previously maturing in 2025, is undrawn as of December
31, 2024. Concurrently with the closing of these senior credit facilities, Air Canada also terminated
its undrawn $200 million revolving credit facility maturing in 2026.
In November 2024, Air Canada completed a repricing of its US$1.175 billion term loan B,
reducing the interest rate by 50 basis points, to an interest rate of two per cent over SOFR.
In the fourth quarter of 2024, Air Canada recorded a $38 million gain on debt modification
related to this transaction.
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8.3 Working capital
The table below provides information on Air Canada’s working capital balances as at
December 31, 2024, and December 31, 2023.
(Canadian dollars in millions)
December 31,
2024
December 31,
2023(1)
$ Change
Cash, cash equivalents and short-term investments
$
6,982
$
8,551
$ (1,569)
Accounts receivable
1,089
1,121
(32)
Other current assets
991
588
403
Total current assets
$
9,062
$
10,260
$ (1,198)
Accounts payable and accrued liabilities
3,718
3,319
399
Advance ticket sales
4,387
4,341
46
Aeroplan and other deferred revenues
1,588
1,473
115
Current portion of long-term debt and lease liabilities
1,755
866
889
Total current liabilities
$
11,448
$
9,999
$
1,449
Net working capital
$
(2,386)
$
261
$ (2,647)
(1) Certain comparative figures have been reclassified to conform to the financial statement presentation adopted for the
current year
Net working capital deficiency of $2,386 million at December 31, 2024, reflected the use of
$1,475 million (US$1,090 million) of cash to reduce Air Canada’s outstanding senior secured
indebtedness in connection with the refinancing transaction completed in March 2024, and
discussed in section 8.2 “Net Debt” of this MD&A and $473 million for the purchase of shares
for cancellation as discussed in section 8.8 “Share Information” of this MD&A.
In addition, $341 million of Air Canada’s outstanding convertible notes were reclassified to
current liabilities as they are convertible at the option of the noteholders as of March 1, 2025.
Certain aircraft debt of $406 million was reclassified to current portion of debt as it matures
in May 2025. Offsetting these factors were the positive earnings and cash from operations
recorded during the year.
8.4 Cash flow movements
The table below provides the cash flow movements for Air Canada for the periods indicated.
Fourth Quarter
Full Year
(Canadian dollars in millions)
2024
2023
$ Change
2024
2023
$ Change
Net cash flows from operating
activities
$
677
$ 985
$
(308)
$ 3,930
$ 4,320
$ (390)
Net cash flows used in financing
activities
(715)
(332)
(383)
(2,872)
(2,368)
(504)
Net cash flows used in investing
activities
(845)
(289)
(556)
(1,363)
(1,827)
464
Effect of exchange rate changes on
cash and cash equivalents
8
(7)
15
6
(1)
7
Increase (decrease) in cash and cash
equivalents
$
(875)
$ 357
$(1,232)
$
(299)
$
124
$ (423)
Net cash flows from operating activities
Air Canada generated net cash flows from operating activities in each of the fourth quarter
and full year 2024, although these were lower compared to the 2023 comparative periods
primarily due to a decrease in cash from working capital and operating results.
Net cash flows used in financing activities
Net cash flows used in financing activities amounted to $2,872 million in 2024, an increase of
$504 million from the prior year and is primarily related to Air Canada’s use of $473 million for the
purchase of shares for cancellation discussed in section 8.8 “Share information” of this MD&A.
Net cash flows used in 2024 included the $1,475 million (US$1,090 million) debt repayment in
the refinancing transaction completed in March 2024 and described in section 8.2 “Net Debt”
of this MD&A.
Net cash flows used in investing activities
Net cash flows used in investing activities decreased $464 million in 2024 compared to
2023 mainly due to inflows from short-term and long-term investments partially offset by
a $1,072 million increase in capital expenditures . The 2024 results include net proceeds of
$1,274 million in disposal of short- and long-term investments to facilitate the $1.475 billion
(US$1.09 billion) net repayment of long-term debt in March 2024 as described in section 8.3
“Working Capital” of this MD&A. Additions to property, equipment and intangible assets were
$2,636 million in 2024, compared to $1,564 million in 2023. The year-over-year increase mainly
reflected higher capitalized maintenance and capital expenditures for purchase of aircraft,
including pre-delivery deposits for purchased aircraft that are scheduled to be delivered in
future periods.
Refer to sections 8.2 “Net Debt”, and 8.3 “Working Capital” of this MD&A for additional
information.
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Free cash flow
The table below provides the calculation of free cash flow for Air Canada for the periods
indicated.
Fourth Quarter
Full Year
(Canadian dollars in millions)
2024
2023
$ Change
2024
2023
$ Change
Net cash flows from operating
activities
$
677
$ 985
$ (308)
$ 3,930
$ 4,320
$
(390)
Additions to property, equipment,
and intangible assets
(1,172)
(316)
(856)
(2,636)
(1,564)
(1,072)
Free cash flow (1)
$
(495)
$ 669
$ (1,164)
$ 1,294
$ 2,756
$ (1,462)
(1) Free cash flow is a non-GAAP financial measure used by Air Canada as an indicator of the financial strength and
performance of its business, indicating how much cash it can generate from operations after capital expenditures. Free
cash flow is calculated as net cash flows from operating activities minus additions to property, equipment and intangible
assets and net of proceeds from sale and leaseback transactions. Such measure is not a recognized measure for
financial statement presentation under GAAP, does not have a standardized meaning, 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
section 20 “Non-GAAP Financial Measures” of this MD&A for additional information.
Air Canada generated $1,294 million in free cash flow in 2024. This was lower than 2023 as a
result of higher capital expenditures and lower net cash flows from operating activities.
8.5 Capital expenditures and related financing
arrangements
Airbus A321XLR aircraft
Air Canada is acquiring 30 extra-long range (XLR) Airbus A321neo aircraft (Airbus A321XLR).
Deliveries are scheduled to begin in the fourth quarter of 2025 with the final aircraft
scheduled to arrive in 2029. Of the 30 total aircraft, 15 aircraft will be leased and 15 are being
acquired under a purchase agreement with Airbus S.A.S. that includes purchase rights to
acquire up to 10 additional aircraft between 2030 and 2032.
Airbus A220-300 aircraft
Air Canada has an agreement with Airbus Canada for the purchase of Airbus A220-300
aircraft, which provides for:
• Firm orders for 65 Airbus A220-300 aircraft.
• Purchase options for 10 additional Airbus A220-300 aircraft.
Of the above-mentioned 65 firm orders, 34 have been delivered. Deliveries for the 31
remaining firm orders are planned to continue into 2027.
In October 2024, Air Canada received a loan commitment from Export Development Canada
of up to US$975 million to finance a portion of the purchase price of up to 27 Airbus A220-300
aircraft, which are expected to be delivered no later than October 2027.
Boeing 737 MAX
Air Canada’s agreement with Boeing for the purchase of Boeing 737 MAX aircraft provides
for firm orders for 40 Boeing 737 MAX 8 aircraft (which have all been delivered) and purchase
options for 10 additional Boeing 737 MAX aircraft.
In 2023, Air Canada entered into lease agreements for five additional Boeing 737 MAX 8
aircraft that are scheduled to enter the operating fleet in 2026.
In June 2024, Air Canada entered into lease agreements for eight additional Boeing 737 MAX
8 aircraft, of which one was delivered in June 2024 and two were delivered to date in 2025. In
February 2025, Air Canada reduced the total number of aircraft to seven, which are scheduled
to enter the operating fleet during 2025.
Boeing 767 freighter aircraft
In the first quarter of 2024, Air Canada adjusted its freighter capacity plans to align with
market conditions and removed the addition of two Boeing 767 freighters from its 2024-2025
fleet plan.
Boeing 787-9 aircraft
In 2021, Air Canada exercised options for the purchase of three Boeing 787-9 aircraft. Two 787-
9 aircraft were delivered, and the third aircraft is scheduled to be delivered in 2025.
Boeing 787-10 aircraft
In September 2023, Air Canada announced that it is acquiring 18 Boeing 787-10 aircraft.
Deliveries are scheduled to begin in 2026, and Air Canada now expects delivery of the last
four aircraft in 2030. The purchase agreement includes options for 12 additional Boeing 787-10
aircraft.
Heart Aerospace ES-30 electric aircraft
In 2022, Air Canada entered into a purchase agreement for 30 ES-30 electric-hybrid aircraft
under development by Heart Aerospace. The purchase remains subject to conditions including
in relation to the design and specifications of the aircraft. In addition, the final cost for the
aircraft, which is subject to a price cap, is not yet determinable and is not included in the table
below. These aircraft would not be expected to start entry into service before at least 2029.
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Capital commitments
As outlined in the table below, the estimated aggregate cost of all aircraft expected to be
delivered and other capital purchase commitments at December 31, 2024 amounted to
$13,059 million.
(Canadian dollars
in millions)
2025
2026
2027
2028
2029
Thereafter
Total
Committed
expenditures
$ 2,289
$ 2,746
$ 3,260
$
957
$
946
$ 2,861
$ 13,059
Projected planned
but uncommitted
expenditures
498
986
834
971
854
Not
available
Not
available
Projected planned
but uncommitted
capitalized
maintenance (1)
651
609
809
629
595
Not
available
Not
available
Total projected
expenditures (2)
$ 3,438
$ 4,341
$ 4,903
$ 2,557
$ 2,395
Not
available
Not
available
(1) Future capitalized maintenance amounts for 2028 and beyond are not yet determinable, however estimates of
$629 million and $595 have been made for 2028 and 2029, respectively.
(2) U.S. dollar amounts are converted using the December 31, 2024 closing exchange rate of US$1=C$1.4384. The estimated
aggregate cost of aircraft is based on delivery prices that include estimated escalation.
8.6 Pension funding obligations
Air Canada maintains several defined benefit pension plans, including domestic registered
pension plans and supplemental pension plans. Air Canada also sponsors several defined
contribution pension plans and pension plans for foreign employees and contributes to some
multi-employer pension plans. In addition, Air Canada has plans providing other retirement
and post-employment benefits to its employees.
On a preliminary basis, at January 1, 2025, the aggregate solvency surplus in Air Canada’s
domestic registered pension plans was estimated at $4.0 billion. The final valuations will
be completed in the first half of 2025. As permitted by legislation and subject to applicable
plan rules, amounts in excess of 105 per cent on a solvency basis can be used to reduce
current service contributions under the defined benefit component or to fund the employer
contribution to a defined contribution component within the same pension plan.
Total employer defined benefit pension funding contributions (including international and
supplemental plans) amounted to $102 million in 2024 and are forecasted to be $66 million
in 2025.
Net of the surplus in the defined benefit components which was used to fund the employer
contribution to a defined contribution component within the same pension plan, total
employer contributions for the defined contribution plans and multi-employer plans amounted
to $85 million in 2024 and are forecasted to be $92 million in 2025.
As a result of the collective agreement concluded with ALPA, the impact of the changes to
the defined benefit pension plans was recognized in the fourth quarter of 2024. Air Canada
recorded a one-time pension past service cost of $490 million to reflect changes relating to
pension plan changes as a result of the new collective agreement. Some of these changes are
conditional on future pension solvency financial positions. Changes in assumptions associated
with these conditional increases will be recognized in other comprehensive income as actuarial
gains and losses. The net impact of these changes will be funded out of the surplus in the
Pilots’ domestic registered pension plan and are not expected to impact Air Canada’s liquidity
position.
As at December 31, 2024, approximately 90 per cent of Air Canada’s Domestic Registered
Defined Benefit Plans’ assets were invested in fixed income instruments to mitigate a
significant portion of the interest rate (discount rate) risk. Air Canada seeks to maintain a high
percentage of long-term fixed income products to hedge pension liabilities.
Pension plan assets
Included in plan assets, for determining the net benefit obligation for accounting purposes, are
17,646,765 (2023 – 17,646,765) shares of Air Canada which were issued to a trust in 2009 in
connection with pension funding agreements reached with all of Air Canada’s Canadian-based
unions. The trust arrangement provides that proceeds of the sale of the trust shares will be
retained and applied to reduce future pension solvency deficits, if any should materialize. In
addition, for so long as the trust continues to hold at least two per cent of Air Canada’s issued
and outstanding shares, the trustee will have the right to designate one nominee to the Board
of Directors of Air Canada (who shall not be a member or officer of any of its Canadian-based
unions), subject to completion by Air Canada of its usual governance process for selection and
confirmation of director nominees.
With Air Canada’s domestic registered plans in a surplus position on a solvency basis, the
accounting rules prevent the recognition of the value of the shares held in trust as part of
the pension assets. The shares held in trust had a fair value of $393 million at December 31,
2024 (2023 – $330 million), however after giving effect to the asset ceiling, the recognized
accounting value of the trust asset is nil.
In November 2021, Air Canada announced that its Canadian unions and the Air Canada
Pionairs agreed in principle to permit certain other uses of the proceeds of the shares
discussed above. If certain conditions are met, the trust would gradually sell shares up
to the end of 2037, and the net proceeds from these sales would be used to make lump
sum payments to Canadian pensioners and to fund voluntary separation packages for
senior unionized employees and non-executive employees. Pursuant to the agreement in
principle, the above-described right to designate one nominee for election to the Board of
Directors of Air Canada would continue until the earlier of (i) January 1, 2030, or (ii) the date
that Air Canada shares in trust represent two per cent or less of Air Canada’s issued and
outstanding shares. There are several conditions to the completion of the agreement in
principle and effecting such sales and payments. These include the conclusion of definitive
documentation, and the receipt of all required regulatory and other approvals which remain
outstanding. While the satisfaction of the conditions is being pursued, there can be no
assurance that these or any other conditions will be satisfied.
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8.7 Contractual obligations
The table below provides Air Canada’s projected contractual obligations as at December 31,
2024, including those relating to interest and principal repayment obligations on Air Canada’s
long-term debt and lease liabilities and committed capital expenditures.
(Canadian dollars
in millions)
2025
2026
2027
2028
2029
Thereafter
Total
Principal
Long-term debt (1)
$
1,176
$ 2,528
$
1,102
$ 1,377
$ 2,309
$ 2,026
$ 10,518
Lease liabilities
592
429
329
253
154
676
2,433
Total principal
obligations
$ 1,768
$ 2,957
$ 1,431
$ 1,630
$ 2,463
$ 2,702
$ 12,951
Interest
Long-term debt
458
397
273
234
218
134
1,714
Lease liabilities
123
94
72
56
42
259
646
Total interest
obligations
$
581
$
491
$
345
$
290
$
260
$
393
$ 2,360
Total long-term debt
and lease liabilities
$ 2,349
$ 3,448
$ 1,776
$ 1,920
$ 2,723
$ 3,095
$ 15,311
Committed capital
expenditures
$ 2,289
$ 2,746
$ 3,260
$
957
$
946
$ 2,861
$ 13,059
Total contractual
obligations (2)
$ 4,638
$ 6,194
$ 5,036
$ 2,877
$ 3,669
$ 5,956
$28,370
(1) Assumes the principal balance of the convertible notes, $394 million (US$274 million), remains unconverted and includes
estimated interest payable until maturity in 2025. The full principal balance of $1,273 million for the unsecured credit
facility in connection with the Government of Canada financing to support customer refunds of non-refundable tickets
and $1,677 million (US$1,166 million) for the term loan B is included.
(2) Total contractual obligations exclude commitments for goods and services required in the ordinary course of business.
Also excluded are long-term liabilities other than long-term debt and lease liabilities due to reasons of uncertainty of
timing of cash flows and items that are non-cash in nature.
8.8 Share information
The issued and outstanding shares of Air Canada, along with shares potentially issuable, as of
the dates indicated below, are as follows:
December 31, 2024
December 31, 2023
Issued and outstanding shares
Class A variable voting shares
102,314,033
82,887,375
Class B voting shares
237,525,089
275,581,911
Total issued and outstanding shares
339,839,122
358,469,286
Class A variable voting and Class B voting shares
potentially issuable
Convertible notes
17,856,599
17,856,599
Stock options
9,230,773
6,642,516
Total shares potentially issuable
27,087,372
24,499,115
Total outstanding and potentially issuable shares
366,926,494
382,968,401
Normal course issuer bid
In the fourth quarter of 2024, Air Canada received approval from the Toronto Stock Exchange
(“TSX”) to launch a normal course issuer bid (“Issuer Bid”) allowing it to purchase for
cancellation, in accordance with the rules of the TSX and during the period from November 5,
2024 to November 4, 2025, up to 35,783,842 of its Class A variable voting shares and Class
B voting shares, representing about 10 per cent of the public float thereof as at October 22,
2024.
In 2024, and pursuant to the Issuer Bid, Air Canada purchased, for cancellation, 20,279,100
shares at an average cost of $23.92 per share for aggregate consideration of $485 million.
In January and February 2025, Air Canada purchased an additional 15,504,742 shares at
an average cost of $20.30 per share for aggregate consideration of $315 million effectively
purchasing the maximum amount of 35,783,842 shares available for purchase for cancellation
under its Issuer Bid.
Air Canada security holders may obtain a copy of Air Canada’s Notice of Intention to
Make a Normal Course Issuer Bid, without charge, by contacting Shareholder Relations at
shareholders.actionnaires@aircanada.ca or +1 (514) 422-6644.
Consolidated
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9. Quarterly financial data
The table below provides select financial information for Air Canada for the last eight quarters.
2023
2024
(Canadian dollars in millions, except per share figures)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Operating revenues
$
4,887
$
5,427
$
6,344
$
5,175
$
5,226
$
5,519
$
6,106
$
5,404
Operating expenses
4,904
4,625
4,929
5,096
5,215
5,053
5,066
5,658
Operating income (loss)
(17)
802
1,415
79
11
466
1,040
(254)
Non-operating income (expense)
(6)
(6)
(98)
43
(76)
(62)
(143)
(467)
Income (loss) before income taxes
(23)
796
1,317
122
(65)
404
897
(721)
Income tax recovery (expense)
27
42
(67)
62
(16)
6
1,138
77
Net income (loss)
$
4
$
838
$
1,250
$
184
$
(81)
$
410
$
2,035
$
(644)
Basic earnings (loss) per share
$
0.01
$
2.34
$
3.49
$
0.51
$
(0.22)
$
1.14
$
5.68
$
(1.81)
Diluted earnings (loss) per share
$
(0.03)
$
2.34
$
3.08
$
0.41
$
(0.22)
$
1.04
$
5.38
$
(1.81)
Adjusted EBITDA (1)
$
411
$
1,220
$
1,830
$
521
$
453
$
914
$
1,523
$
696
Adjusted pre-tax income (loss) (1)
$
(194)
$
656
$
1,278
$
(47)
$
(94)
$
371
$
985
$
135
Adjusted net income (loss) (1)
$
(188)
$
664
$
1,281
$
(44)
$
(96)
$
369
$
969
$
93
Adjusted earnings (loss) per share – diluted (1)
$
(0.53)
$
1.85
$
3.41
$
(0.12)
$
(0.27)
$
0.98
$
2.57
$
0.25
(1) Adjusted EBITDA, adjusted pre-tax income (loss) and adjusted net income (loss) are non-GAAP financial measures. Adjusted earnings (loss) per share is a non-GAAP financial ratio. For additional information, refer to section 20 “Non-GAAP Financial
Measures” of this MD&A.
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10. Annual information
The table below provides select financial information for Air Canada for the periods indicated.
Full Year
(Canadian dollars in millions, except per share figures)
2024
2023 (1)
2022
Operating revenues
$
22,255
$
21,833
$
16,556
Operating expenses
20,992
19,554
16,743
Operating income (loss)
1,263
2,279
(187)
Income (loss) before income taxes
515
2,212
(1,524)
Income tax recovery (expense)
1,205
64
(176)
Net income (loss)
$
1,720
$
2,276
$
(1,700)
Basic earnings (loss) per share
$
4.81
$
6.35
$
(4.75)
Diluted earnings (loss) per share
$
4.72
$
5.96
$
(4.75)
Adjusted EBITDA (2)
$
3,586
$
3,982
$
1,457
Adjusted pre-tax income (loss) (2)
$
1,397
$
1,693
$
(952)
Adjusted net income (loss) (2)
$
1,335
$
1,713
$
(988)
Adjusted earnings (loss) per share – diluted (2)
$
3.55
$
4.56
$
(2.76)
Cash, cash equivalents and short-term investments
$
6,982
$
8,551
$
7,988
Total assets
$
31,208
$
30,171
$
29,507
Total long-term liabilities
$
17,372
$
19,376
$
21,709
Total liabilities
$
28,820
$
29,375
$
31,062
(1) Certain comparative figures have been reclassified to conform to the financial statement presentation adopted for the
current year.
(2) Adjusted EBITDA, adjusted pre-tax income (loss) and adjusted net income (loss) are non-GAAP financial measures.
Adjusted earnings (loss) per share is a non-GAAP financial ratio. For additional information, refer to section 20 “Non-
GAAP Financial Measures” of this MD&A.
11. Financial instruments and
risk management
Financial instruments recorded at fair value
The following is a summary of gains (losses) on financial instruments recorded at fair value
included in non-operating income (expense) on Air Canada’s consolidated statement of
operations for the periods indicated.
Fourth Quarter
Full Year
(Canadian dollars in millions)
2024
2023
2024
2023
Embedded derivative on convertible notes
$
(35)
$
32
$
11
$
64
Short-term and long-term investments
(3)
53
17
45
Other
-
6
-
6
Gain (loss) on financial instruments recorded at fair value
$
(38)
$
91
$
28
$
115
Risk management
Under its risk management policy, Air Canada manages its market risk through the use of
various financial derivative instruments. Air Canada uses these instruments solely for risk
management purposes, not for generating trading profit. As such, any change in cash flows
associated with derivative instruments is designed to be an economic hedge and offset by
changes in cash flows of the relevant risk being hedged.
The fair values of derivative instruments represent the amount of the consideration that
could be exchanged in an arm’s length transaction between willing parties who are under no
compulsion to act. The fair values of these derivatives are determined using prices in active
markets, where available. When no such market is available, valuation techniques such as
discounted cash flow analysis are applied. The valuation technique incorporates all factors
that would be considered in setting a price, including Air Canada’s own credit risk as well as
the credit risk of the counterparty.
Fuel price risk management
Fuel price risk is the risk that future cash flows will fluctuate because of changes in jet fuel
prices. To manage its exposure to jet fuel prices and to help mitigate volatility in operating
cash flows, Air Canada can elect to enter into derivative contracts with financial intermediaries.
Air Canada may use derivative contracts based on jet fuel, heating oil and crude-oil-based
contracts. Air Canada’s policy permits hedging of up to 75 per cent of the projected jet fuel
purchases for the current calendar year, 50 per cent of the projected jet fuel purchases for
the next calendar year, and 25 per cent of projected jet fuel purchases for any calendar year
thereafter. These are maximum (but not mandated) limits. There is no minimum monthly
hedging requirement. There are regular reviews to adjust the strategy in light of market
conditions.
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During 2024, Air Canada entered into jet fuel swap contracts
covering a portion of 2024 fuel exposure. These derivative
contracts cash settled with a fair value of $54 million in favor
of the counterparties, with a hedging loss of $54 million
recorded in Aircraft fuel expense. No hedge ineffectiveness
was recorded. There were no outstanding fuel derivatives as
at December 31, 2024 nor as at December 31, 2023.
During 2023, Air Canada purchased jet fuel call options
covering a portion of 2023 fuel exposure. The cash premium
related to these contracts was $44 million. Premium costs
and any hedging gains and losses are reclassified from
other comprehensive income to Aircraft fuel expense on
settlement of the derivatives. Fuel derivative contracts
cash settled with a fair value of $95 million in favour of
Air Canada, with a net hedging gain of $51 million recorded in
aircraft fuel expense.
Foreign exchange risk
Air Canada’s financial results are reported in Canadian
dollars, while a large portion of its expenses, debt obligations
and capital commitments are in foreign currencies,
primarily in U.S. dollars. Foreign exchange risk is the risk
that fluctuations in foreign exchange rates may have
on operating results and cash flows. Air Canada’s risk
management objective is to reduce cash flow risk related to
foreign denominated cash flows.
Air Canada generates certain sales in U.S. dollars and in other
foreign currencies which are converted to U.S. dollars under
its risk management program. In 2024, these net operating
cash inflows totalled approximately US$3.7 billion and U.S.
denominated operating costs amounted to approximately
US$7.3 billion. Non-operating cash outflows in U.S. dollars,
primarily related to interest payments on U.S. dollar
denominated debt and net financing outflows, amounted to
approximately US$3.5 billion. For 2024, this resulted in a U.S.
dollar net cash flow exposure of approximately US$7.1 billion.
In 2024, Air Canada increased its target foreign currency
derivative coverage from 60 per cent to 70 per cent on a
rolling 18 month basis to manage its net U.S. dollar cash
flow exposure described above utilizing the following risk
management strategies:
• Holding U.S. dollar cash reserves as an economic hedge
against changes in the value of the U.S. dollar. U.S.
dollar cash, short and long-term investment balances
as at December 31, 2024 amounted to $805 million
(US$561 million) ($1,123 million (US$845 million) as at
December 31, 2023). A portion of the cash and investment
reserves are an economic hedge against long-term U.S.
dollar debt while the remainder of the cash is operational
cash and investment reserves which are applied against
the rolling 18 month net U.S. dollar cash flow exposure.
In 2024, a gain of $64 million (loss of $18 million in 2023)
was recorded in Foreign exchange gain (loss) reflecting the
change in Canadian equivalent market value of the U.S.
dollar cash, short and long-term investment balances held.
• Locking in the foreign exchange rate through the use
of a variety of foreign exchange derivatives which have
maturity dates corresponding to the forecasted dates of
U.S. dollar net outflows.
The level of foreign exchange derivatives entered into and
their related maturity dates are dependent upon a number
of factors, which include the amount of foreign revenue
conversion available, U.S. dollar net cash outflows, as well
as the amount attributed to aircraft and debt payments.
Based on the notional amount of currency derivatives
outstanding at December 31, 2024, as further described
below, approximately 74 per cent of net U.S. cash outflows
are hedged for 2025 and 60 per cent for 2026, resulting in
derivative coverage of 69 per cent over the next 18 months.
Operational U.S. dollar cash and investment reserves
combined with derivative coverage results in 70 per cent
coverage over the next 18 months.
As at December 31, 2024, Air Canada had outstanding
foreign currency options and swap agreements, settling
in 2025 and 2026, to purchase at maturity $9,812 million
(US$6,847 million) of U.S. dollars at a weighted average
rate of $1.3457 per US$1.00 (2023 – $5,982 million
(US$4,542 million) with settlements in 2024 and 2025 at a
weighted average rate of $1.3089 per US$1.00). Air Canada
also has protection in place to sell a portion of its excess
Euros, Sterling, YEN, CNH, and AUD (EUR €341 million,
GBP £172 million, JPY ¥38,610 million, CNH ¥711 million
and AUD $242 million) which settle in 2025 and 2026 at
weighted average rates of €1.1267, £1.1.2897, ¥0.0071, CNH
¥0.1435 and AUD $0.6810 per US$1.00, respectively (as at
December 31, 2023 – EUR €276 million, GBP £166 million,
JPY ¥14,797 million, and AUD $124 million) with settlement
in 2024 and 2025 at weighted average rates of €1.1292,
£1.2790, ¥0.0075, and AUD $0.6920 per US$1.00.
The hedging structures put in place have various option
pricing features, such as knock-out terms and profit cap
limitations, and based on the assumed volatility used in
the fair value calculation, the net fair value of these foreign
currency contracts as at December 31, 2024 was $22 million
in favour of Air Canada (2023 – $165 million in favour of
the counterparties). These derivative instruments have not
been designated as hedges for accounting purposes and are
recorded at fair value. During 2024, a gain of $450 million
was recorded in Foreign exchange gain (loss) related to
these derivatives (2023 – $139 million gain). In 2024, foreign
exchange derivative contracts cash settled with a net
fair value of $265 million in favour of Air Canada (2023 –
$163 million in favour of Air Canada).
Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of
changes in market interest rates.
Air Canada enters into both fixed and floating rate debt
and also leases certain assets where the rental amount
fluctuates based on changes in short-term interest rates.
Air Canada manages interest rate risk on a portfolio basis
and seeks financing terms in individual arrangements that
are most advantageous taking into account all relevant
factors, including credit margin, term and basis. The risk
management objective is to minimize the potential for
changes in interest rates to cause adverse changes in cash
flows to Air Canada. The cash and short-term investment
portfolio which earns a floating rate of return is an economic
hedge for a portion of the floating rate debt.
The ratio of fixed to floating rate obligations outstanding
is designed to maintain flexibility in Air Canada’s capital
structure and is based upon a long-term objective of 60 per
cent fixed and 40 per cent floating but allows flexibility to
adjust to prevailing market conditions. The ratio at December
31, 2024 is 84 per cent fixed and 16 per cent floating (75 per
cent and 25 per cent, respectively as at December 31, 2023).
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12. Accounting policies
Information on Air Canada’s accounting policies is provided
in Note 2 of Air Canada’s audited consolidated financial
statements and notes for 2024, including future changes
in accounting policies for amendments to standards not yet
effective.
Amendments to IAS 1, Presentation of financial
statements - Classification of liabilities as current or
non-current
In October 2022, the IASB published amendments to the
Classification of Liabilities as Current or Non-current in IAS
1 Presentation of Financial Statements. The amendments
aim to improve the information companies provide when
the right to defer settlement of a liability for at least 12
months is subject to the entity complying with covenants
after the reporting date. The amendments specify that
covenants to be complied with after the reporting date do
not affect the classification of debt as current or non-current
at the reporting date. The amendments require an entity
to disclose information about these covenants in the notes
to the financial statements. The amendments are effective
for annual periods beginning on or after January 1, 2024.
Air Canada adopted this amendment in the first quarter of
2024 with no impact to Air Canada’s consolidated statement
of financial position.
IAS 12 income taxes
In May 2023, the IASB issued an amendment to IAS 12. The
amendment addresses accounting for the global minimum
tax as outlined in the two-pillar plan for international tax
reform developed by the Organisation for Economic Co-
operation and Development. The objective of the tax reform
is to ensure that large multinational enterprises are subject to
a minimum income tax rate of 15 per cent in each jurisdiction
they operate. The amendment to IAS 12 includes temporary
mandatory relief from recognizing and disclosing deferred
taxes related to the implementation of Pillar Two global
minimum tax rules.
In June 2024, the Global Minimum Tax Act was enacted
in Canada which is a jurisdiction where Air Canada has a
constituent entity for the purposes of Pillar Two. Air Canada
adopted the amendments to IAS 12 in the second quarter of
2024 and applied the exception to recognizing and disclosing
information about deferred tax assets and liabilities related
to Pillar Two income taxes. This exception has been applied
retrospectively but no adjustments to previously reported
figures were required. There is no material impact for the
year ended December 31, 2024.
Accounting standards and amendments
issued but not yet effective
The following accounting standards and amendments to
accounting standards issued by the IASB have not yet been
adopted by Air Canada. Air Canada is evaluating the impact
of these standards and amendments on its consolidated
financial statements.
IFRS 18 – presentation and disclosure in financial
statements
In April 2024, the IASB issued IFRS 18 which sets out
requirements for the presentation and disclosure of
information in the financial statements. IFRS 18 will replace
IAS 1 Presentation of Financial Statements but carries
forward many of the requirements from IAS 1. The standard
introduces new defined subtotals to be presented in the
consolidated statements of operations, disclosure of
management-defined performance measures related to
the income statement and requirements for grouping of
information. IFRS 18 is effective for annual periods beginning
on or after January 1, 2027, with earlier adoption permitted.
Amendments to the classification and measurement of
financial instruments
In May 2024, the IASB issued Amendments to the
Classification and Measurement of Financial Instruments
which amends IFRS 9 Financial Instruments and IFRS 7
Financial Instruments: Disclosures (the Amendments). The
narrow scope amendments clarify classification guidance
for financial assets with environmental, social and corporate
governance features; and clarify the date on which a
financial asset or financial liability is derecognized when
using electronic payment systems. The amendments will be
effective for annual reporting periods beginning on or after
January 1, 2026, with earlier adoption permitted.
13. Critical accounting
estimates and
judgments
Critical accounting estimates are those estimates of
management that are most important to the portrayal of
Air Canada’s financial condition and results of operations.
They require management’s most difficult, subjective or
complex judgments, often because of the need to make
estimates and judgments about the effect of matters that
are inherently uncertain. Actual results could differ materially
from those estimates and judgments.
Significant estimates and judgments made in the preparation
of Air Canada’s consolidated financial statements include,
but are not limited to, the following areas.
Impairment considerations on long-lived
assets
When required, an impairment test is performed by
comparing the carrying amount of the asset or cash-
generating unit to their recoverable amount, which is
calculated as the higher of an asset’s or cash-generating
unit’s fair value less costs to dispose and its value in use. Fair
value less costs to dispose may be calculated based upon a
discounted cash flow analysis, which requires management
to make a number of significant market participant
assumptions including assumptions relating to cash flow
projections, discount rates and future growth rates.
Aeroplan loyalty program
Loyalty program accounting requires management to make
several estimates including the ETV of Aeroplan Points
issued and the breakage on Aeroplan Points. The ETV of
Aeroplan Points issued is determined based on the value a
passenger receives by redeeming Points for a ticket rather
than paying cash. This ETV is estimated with reference to
historical Aeroplan redemptions as compared to equivalent
ticket purchases after considering similar fare conditions,
advance booking periods and other relevant factors including
the selling price of Points to third parties. ETV estimates and
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assumptions are considered for updates at least annually. A
change in the ETV rate is accounted for prospectively.
Breakage represents the estimated Points that are not
expected to be redeemed. Breakage is estimated by
management based on the terms and conditions of
membership and historical accumulation and redemption
patterns, as adjusted for changes to any terms and
conditions or other circumstances that may affect future
redemptions. Management uses statistical and simulation
models to estimate breakage. Assumptions are reviewed for
updates at least annually. A change in assumptions as to the
number of Points expected to be redeemed could have a
significant impact on revenue in the year in which the change
occurs.
As at December 31, 2024, the Aeroplan Points deferred
revenue balance was $3,785 million. For the purposes of
sensitivity analysis, a one per cent change in the number of
outstanding Points estimated to be redeemed would result
in an approximate impact of $38 million on revenue with a
corresponding adjustment to Aeroplan deferred revenue.
Passenger revenues - breakage
Air Canada estimates the amount of advance ticket sales that
will expire unused (breakage) and recognizes revenue at the
scheduled date of travel. Breakage estimates and resulting
amount of breakage revenues recorded are estimated based
on historical ticket breakage patterns and other applicable
factors such as ticket contract terms and are subject to
measurement uncertainty. Estimates of breakage may vary
in future periods.
Depreciation and amortization period for
long-lived assets
Air Canada makes estimates about the expected useful
lives of long-lived assets and the expected residual value of
the assets based on the estimated current and future fair
values of the assets, Air Canada’s fleet plans and the cash
flows they generate. Changes to these estimates, which
can be significant, could be caused by a variety of factors,
including changes to maintenance programs, changes in jet
fuel prices and other operating costs, changes in utilization
of the aircraft, and changing market prices for new and
used aircraft of the same or similar types. Estimates and
assumptions are evaluated at least annually. Generally,
these adjustments are accounted for on a prospective basis,
through depreciation and amortization expense. For the
purposes of sensitivity analysis on these estimates, a 50 per
cent reduction to residual values on aircraft with remaining
useful lives greater than five years results in an increase of
$16 million to annual depreciation expense. For aircraft with
shorter remaining useful lives, the residual values are not
expected to change significantly.
Maintenance provisions
The recording of maintenance provisions related to return
conditions on aircraft leases requires management to
make estimates of the future costs associated with the
maintenance events required under the lease return
condition and estimates of the expected future maintenance
condition of the aircraft at the time of lease expiry.
These estimates take into account current costs of these
maintenance events, estimates of inflation surrounding
these costs as well as assumptions surrounding utilization of
the related aircraft. Any difference in the actual maintenance
cost incurred at the end of the lease and the amount of the
provision is recorded in Aircraft maintenance expense in the
period. The effect of any changes in estimates, including
changes in discount rates, inflation assumptions, cost
estimates or lease expiries, is recognized as an adjustment to
the right-of-use asset.
Income taxes
Since 2020, the net deferred income tax assets related
to unused tax losses and other deductible temporary
differences have not been recognized. As a result of the
COVID-19 pandemic, there was considerable negative
evidence relating to losses that were incurred at that time
and assumptions as to the timing of reversal of temporary
differences including expectations about the future results
of operations and future cash flows.
During the third quarter of 2024, Air Canada determined
that it was probable that substantially all of the deferred
income tax assets, which include non-capital losses,
other post-employment benefits, maintenance and other
temporary differences, would be realized. Refer to Note 11
Income taxes of Air Canada’s audited consolidated financial
statements and notes for 2024 for additional information on
the recognition of deferred income tax assets.
Employee future benefits
The cost and related liabilities of Air Canada’s pension, other
post-retirement and post-employment benefit programs
are determined using actuarial valuations. The actuarial
valuations involve assumptions and estimates including
discount rates and mortality assumptions. Also, due to
the long-term nature of these programs, such estimates
are subject to significant uncertainty. Refer to Note 9
Pensions and other benefit liabilities of Air Canada’s audited
consolidated financial statements and notes for 2024 for
additional information.
Assumptions
Management is required to make estimates about actuarial
and financial assumptions to determine the cost and related
liabilities of Air Canada’s employee future benefits.
Discount rate
The discount rate used to determine the pension obligation
was determined by reference to market interest rates on
corporate bonds rated “AA” or better with cash flows that
approximate the timing and amount of expected benefit
payments.
Future increases in compensation
Estimates surrounding assumptions of future increases in
compensation are based upon the current compensation
policies, Air Canada’s long-range plans, labour and
employment agreements and economic forecasts.
Mortality assumptions
Mortality tables and improvement scales issued by the
Canadian Institute of Actuaries (revised in 2014) were taken
into account in selecting management’s best estimate
mortality assumption used to calculate the accrued benefit
obligation as at December 31, 2024 and 2023.
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The weighted average assumptions used to determine Air Canada’s accrued benefit
obligations and cost are as follows:
Pension Benefits
Other Employee
Future Benefits
2024
2023
2024
2023
Discount rate used to determine:
Net interest on the net defined benefit obligation for the
year ended December 31
4.64%
5.28%
4.64%
5.28%
Service cost for the year ended December 31
4.65%
5.28%
4.65%
5.28%
Accrued benefit obligation as at December 31
4.70%
4.64%
4.70%
4.64%
Rate of future increases in compensation used to
determine:
Accrued benefit cost and service cost for the year ended
December 31
2.75%
2.75%
Not
applicable
Not
applicable
Accrued benefit obligation as at
December 31
2.75%
2.75%
Not
applicable
Not
applicable
Sensitivity analysis
Sensitivity analysis is based on changing one assumption while holding all other assumptions
constant. In practice, this may be unlikely to occur, and changes in some of the assumptions
may be correlated. When calculating the sensitivity of the defined benefit obligation to
variations in significant actuarial assumptions, the same method (present value of the
defined benefit obligation calculated with the projected unit credit method at the end of the
reporting period) has been applied as for calculating the liability recognized in the consolidated
statement of financial position.
Sensitivity analysis on 2024 pension expense, net interest relating to pension benefit liabilities
and pension obligation, based on different actuarial assumptions with respect to discount rate
is set out below. The effects on each pension plan of a change in an assumption are weighted
proportionately to the total plan obligation to determine the total impact for each assumption
presented.
0.25 Percentage Point
(Canadian dollars in millions)
Decrease
Increase
Discount rate on obligation assumption
Pension expense
$
34
$
(32)
Net interest relating to pension benefit liabilities
11
(9)
Total
$
45
$
(41)
Increase (decrease) in pension obligation
$
604
$
(571)
The increase (decrease) in the pension obligation for a 0.25-percentage-point change in
the discount rate relates to the gross amount of the pension liabilities and is before the
impact of any change in plan assets. As at December 31, 2024, approximately 90 per cent
of Air Canada’s pension assets were invested in fixed income instruments to mitigate a
significant portion of the interest rate (discount rate) risk.
An increase of one year in life expectancy would increase the pension benefit obligation by
$433 million.
Assumed health care cost trend rates impact the amounts reported for the health care plans.
A 4.5 per cent annual rate of increase in the per capita cost of covered health care benefits
was assumed for 2024 and thereafter, unchanged from the 2023 assumption. A one-
percentage-point increase in assumed health care trend rates would have increased the total
of current service and interest costs by $5 million and the obligation by $61 million. A one-
percentage-point decrease in assumed health care trend rates would have decreased the total
of current service and interest costs by $4 million and the obligation by $64 million.
A 0.25-percentage-point decrease in discount rate for other employee future benefits would
have increased the total of current and interest costs by less than $1 million and the obligation
by $34 million. A 0.25-percentage-point increase in discount rate would have decreased the
total of current and interest costs by less than $1 million and the obligation by $32 million.
Consolidated
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14. Off-balance sheet arrangements
Guarantees
Air Canada participates in fuel facility arrangements operated through nine Fuel Facility
Corporations, and three aircraft de-icing service facilities, along with other airlines that
contract for fuel and de-icing services at various major airports in Canada. These entities
operate on a cost recovery basis. The aggregate debt of these entities that has not been
consolidated by Air Canada under IFRS 10 Consolidated Financial Statements is approximately
$1,425 million as at December 31, 2024 (December 31, 2023 – $1,215 million), which is
Air Canada’s maximum exposure to loss before taking into consideration the value of the
assets that secure the obligations and any cost sharing that would occur among the other
contracting airlines. Air Canada views this loss potential as remote. Each contracting airline
participating in these entities shares pro rata, based on system usage, in the guarantee of this
debt. The maturities of these debt arrangements vary but generally extend beyond five years.
Indemnification agreements
In the ordinary course of Air Canada’s business, Air Canada enters into a variety of
agreements, such as real estate leases or operating agreements, aircraft financing or
leasing agreements, technical service agreements, and director/officer contracts, and other
commercial agreements, some of which may provide for indemnifications to counterparties
that may require Air Canada to pay for costs and/or losses incurred by such counterparties.
Air Canada cannot reasonably estimate the potential amount, if any, it could be required to
pay under such indemnifications. Any such amount would also depend on the outcome of
future events and conditions, which cannot be predicted. While certain agreements specify
a maximum potential exposure, certain others do not specify a maximum amount or a
limited period. Historically, Air Canada has not made any significant payments under these
indemnifications.
Air Canada expects that it would be covered by insurance for most extra-contractual liabilities
and certain contractual indemnities.
15. Related party transactions
At December 31, 2024, Air Canada had no transactions with related parties as defined in the
CPA Handbook, except those pertaining to transactions with key management personnel in
the ordinary course of their employment or directorship agreements and sponsorship and
management services for a number of post-retirement plans which are related parties. Refer
to Notes 9 and 21 of Air Canada’s audited consolidated financial statements and notes for
2024, for additional information on these plans.
16. Sensitivity of results
Air Canada’s financial results are subject to many different internal and external factors which
can have a significant impact on results of operations. The following table describes, on an
indicative basis, the financial impact that changes in fuel prices and the value of the Canadian
dollar would generally have had on Air Canada’s past results of operations. An equivalent but
opposite movement of the sensitivity factor in the table below would have generally resulted
in a similar but opposite impact. These guidelines were derived from 2024 levels of activity
and are based on management estimates. The impacts are not additive, do not reflect the
interdependent relationship of the elements and may not be indicative of future trends or
results which may vary significantly due to a wide range of factors many of which are beyond
the control of Air Canada.
Key Variable
2025
Measure
Sensitivity
Factor
Favourable/
(Unfavourable)
Estimated
Operating
Income Impact/
Pre-tax Income
(Canadian dollars
in millions)
Fuel
Fuel – Jet fuel price
(US$/barrel) (1)
$99
US$1/barrel increase
$
(49)
Fuel – Jet fuel price
(C$/litre) (1)
$1.01
1% increase
$
(52)
Currency Exchange
C$ to US$
US$1=C$1.40
1 cent appreciation
(i.e. from $1.40 to $1.39 per US$)
Operating income (2)
$
36
Net interest expense
4
Revaluation of long-term debt and
lease liabilities, U.S. dollar cash,
cash equivalents and short-term
investments, and other long-term
monetary items, net
67
Remeasurement of outstanding
currency derivatives
(68)
Pre-tax income impact
$
39
(1) Excludes the impact of carrier surcharges and fuel hedging (if any).
(2) The operating income impact of currency exchange movements is before the impact of hedging activities, such as
through the use of foreign currency derivatives and holding U.S. dollar cash reserves. The gains and losses related to
these hedging activities are recorded in non-operating income (expense) on Air Canada’s consolidated statement of
operations.
Consolidated
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and notes
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17. Enterprise risk management and
governance
Overview
The management of opportunities and risks is an integral part of Air Canada’s business
processes. Strategic decisions are made by the executive team with consideration of risk
implications to the business and its stakeholders. Risks which may be material to Air Canada
are identified and monitored on an on-going basis through Air Canada’s Enterprise Risk
Management (ERM) program which provides insight on a regular basis to the Board of
Directors through the Board’s Audit, Finance and Risk Committee.
Board oversight
Risk management is an integral part of Air Canada’s corporate governance. The Board of
Directors has established board committees (Audit, Finance and Risk Committee; Safety,
Health, Environment and Security Committee; Governance and Nominating Committee;
and Human Resources, Compensation and Pension Committee) to assist in the oversight
responsibilities.
Risk information is reviewed by the Board or the relevant Board committee on a quarterly
basis. In addition, Board committees review and discuss with management, on a regular
basis, all key enterprise risk exposures based on their respective terms of reference set out
in committee charters and the steps taken that seek to monitor/control and mitigate those
exposures to satisfy themselves as to the effective risk management of the individual risks.
These processes seek to appropriately mitigate rather than eliminate risk.
The Audit, Finance and Risk Committee is responsible for the oversight of the ERM program
and the work carried out by the Corporate Audit and Advisory department, as stated in its
committee charter.
ERM risk reporting is maintained by the Corporate Audit and Advisory department, which
provides an independent update as to the state of each enterprise risk on a quarterly basis.
Risk management framework and structure
Air Canada’s enterprise risk management framework has been developed to support
governance and oversight over Air Canada’s most important strategic risks and is aligned to
the ISO 31000 standard and COSO ERM 2017 framework.
Air Canada identifies and assesses enterprise-level risks and classifies them in the following
categories: Safety, Regulatory, Financial, Commercial, Operational and Reputational. These risk
categories and the risks assigned to each category are reviewed quarterly and reported to the
Audit, Finance, and Risk Committee.
Sound business practices and ethical behaviour are also fundamental to Air Canada’s risk
governance culture. Air Canada has in place (and updates, as required) a Code of conduct,
which sets out guiding principles and ethical standards that apply to all Air Canada corporate
activities. A confidential, anonymous reporting process and ethics committee are also some of
the means in place to oversee adherence to the Code of conduct.
Air Canada’s risk management structure is aligned with the “Three Lines Model” approach to
risk management:
• 1st line - Business functions are expected to integrate risk management when performing
their day-to-day core commercial and operational activities.
• 2nd line - Support functions establish policies, provide guidance and expertise, and risk
oversight (e.g. Safety, Security, Legal and Compliance, Finance/Treasury/Tax, Sourcing and
Procurement, Government Affairs, People, Environment, IT Operations and Cybersecurity).
• 3rd line - Corporate Audit and Advisory department provides an independent and objective
perspective on Air Canada’s governance, risk management practices and controls.
Air Canada’s ERM and governance structure is as follows:
Line Managers and Core Business Activities
(1st line)
Executive Leadership Team / Risk Owners
Board of Directors
Board Committees
Corporate Audit and Advisory /
Independent Risk Reporting
(3rd line)
Management Risk Oversight / Corporate
Support Functions / Committees
(2nd line)
Although the risk management framework described in this section is aligned with industry
best practices, there can be no assurance that it will be sufficient to prevent the occurrence
of events that could have a material adverse effect on our financial position, financial
performance, cash flows, business or reputation.
Consolidated
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and notes
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18. Risk factors
Alongside the other information provided in this report, the
material risks described below should be read carefully when
evaluating Air Canada’s business as well as the forward-
looking statements contained in this report and other
statements Air Canada may make from time to time. Any of
these risks, individually or in combination, could materially
and adversely affect Air Canada’s business, results from
operations, financial condition as well as the outcome of
matters as to which forward-looking statements are made.
Should a risk materialize, circumstances at the time may also
cause that risk to have a different impact than that which
might otherwise have been expected. These risks may not
be the only ones faced by Air Canada. Other risks of which
Air Canada is not aware or which Air Canada deems not to
be material may surface and have a material and adverse
impact on Air Canada, its business, results from operations,
financial condition and the outcome of matters as to which
forward-looking statements are made.
Economic and geopolitical conditions – Changes in
economic and geopolitical conditions could have a material
adverse effect on Air Canada, its business, results from
operations and financial condition.
Air Canada’s results from operations are sensitive to and
may be significantly impacted by economic and geopolitical
conditions, which may also impact overall demand for air
transportation or to or from certain destinations, the ability
to operate to destinations or the viability of routes, operating
costs and revenues, fuel cost and availability, foreign
exchange costs, tax costs and the costs and availability of
capital and supplies. Statements or actions by governments
relating to the imposition of (or threats to impose) tariffs
on Canadian exports or imports, as well as reactions from
consumers and other customers of Air Canada, including
travel boycotts to Air Canada destinations, may pose
significant risks to Air Canada, as well as the Canadian
economy, and may undermine investor confidence, and
disrupt the highly integrated supply chains which drive
economic activity in Canada or on which Air Canada
relies, negatively impacting trade, economic stability and
Air Canada’s access to supplies or costs. Any uncertainty
created by these statements or actions may also lead to a
chilling effect on economic growth as businesses, investors
and consumers adopt a wait-and-see approach. Any
prolonged or significant impact arising from economic and
geopolitical conditions, including in relation to conflicts in
the Middle East, or Russia and Ukraine, or other geopolitical
conflicts, and civil unrest, as well as related responses of
various governments and authorities (or lack thereof),
infectious diseases, weakness of the Canadian, U.S. or
world economies, inflation, disputes, changes or uncertainty
relating to political, economic, fiscal or trading policies
or relationships, within or between jurisdictions where
Air Canada operates flights or does business, or threatened
or actual conflicts or outbreaks of hostilities in or adjacent
to regions Air Canada serves or over which it operates
flights or does business could have a material adverse effect
on Air Canada, its business, results from operations and
financial condition.
Operating results – Air Canada may sustain significant
losses and not be able to successfully achieve and/or sustain
positive net profitability or realize the objectives of any or all
its initiatives.
A variety of factors, including economic conditions and other
factors described in this report, may result in Air Canada
incurring significant losses. The airline industry has
historically been characterized by low profit margins and
high fixed costs, and the costs of operating a flight do not
vary significantly with the number of passengers carried.
Therefore, a change in the number of passengers, fare
pricing, margins or traffic mix, or increased costs, could have
a significant impact on Air Canada’s operating and financial
results. Due to the competitive nature of the airline industry
and customer sensitivity to travel costs, Air Canada may not
be able to pass on cost increases to its customers. Despite
a focus on improving resiliency to downturns in its business
as well as ongoing and planned strategic and business
initiatives, Air Canada may not be able to successfully
achieve and/or sustain positive net profitability or realize
all of its objectives, including those that seek to increase
revenues, decrease costs, improve margins, profitably deploy
additional capacity, generate sufficient returns on its capital
expenditures or offset or mitigate risks facing Air Canada,
including those described in this report.
Fares and market demand – Fluctuations in fares and
demand for air travel could materially and adversely impact
Air Canada, its business, results from operations and
financial condition.
Air Canada fares and passenger demand, like those of
other airlines, have fluctuated significantly in the past and
may fluctuate significantly in the future, Air Canada cannot
predict with certainty market conditions and the fares that
Air Canada may be able to charge. Customer expectations
and perception can change rapidly due to many factors,
and the demand for lower fares or alternative modes of
transportation may impact revenues. Travel, especially
leisure travel, is a discretionary consumer expense. Demand
for business and premium travel is also impacted by a variety
of factors such as economic and geopolitical conditions.
Many factors such as depressed economic conditions,
geopolitical instability, infectious diseases, and concerns
about the environmental impacts of air travel and tendencies
toward less environmentally impactful travel, could each
have the effect of reducing demand for air travel and fares
and could materially and adversely impact Air Canada, its
business, results from operations and financial condition.
Competition – Air Canada operates in a highly competitive
environment and faces increasing competition in Canada,
North America and internationally.
Air Canada operates within a highly competitive industry
and continuously encounters substantial price competition.
Carriers, including low-cost, ultra-low-cost, domestic, U.S. and
foreign carriers, have entered, announced their intention to
enter or continue to enter or expand into markets Air Canada
operates in or plans to operate in, including domestic, U.S.
transborder, international and leisure-oriented markets, as
well as cargo transportation markets.
Canadian, U.S. and foreign carriers against which Air Canada
competes may undergo (and some have undergone)
substantial reorganizations (including by way of merger
with or acquisition by another carrier or entity), creating
greater access to capital, reduced levels of indebtedness,
lower operating costs and other competitive advantages.
Consolidation within the airline industry and carriers
increasingly entering into integrated commercial cooperation
arrangements (including with multi-modal operators) may
also strengthen the ability of carriers to compete. State-
owned, controlled or sponsored airlines may benefit from
competitive advantages, including through preferential
access to airport infrastructure, favorable regulatory
environments, market protection policies, and the ability
to leverage political influence for advantageous bilateral
agreements.
Consolidated
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and notes
Governance
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The prevalence of internet travel websites and other
travel product distribution channels has also resulted in a
substantial increase in new routings and discounted and
promotional fares initiated by Air Canada’s competitors.
Competitors also continue to pursue commissions and
incentive actions and, in many cases, increase these
payments. Air Canada’s ability to reduce its fares in order
to effectively compete is dependent on its ability to
achieve acceptable operating margins and may be limited
by applicable laws or government policies to encourage
competition.
Increased competition, from existing or new competitors,
including competitors entering into new or expanded joint
ventures and other arrangements, or using disruptive
distribution, business models or technologies, and other
competitive actions, or benefitting from foreign subsidies,
government aid or other advantages not available to
Air Canada, could have a material adverse effect on
Air Canada, its business, results from operations and
financial condition.
Dependence on technology – Air Canada relies heavily on
technology to operate its business and any inadequacy,
failure or security breach could have a material adverse
effect on Air Canada, its business, results from operations
and financial condition.
Air Canada relies heavily on technology, including to operate
its business, increase its revenues and reduce its costs.
Air Canada’s technology systems include those relating to
its websites, passenger sales and services, cargo services,
airport customer services, flight operations, loyalty program,
communications, distribution, and other business activities.
Air Canada’s websites and other technology systems
must efficiently accommodate a high volume of traffic
and must securely and effectively process and deliver
information critical to Air Canada’s business and operations.
Air Canada’s business also requires the secure collection,
processing, storage and effective governance of sensitive
data, including personal information of its passengers,
Aeroplan Members, employees, business partners and
others. Appropriate development and governance of
artificial intelligence systems is crucial, including to ensure
safety, enhance operational efficiency, achieve business
objectives and maintain public trust. The effective, reliable
and secure operation and governance of the networks and
systems (including third party systems) on which sensitive
information is stored, transmitted and processed is critical to
Air Canada’s business.
The technology systems Air Canada relies on also depend
on the performance of its many suppliers and Air Canada
has less direct oversight over their security ecosystem and
practices. These suppliers’ performance is in turn dependent
upon their respective technology ecosystems. Technology
systems may be vulnerable to a variety of sources of failures,
interruption or misuse, including by reason of human error,
third-party suppliers’ acts or omissions, natural disasters,
terrorist attacks, telecommunications failures, power failures,
misuse, unauthorized or fraudulent users (including cyber-
attacks, malware, ransomware, computer viruses and the
like), and other operational and security issues.
Like other entities operating in today’s digital business
environment, we are subject to threats to the security of our
networks, systems and data. There is a growing number of
sophisticated actors, including hackers, organized criminals,
state-sponsored actors and other parties, and information
security attacks have continued to grow in complexity.
The emergence of new technologies, such as artificial
intelligence, as well as the growing sophistication of social
engineering techniques, continues to grow these threats.
The magnitude and frequency of information security
breaches and their potential for damage has also continued
to grow.
In light of the evolving nature and sophistication of
information security threats, our information security
systems and controls must continuously adapt and require
continuous monitoring to ensure effectiveness. Despite
our efforts, and those of third parties we rely on, given the
complexity and scale of our business, network infrastructure,
technology and IT supporting systems, there can be no
assurance that our information security systems and controls
will be effective. We have been the target of cybersecurity
attacks in the past and expect that we will continue to be in
the future.
Any technology system failure, degradation, interruption,
misuse or fraudulent use, security breach, or failure to
comply with applicable confidentiality, privacy, security
or other related obligations, whether at Air Canada or a
third party on which Air Canada or its suppliers rely, could
adversely affect Air Canada, including by damaging its
reputation and exposing Air Canada to litigation, claims
for contract breach, fines, sanctions and/or remediation
costs, any of which could have a material adverse effect
on Air Canada, its business, results from operations and
financial condition.
Interruptions or disruptions in service – Interruptions or
disruptions in service could have a material adverse effect
on Air Canada, its business, results from operations and
financial condition.
Air Canada’s business is significantly dependent upon its
ability to operate without interruption to or from a number
of airports, including its main hubs at Toronto, Montréal, and
Vancouver. Delays or disruptions in service may arise from
a variety of factors, including the performance of airline
industry participants on which Air Canada’s operations
are dependent (including airports, security, customs, air
navigation and other participants or services), security issues,
technology failures, breaches or other incidents, weather
conditions, capacity constraints, labour shortages or conflicts
in respect of personnel not employed by Air Canada such
as airport workers, baggage handlers, air traffic controllers,
security personnel, immigration and customs personnel
and others supporting airport-related operations, infectious
diseases, public health restrictions or other factors beyond
the control of Air Canada. Any of these could have a material
adverse impact on Air Canada, its business, results from
operations and financial condition.
Interruptions and disruptions in service may be caused by,
and the demand and cost of air travel may also be adversely
impacted by, environmental conditions (which are also
being driven by climate change which may also increase the
frequency, duration and intensity of severe weather events),
volcanic eruptions floods or other natural phenomena, as
well as those arising from anthropogenic sources. Such
events, including on the ground and at altitude (including
turbulence events), or impacting airports or destinations
served or flight routes used by Air Canada may impact
the viability or cost of flying to such destinations, cause
interruptions and disruptions in service, increase Air Canada’s
costs or adversely impact demand for air travel, any of which
could have a material adverse impact on Air Canada, its
business, results from operations and financial condition.
Consolidated
financial statement
and notes
Governance
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Management
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Key supplies and suppliers – Air Canada’s failure or inability
to source certain goods and services from key suppliers,
including on favourable terms and on a timely basis could
have a material adverse effect on Air Canada, its business,
results from operations and financial condition.
Air Canada is dependent upon its ability to source, from
ethical and responsible suppliers, on favourable terms and
costs, and without disruption, sufficient quantities of goods
and services of desirable quality, in a timely manner or within
planned timeframes, required for Air Canada’s business or
operations, such as fuel, aircraft and related parts, catering,
airport services (including customs and security services and
infrastructure to support demand), de-icing services, airport
slots, aircraft maintenance services, cargo handling services
and facilities, and information technology systems and
services. Like other airlines, we are dependent on the high
quality and stable engineering design, manufacturing and
maintenance of aircraft and related parts and other products
we purchase, and issues that arise may cause these to be
unavailable.
In certain cases, Air Canada may only be able to source
goods and services from a limited number of suppliers
(or from sole source suppliers) and the transition to new
or alternative suppliers, which may be necessitated by
reason of such suppliers increasing their rates or by their
failure, refusal or inability to deliver or perform, may not be
possible or may take a significant amount of time or require
significant resources. In addition, tariffs or the threat of
tariffs can disrupt supply chains, increase prices and create
volatility and uncertainty. A failure, refusal, delay or inability
of a supplier to supply Air Canada with goods and services of
desirable quality on terms and pricing and within timeframes
acceptable to Air Canada may arise as a result of a wide
range of causes, many of which are beyond Air Canada’s
control. Global supply chains have continued to be less
resilient, less elastic, and less efficient, including by reason
of labour shortages, access to raw materials, economic
and geopolitical conditions and transportation logistics.
These factors create an uncertain and continually shifting
landscape which has and may continue to impact Air Canada
and its suppliers.
Any failure or the inability of Air Canada to successfully
source goods and services of desirable quality on terms and
pricing and within the timeframes acceptable to Air Canada
could have a material adverse effect on Air Canada, its
business, results from operations and financial condition.
Labour costs and labour relations – Air Canada may not be
able to maintain labour costs at appropriate levels or secure
labour agreements that permit it to successfully pursue its
strategic initiatives. There can be no assurance that collective
bargaining agreements will be renewed without labour
conflicts and/or disruptions.
Labour costs constitute one of Air Canada’s largest operating
cost items. There can be no assurance that Air Canada
will be able to maintain such costs at levels that do not
negatively affect its business, results from operations and
financial condition. Most of Air Canada’s employees are
unionized. Air Canada is engaged in collective bargaining
with the Canadian Union of Public Employees (CUPE), the
union representing its flight attendants, and Unifor, the
union representing Aeroplan Contact Centre agents, as
well as other bargaining units. As agreements with certain
other unions will expire over the next few years, bargaining
is expected to commence with them as well. Any future
agreements or outcomes of negotiations or arbitrations,
including in relation to wages or other labour costs or work
rules, may result in increased labour costs or other charges,
or terms and conditions restricting or reducing Air Canada’s
ability to sustain its business objectives or pursue its
strategic initiatives, which could have a material adverse
effect on Air Canada, its business, results from operations
and financial condition.
There can be no assurance that collective agreements will
be further renewed, including on terms consistent with
Air Canada’s expectations or comparable to its competitors’
labour agreements, without labour conflict or action or that
there will not otherwise be any labour conflict or action that
could also lead to a degradation, interruption or stoppage in
Air Canada’s service or otherwise adversely affect the ability
of Air Canada to execute on its business plans or operate
its business, either of which could have a material adverse
effect on Air Canada, its business, results from operations
and financial condition.
In respect of the unions for Canadian-based employees, no
strikes or lockouts may lawfully occur following the term of
the collective agreements unless a number of pre-conditions
prescribed by the Canada Labour Code have been satisfied.
Any labour disruption or work stoppage by any of the
unionized work groups of Jazz or other airlines operating
flights on behalf of Air Canada, or other key suppliers, or of
other parties with which Air Canada conducts business or
relies on could have a material adverse effect on Air Canada,
its business, results from operations and financial condition.
In addition, labour conflicts at Star Alliance® partners or
involving the operations of key airports could result in lower
demand for connecting traffic with Air Canada, which could
have a material adverse effect on Air Canada, its business,
results from operations and financial condition.
Strategic, business, technology and other important
initiatives – A delay or failure to identify and devise, invest
in and implement certain important initiatives could have
a material impact on Air Canada, its business, results from
operations and financial condition.
In order to operate its business, achieve its goals and remain
competitive, Air Canada continually seeks to identify and
devise, invest in, implement and pursue strategic, business,
technology and other important initiatives, including to
source of aircraft, participate in the leisure or lower-cost
market, enter into or expand joint venture arrangements,
address climate change, enhance revenues, reduce costs,
improve business processes, implement new technologies
(including artificial intelligence), expand network and
capacity, and initiatives seeking to improve and ensure
a consistently high-quality customer service experience.
Strategic initiatives, including their development and
implementation, may be adversely impacted by a wide range
of factors, many of which are beyond Air Canada’s control.
Such factors include the need to seek legal or regulatory
approvals, the performance of third parties (including
suppliers, their products and services), their integration into
Air Canada’s other activities and processes as well as the
adoption and acceptance of these initiatives including by
Air Canada’s customers, suppliers and personnel. A delay or
a failure to sufficiently and successfully identify and devise,
invest in or implement any strategic or important initiative
could adversely affect Air Canada’s ability to operate its
business, achieve its goals and remain competitive and could
have a material adverse effect on Air Canada, its business,
results from operations and financial condition.
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Fuel costs – Significant fluctuations or increases in fuel
prices could have a material adverse effect on Air Canada, its
business, results from operations and financial condition.
Fuel costs constitute one of Air Canada’s largest operating
cost items. Fuel prices fluctuate widely depending on
many factors, including international market conditions,
geopolitical events, jet fuel supply and refining costs,
carbon pricing, or other climate change related regulations,
taxes, levies or other measures, and the Canada/U.S. dollar
exchange rate. The global jet fuel market is highly volatile
due to geopolitical tensions, economic factors, and other
factors, which may impact the price and Air Canada’s ability
to source jet fuel. Air Canada cannot accurately predict the
future price of fuel and it may not be able to sufficiently, or
may not, hedge the risk associated with fluctuations in fuel
prices. Due to the competitive nature of the airline industry,
Air Canada may not be able to pass on increases in fuel
prices to its customers by increasing its pricing. Significant
fluctuations (including increases) in fuel prices could have a
material adverse effect on Air Canada, its business, results
from operations and financial condition.
Financial leverage – Air Canada has a significant amount of
financial indebtedness. Air Canada may also not be able to
obtain sufficient funds in a timely manner and on acceptable
terms to provide adequate liquidity and to finance necessary
operating and capital expenditures.
Air Canada has a significant amount of financial
indebtedness from fixed obligations, including substantial
obligations under aircraft leases, aircraft purchases and
other financings. While Air Canada actively seeks to manage
its indebtedness, it may incur greater levels of indebtedness
than currently exist or are planned.
The amount of indebtedness that Air Canada has and which
it may incur in the future could have a material adverse
effect on Air Canada. The ability of Air Canada to make
scheduled payments under its indebtedness may depend on,
among other things, its future operating performance and its
ability to refinance its indebtedness, if necessary. Air Canada
incurs a significant proportion of its indebtedness in foreign
currencies, primarily in U.S. dollars, and as a result, future
debt servicing repayments are subject to foreign exchange
risk. There can be no assurance that Air Canada will at all
times be able to generate sufficient cash from its operations
to satisfy its debts, lease and other obligations and continue
to pursue capital expenditures, and other business initiatives
or strategic plans. Each of these factors is, to a large extent,
subject to geopolitical, economic, financial, competitive,
regulatory, operational and other factors, many of which are
beyond Air Canada’s control.
Need for capital and liquidity – Air Canada may not be able
to obtain sufficient funds in a timely way and on acceptable
terms to provide adequate liquidity and to finance necessary
operating and capital expenditures.
Air Canada’s liquidity levels may be adversely impacted by
risks identified in this report, including geopolitical, economic
and public health conditions, foreign exchange rates,
increased competition, volatile fuel prices, labour issues, and
contractual covenants. As part of Air Canada’s efforts to
manage risk and to support its business strategy, significant
liquidity and significant ongoing operating and capital
expenditures are required.
Air Canada’s level of indebtedness, as well as market
conditions and the availability of assets as collateral for loans
or other indebtedness, may make it difficult for Air Canada to
raise additional capital if needed to meet its liquidity needs
on acceptable terms, or at all.
A major decline in the market price of Air Canada’s securities,
including a major decline in capital markets in general,
a downgrade in Air Canada’s credit ratings, differences
between Air Canada’s actual or anticipated financial results
and the published expectations of financial analysts, and
differences between the estimated and available value
of Air Canada’s unencumbered assets, as well as events
affecting its business or operating environment, may
negatively impact Air Canada’s ability to raise capital, issue
debt, borrow on acceptable terms, attract and/or retain key
employees, make strategic acquisitions, enter into business
arrangements or operate its business.
There can be no assurance that Air Canada will continue
to maintain sufficient liquidity, whether from operations or
by obtaining funds on terms acceptable to Air Canada, to
finance the operating and capital expenditures necessary to
support its business strategy and manage any challenges.
Regional carrier service – The failure by a regional carrier
to fulfill its obligations to Air Canada could have a material
adverse effect on Air Canada, its business, results from
operations and financial condition.
Air Canada enhances its network through agreements
with certain airlines such as Jazz which operate flights on
behalf of Air Canada. Pursuant to the terms of the Jazz CPA,
Air Canada pays Jazz a number of fees, some of which are
fixed and others that are determined based upon certain
costs incurred by Jazz. Air Canada also reimburses Jazz for
certain pass- through costs incurred by Jazz (or arranges
to provide the related supplies to Jazz), such as fuel costs,
navigation fees, landing fees and terminal fees. In addition,
the Jazz CPA requires that Jazz maintain a minimum fleet
size and contains a minimum average daily utilization
guarantee, which requires Air Canada to use Jazz for that
amount of flying. Significant increases in Jazz’s costs, the
failure by Jazz to adequately fulfill its obligations under
the Jazz CPA, factors that may reduce the utilization of the
Jazz fleet, including economic or market downturns, and
unexpected interruptions or cessation of Jazz’s services, as
well as similar circumstances relating to other airlines from
whom Air Canada may source regional capacity, could have
a material adverse effect on Air Canada, its business, results
from operations and financial condition.
Personnel – Air Canada is dependent on key employees
and having sufficient personnel and could be materially and
adversely affected by a shortfall or substantial turnover.
Air Canada is dependent on its ability to attract and retain a
variety of employees, including senior leadership, managers,
airline flight, technology and operations personnel and other
key employees, including for specialized technical roles,
having the necessary industry experience, qualifications and
knowledge in order to execute its business plan and operate
its business. If Air Canada were to experience a shortfall or
a substantial turnover in its key employees (including as a
result of the more competitive labour market), Air Canada,
its business, results from operations and financial condition
could be materially and adversely affected.
Infectious diseases – Infectious diseases could impact
passenger demand for air travel
Outbreaks or the threat of outbreaks of viruses or other
contagions or infectious diseases, including an epidemic or a
pandemic such as COVID-19, influenza, SARS, Ebola, Zika, as
well as any government actions, or travel or other advisories
relating to same, whether domestic or international or
whether relating to Canadian cities or regions or other cities,
regions or countries, could have a material adverse effect
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on demand for air travel and could have a material adverse
effect on Air Canada, its business, results from operations
and financial condition. During the period from March 2020
until early- to mid-2022, Air Canada and the rest of the
global airline industry faced significantly lower traffic than
in 2019, and a corresponding decline in revenue and cash
flows, as a result of the COVID- 19 pandemic and the travel
restrictions imposed in many countries around the world
including in Canada. Conditions have improved significantly,
however, there can be no assurance that there will not be
further impacts. Other disease outbreaks or health threats
may occur, and these could materially and adversely affect
Air Canada, its business, results from operations and
financial condition.
Regulatory matters – Air Canada is subject to extensive
and continually evolving domestic and international legal,
regulatory and administrative controls and oversight.
Air Canada and the airline industry are subject to extensive
and continually evolving domestic and international legal,
regulatory and administrative controls and oversight,
including in relation to taxes, charges, airport fees and
operations, route rights, airport slots, aircraft operations
and maintenance, security, air passenger and consumer
protection regulations, public health and safety, accessibility
of transportation, human rights flight crew and other labour
rules, privacy, data security, marketing and advertising,
licensing, competition, joint ventures, pensions, environment
(including in relation to fuel management, pollution,
climate change, greenhouse gas emissions and noise
levels), customs, immigration, foreign exchange controls,
repatriation of funds and, in some measure, pricing.
Air Canada is subject to significant and continually evolving
tax laws, regulations and interpretations, which apply to
its operations in various jurisdictions throughout the world.
For example, a significant majority of countries in the
Organisation for Economic Co-operation and Development’s
(OECD) Inclusive Framework approved a framework
that imposes a global minimum tax rate of 15 per cent.
Canada has enacted legislation to implement it and other
jurisdictions that Air Canada operates to have also indicated
their intent to introduce similar legislation. The OECD also
continues to work on proposed changes to profit reallocation
to market jurisdictions. Air Canada cannot predict whether,
or the manner in which, proposed domestic and international
laws (including in respect of the work of the OECD Inclusive
Framework), regulations and administrative requirements
or similar initiatives will ultimately be implemented or their
impact on Air Canada.
Air Canada has and continues to establish targets, make
commitments and assess the impact regarding climate
change, and related initiatives, plans and proposals that
Air Canada and other stakeholders (including government,
regulatory and other bodies) are pursuing in relation to
climate change and carbon emissions. The achievement of
our commitments and targets depends on many factors,
including the combined actions of governments, industry,
suppliers and other stakeholders and actors, as well as the
development and implementation of new technologies.
In particular, our 2030 carbon emission-related targets
and our related 2050 aspiration are ambitious and heavily
dependent on new technologies, renewable energies and
the availability of a sufficient supply of sustainable aviation
fuels, which continues to present serious challenges. In
addition, Air Canada has incurred, and expects to continue to
incur, costs to achieve its goal of net-zero carbon emissions
and to comply with environmental sustainability legislation
and regulation and other standards and accords. The
precise nature of future binding or non-binding legislation,
regulation, standards and accords, on which local and
international stakeholders are increasingly focusing, cannot
be predicted with any degree of certainty, nor can their
financial, operational or other impact. There can be no
assurance of the extent to which any of our climate goals
will be achieved or that any future investments that we
make in furtherance of achieving our climate goals will
produce the expected results or meet increasing stakeholder
environmental, social and governance expectations.
Moreover, future events could lead Air Canada to prioritize
other nearer-term interests over progressing toward our
current climate goals based on business strategy, economic,
regulatory and social factors, and potential pressure from
investors, activist groups or other stakeholders. If we are
unable to meet or properly report on our progress toward
achieving our climate change goals and commitments, we
could face adverse publicity and reactions from investors,
customers, advocacy groups or other stakeholders, which
could result in reputational harm or other adverse effects to
Air Canada.
While Air Canada seeks to comply with all applicable laws,
regulations and administrative requirements, compliance
may involve significant judgment in interpreting them.
Furthermore, interpretations as well as the application
and enforcement of such requirements may evolve
due to numerous factors, including decisions by courts,
regulators, administrative and other bodies. Compliance
(including failure to comply) with current or future domestic
and international laws, regulations and administrative
requirements, including potentially inconsistent or
conflicting laws or regulations, or laws or regulations that
disproportionally apply to Canadian airlines or Air Canada
specifically, may impose significant costs (including
taxes, fines, penalties and/or levies), impediments and/
or competitive disadvantages and a failure to comply may
result in other claims against Air Canada including class
actions. There cannot be any assurance that current or
future laws, regulations and administrative requirements will
not materially and adversely affect Air Canada, its business,
results from operations and financial condition.
Terrorist attacks and security measures – Terrorist attacks
and related consequences could have a material adverse
effect on Air Canada, its business, results from operations
and financial condition.
The potential for terrorist attacks and terrorist activity causes
concern and uncertainty in the minds of the travelling public.
The occurrence of a terrorist attack, an attempted attack
or the perceived threat of one (whether or not involving
Air Canada or another carrier, or involving Air Canada’s
destinations, or other destinations or regions) and restrictive
security measures, such as those relating to the content
of carry-on baggage, passenger identification document
requirements and passenger screening procedures, could
have a material adverse effect on passenger demand
for air travel and on the number of passengers travelling
on Air Canada’s flights. It could also lead to a substantial
increase in insurance, security and other costs. Any resulting
reduction in revenues and/or increases in costs could have a
material adverse effect on Air Canada, its business, results
from operations and financial condition.
Aeroplan loyalty program – Loss of redemption or accrual
partners, changes to accrual or redemption settlement rates,
increased redemption rates of loyalty points, or disruptions or
other interruptions of services affecting the Aeroplan loyalty
program could have a material adverse effect on Air Canada,
its business, results from operations and financial condition.
Air Canada offers its customers who are Aeroplan Members
the opportunity to earn Aeroplan points, which management
believes is a significant factor in many customers’ decision to
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travel with Air Canada and contributes to building customer
loyalty. The success of the Aeroplan program is dependent
on attracting new and retaining current members and
on maintaining sufficient accumulation and redemption
partners. Increases in redemption rates for outstanding
Aeroplan points, failures to adequately operate the Aeroplan
program, reductions in the prevailing interchange rates in
Canada or the U.S., additional payment card regulation on
fees and charges, or interruptions or disruptions of Aeroplan
program services, could have a material adverse effect
on Air Canada, its business, results from operations and
financial condition.
Casualty losses – Air Canada’s business makes it subject
to large liability claims for serious personal injury or death
arising out of accidents or disasters.
Due to the nature of its core business, Air Canada may be
subject to liability claims arising out of accidents or disasters
involving aircraft on which Air Canada’s customers are
travelling or involving aircraft of other carriers maintained
or otherwise serviced by Air Canada or through third parties
providing services to Air Canada, including claims for serious
personal injury or death. Any such accident or disaster may
significantly harm Air Canada’s reputation for safety, which
would have a material adverse effect on Air Canada, its
business, results from operations and financial condition.
There can be no assurance that Air Canada’s insurance
coverage will be sufficient to cover one or more large claims
and any shortfall may be material.
Accidents and disasters may occur despite all appropriate
measures being taken, and as a result of a variety of factors
beyond Air Canada’s control including acts of terrorism
and sabotage, security breaches, equipment failures,
human error, severe weather, lightning strikes and other
natural phenomenon, bird strikes as well as the increasing
prevalence of unmanned aerial vehicles. Additionally, any
accident, catastrophe, or incident involving Air Canada, its
regional carriers, or codeshare partners could also lead to
operational restrictions, such as voluntary or mandatory
aircraft groundings.
Star Alliance and strategic and commercial
arrangements – Departure of a key member from Star
Alliance or the failure by a key member to meet its
obligations, including under joint ventures arrangements,
could have a material adverse effect on Air Canada, its
business, results from operations and financial condition.
The strategic and commercial arrangements with Star
Alliance and other airlines, including Lufthansa AG, United
Airlines, Air China and Emirates, provide Air Canada
with important benefits, including codesharing, efficient
connections and transfers, reciprocal participation in
frequent flyer programs and use of airport lounges from the
other members. Should a key member leave Star Alliance
or should a Star Alliance or other airlines fail to meet its
obligations toward Air Canada, Air Canada, its business,
results from operations and financial condition could be
materially and adversely affected.
Air Canada’s brand – The failure to preserve or grow the
value of Air Canada’s brand could have a material adverse
effect on Air Canada, its business, results from operations
and financial condition.
Air Canada believes that its success is dependent on the
value of its brand and on Air Canada’s ability to preserve,
grow and leverage that value. The Air Canada brand is
recognized throughout the world, and Air Canada has
received high ratings in external brand value studies, based
in part on consumer perceptions on a variety of subjective
qualities. Air Canada believes it has and continues to build
an excellent reputation globally for the safety and quality
of its services, and for the delivery of a consistently positive
passenger experience. Air Canada’s reputation and brand
could be damaged if they are exposed to significant adverse
publicity including through social media. Adverse publicity,
whether justified or not, can rapidly spread through social
or digital media. To the extent we are subject to, or unable
to respond timely and appropriately to adverse publicity,
our brand and reputation may be damaged. Any failure to
preserve or grow Air Canada’s brand, including by reason of
the conduct of Air Canada or any of its business partners,
suppliers or other third parties, could have a material adverse
effect on Air Canada, its business, results from operations
and financial condition.
Legal proceedings – Air Canada may be subject to legal
proceedings which could have a material adverse impact.
In the course of conducting its business, Air Canada is
subject to various claims and litigation (including class
action claims), including with respect to its contractual
arrangements and current or future laws and regulations.
Any future claims or litigation could have a material adverse
effect on Air Canada, its business, results from operations
and financial condition.
Foreign exchange – A significant deterioration of the
Canadian dollar relative to the U.S. dollar could have a
material adverse effect on Air Canada, its business, results
from operations and financial condition.
Air Canada’s financial results are sensitive to the fluctuating
value of the Canadian dollar. Air Canada incurs significant
expenses in U.S. dollars for items such as fuel, aircraft
purchases, aircraft leasing and maintenance, airport charges,
ground package costs, sales and distribution costs, interest
and debt servicing payments, while a substantial portion of
its revenues are generated in Canadian dollars. In addition,
Air Canada may not be able to sufficiently, or may not, hedge
the risk associated with fluctuations in exchange rates. A
significant deterioration of the Canadian dollar relative to
the U.S. dollar or other foreign currencies would increase
the costs of Air Canada relative to its U.S. or other foreign
competitors. Any of these factors could have a material
adverse effect on Air Canada, its business, results from
operations and financial condition.
Limitations due to restrictive covenants – Covenants in
agreements that Air Canada has entered into or may enter
into may affect or limit the manner in which Air Canada
operates its business.
Some of the financing and other major agreements to which
Air Canada is a party contain, and in the future may contain,
restrictive, financial (including in relation to asset valuations,
liquidity, fixed charge coverage ratio) and other covenants
that affect and, in some cases, significantly limit or prohibit,
among other things, the manner in which Air Canada may
structure or operate its business, including by reducing
Air Canada’s liquidity, limiting Air Canada’s ability to incur
indebtedness, create liens, sell assets, pay dividends, make
capital expenditures, and engage in acquisitions, mergers
or restructurings or a change of control. Future financing
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and other significant agreements may be subject to similar
or stricter covenants that limit Air Canada’s operating and
financial flexibility, which could materially and adversely
affect Air Canada’s ability to operate its business and its
profitability.
A failure by Air Canada to comply with its contractual
obligations (including restrictive, financial and other
covenants) or to pay its indebtedness and fixed costs
could result in a variety of material adverse consequences,
including the acceleration of its indebtedness, the
withholding of credit card proceeds by the credit card
service providers and the exercise of remedies by its
creditors, lessors or other co-contracting parties, including
the foreclosure of Air Canada assets that secure obligations
under secured financing agreements. Defaults could also
trigger additional defaults under other indebtedness or
agreements. In such a situation, Air Canada may not be able
to repay the accelerated indebtedness or fulfill its obligations
under certain contracts, make required aircraft lease
payments or otherwise cover its fixed costs.
Availability of insurance coverage and increased
insurance costs – Increases in insurance costs or reduction
in insurance coverage could have a material adverse effect
on Air Canada, its business, results from operations and
financial condition.
The insurance industry in general, including the aviation
insurance industry, has been experiencing increasing losses
and decreased insurer profitability in recent years, resulting
in reduced capacity levels and premium increases. These
conditions may adversely affect some of Air Canada’s
existing insurance carriers or Air Canada’s ability to obtain
future insurance coverage (including war risk insurance
coverage), including desired levels of coverage or on terms
acceptable to Air Canada. To the extent that Air Canada’s
existing insurance carriers are unable or unwilling to provide
required coverage (and in the absence of measures by the
Government of Canada to provide the required coverage),
Air Canada’s insurance costs may increase further and
may result in Air Canada being in breach of regulatory
requirements or contractual arrangements requiring that
specific insurance be maintained, which could have a
material adverse effect on Air Canada, its business, results
from operations and financial condition.
Pension plans – Failure or inability by Air Canada to make
required cash contributions to its pension plans could have
a material adverse effect on Air Canada, its business, results
from operations and financial condition.
Air Canada maintains several defined benefit pension
plans, including domestic registered pension plans and
supplemental pension plans.
Canadian federal pension legislation requires that the
funded status of defined benefit registered pension plans
be determined periodically, on both a going concern basis
(essentially assuming indefinite plan continuation) and
a solvency basis (essentially assuming immediate plan
termination). Canadian federal pension legislation prescribes
the minimum contributions that plan sponsors must make
to their defined benefit registered pension plans. Current
service contributions are required to be paid monthly,
except to the extent they are funded through the surplus in
such plan (subject to applicable plan rules and legislation).
Air Canada’s pension funding obligations (including projected
funding obligations) may vary significantly based on a wide
variety of factors, including the plan’s solvency financial
position, regulatory developments, plan demographics,
changes to plan provisions, the success of its pension asset
investment strategies, assumptions and methods used and
changes in economic conditions (mainly the return on fund
assets and changes in interest rates) and other factors.
Air Canada has taken significant steps to reduce its pension
plan risk, and its domestic defined benefit registered pension
plans are in a surplus position, but there can be no assurance
that such a risk will not materialize and adversely impact
Air Canada’s ability to meet its funding obligations, which in
turn could have a material adverse effect on Air Canada, its
business, results from operations and financial condition. See
section 8.6“Pension Funding Obligations” of this MD&A for
additional information.
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19. Controls and
procedures
Disclosure controls and procedures and
internal controls over financial reporting
Disclosure controls and procedures within Air Canada have
been designed to provide reasonable assurance that all
relevant information is identified to its President and Chief
Executive Officer (CEO) and its Chief Financial Officer (CFO)
and its Disclosure Policy Committee to ensure appropriate
and timely decisions are made regarding public disclosure.
Internal controls over financial reporting have been designed
by management, under the supervision of, and with the
participation of Air Canada’s CEO and CFO, to provide
reasonable assurance regarding the reliability of Air Canada’s
financial reporting and its preparation of financial statements
for external purposes in accordance with GAAP.
Air Canada will file certifications, signed by its CEO and CFO,
with the Canadian Securities Administrators (CSA) upon filing
of Air Canada’s Annual Information Form. In those filings,
Air Canada’s CEO and CFO will certify, as required by National
Instrument 52-109, the appropriateness of the financial
disclosure, the design and effectiveness of Air Canada’s
disclosure controls and procedures and the design and
effectiveness of internal controls over financial reporting.
Air Canada’s CEO and CFO also certify the appropriateness
of the financial disclosures in Air Canada’s interim filings with
securities regulators. In those interim filings, Air Canada’s
CEO and CFO also certify the design of Air Canada’s
disclosure controls and procedures and the design of internal
controls over financial reporting.
Air Canada’s Audit, Finance and Risk Committee reviewed
this MD&A and the audited consolidated financial
statements, and Air Canada’s Board of Directors approved
these documents prior to their release.
Management’s report on disclosure
controls and procedures
Management, under the supervision of and with the
participation of Air Canada’s CEO and CFO, evaluated
the effectiveness of Air Canada’s disclosure controls and
procedures (as defined under National Instrument 52-109)
and concluded, as at December 31, 2024, that such disclosure
controls and procedures were effective.
Management’s report on internal controls
over financial reporting
Management, under the supervision of and with the
participation of Air Canada’s CEO and CFO, evaluated the
effectiveness of Air Canada’s internal controls over financial
reporting (as defined under National Instrument 52-109).
In making this evaluation, management used the criteria
set forth by the Committee of Sponsoring Organizations
of the Treadway Commissions (COSO) in Internal Control
- Integrated Framework (2013). Based on that evaluation,
management and the CEO and CFO have concluded that,
as at December 31, 2024, Air Canada’s internal controls over
financial reporting were effective. This evaluation took into
consideration Air Canada’s Corporate Disclosure Policy and
the functioning of its Disclosure Policy Committee.
Changes in internal controls over
financial reporting
There have been no changes to Air Canada’s internal controls
over financial reporting during 2024 that have materially
affected, or are reasonably likely to materially affect, its
internal controls over financial reporting.
20. 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, adjusted EBITDA,
adjusted EBITDA margin, adjusted pre-tax income (loss)
and adjusted net income (loss) as it may distort the
analysis of certain business trends and render comparative
analysis across periods or to other airlines less meaningful.
Air Canada did not record charges for impairment of assets
in 2024 or in 2023.
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, adjusted EBITDA, adjusted pre-tax income and
adjusted net income.
With ratification of the collective agreement with ALPA,
in the fourth quarter of 2024, 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 collective
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agreement. Air Canada excluded this charge in computing
adjusted CASM, adjusted EBITDA, adjusted pre-tax income
and adjusted net income.
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.
Air Canada also incurs expenses related to the operation of
freighter aircraft which some airlines, without comparable
cargo businesses, may not incur. Air Canada had six Boeing
767 dedicated freighter aircraft in service as at
December 31, 2024, and seven as at December 31, 2023.
These costs do not generate ASMs and therefore excluding
these costs from operating expense results provides for
a more meaningful comparison of the passenger airline
business across periods.
Adjusted CASM is reconciled to GAAP operating expense as follows:
Fourth Quarter
Full Year
(Canadian dollars in millions, except where indicated)
2024
2023
Change
2024
2023
Change
Operating expense – GAAP
$
5,658
$ 5,096
$
562
$ 20,992
$ 19,554
$ 1,438
Adjusted for:
Aircraft fuel
(1,154)
(1,391)
237
(5,118)
(5,318)
200
Ground package costs
(208)
(177)
(31)
(782)
(720)
(62)
Freighter costs (excluding fuel)
(50)
(46)
(4)
(163)
(157)
(6)
Provision for contractual lease obligations
-
-
-
(34)
-
(34)
Pension plan amendments
(490)
-
(490)
(490)
-
(490)
Operating expense, adjusted for the above-noted items
$
3,756
$ 3,482
$
274
14,405
13,359
1,046
ASMs (millions)
24,949
24,439
2.1%
104,381
99,012
5.4%
Adjusted CASM (cents)
¢
15.05
¢
14.25
¢
0.80
¢
13.80
¢ 13.49
¢
0.31
Adjusted EBITDA and adjusted EBITDA margin
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted EBITDA margin (adjusted
EBITDA as a percentage of operating revenues) are commonly used in the airline industry and are used by Air Canada as a
means to view operating results and the related margin before interest, taxes, depreciation and amortization and other items
discussed above. These items can vary significantly among airlines due to differences in the way airlines finance their aircraft
and other assets.
Adjusted EBITDA and adjusted EBITDA margin are reconciled to GAAP operating income (loss) as follows:
Fourth Quarter
Full Year
(Canadian dollars in millions, except where indicated)
2024
2023
Change
2024
2023
Change
Operating income (loss) – GAAP
$
(254)
$
79
$
(333)
$
1,263
$ 2,279
$ (1,016)
Add back:
Depreciation and amortization
460
442
18
1,799
1,703
96
EBITDA
206
521
(315)
3,062
3,982
(920)
Add back:
Provision for contractual lease obligations
-
-
-
34
-
34
Pension plan amendments
490
-
490
490
-
490
Adjusted EBITDA
$
696
$
521
$
175
$
3,586
$ 3,982
$
(396)
Operating revenues
$
5,404
$
5,175
$
229
$ 22,255
$21,833
$
422
Operating margin (%)
(4.7)
1.5
(6.2) pp
5.7
10.4
(4.7) pp
Adjusted EBITDA margin (%)
12.9
10.1
2.8 pp
16.1
18.2
(2.1) pp
Consolidated
financial statement
and notes
Governance
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Summary
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| 2024 Annual Report
Management
discussion and
analysis
Adjusted pre-tax income (loss)
Adjusted pre-tax income (loss) is used by Air Canada to assess the overall pre-tax financial
performance of its business without the effects of foreign exchange gains or losses, net
interest relating to employee benefits, gains or losses on financial instruments recorded at fair
value, gains or losses on sale and leaseback of assets, gains or losses on disposal of assets,
gains or losses on debt settlements and modifications and other items discussed above. These
items may distort the analysis of certain business trends and render comparative analysis
across periods or to other airlines less meaningful.
Adjusted pre-tax income (loss) is reconciled to GAAP income (loss) before income taxes as
follows:
Fourth Quarter
Full Year
(Canadian dollars in millions)
2024
2023
Change
2024
2023
Change
Income (loss) before income
taxes – GAAP
$
(721)
$
122
$ (843)
$
515
$ 2,212
$ (1,697)
Adjusted for:
Provision for contractual lease
obligations
-
-
-
34
-
34
Pension plan amendments
490
-
490
490
-
490
Foreign exchange (gain) loss
372
(72)
444
400
(389)
789
Net interest relating to employee
benefits
(6)
(7)
1
(22)
(25)
3
(Gain) loss on financial instruments
recorded at fair value
38
(91)
129
(28)
(115)
87
(Gain) loss on debt settlements
and modifications
(38)
1
(39)
8
10
(2)
Adjusted pre-tax income (loss)
$
135
$
(47)
$
182
$
1,397
$ 1,693
$
(296)
Adjusted net income (loss) and adjusted earnings (loss) per
share – diluted
Air Canada uses adjusted net income (loss) and adjusted earnings (loss) per share – diluted
as a means to assess the overall financial performance of its business without the after-tax
effects of foreign exchange gains or losses, net financing expense relating to employee
benefits, gains or losses on financial instruments recorded at fair value, gains or losses on sale
and leaseback of assets, gains or losses on debt settlements and modifications, gains or losses
on disposal of assets and other items discussed above. These items may distort the analysis of
certain business trends and render comparative analysis to other airlines less meaningful.
Adjusted net income (loss) and adjusted earnings (loss) per share are reconciled to GAAP net
income as follows:
Fourth Quarter
Full Year
(Canadian dollars in millions)
2024
2023
Change
2024
2023
Change
Net income (loss) – GAAP
$ (644)
$
184
$ (828)
$
1,720
$ 2,276
$
(556)
Adjusted for:
Provision for contractual lease
obligations
-
-
-
34
-
34
Pension plan amendments
490
-
490
490
-
490
Foreign exchange (gain) loss
372
(72)
444
400
(389)
789
Net interest relating to employee
benefits
(6)
(7)
1
(22)
(25)
3
(Gain) loss on financial instruments
recorded at fair value
38
(91)
129
(28)
(115)
87
(Gain) loss on debt settlements
and modifications
(38)
1
(39)
8
10
(2)
Income tax, including for the above
reconciling items (1)
(119)
(59)
(60)
(1,267)
(44)
(1,223)
Adjusted net income (loss)
$
93
$
(44)
$
137
$ 1,335
$
1,713
$
(378)
Weighted average number of
outstanding shares used in
computing diluted income per
share (in millions)
374
358
16
376
376
-
Adjusted earnings (loss) per
share – diluted
$
0.25
$ (0.12)
$
0.37
$
3.55
$
4.56
$
(1.01)
(1) In the third quarter of 2024, previously unrecognized deferred income tax assets were recognized which included a
deferred income tax recovery of $1,154 million recorded in the consolidated statement of operations. This deferred
income tax recovery of $1,154 million is removed from the adjusted net income. In 2023, the deferred income tax
expense recorded in other comprehensive income related to remeasurements on employee benefit liabilities was offset
by a deferred income tax recovery that was recorded through Air Canada’s consolidated statement of operations. This
recovery was removed from adjusted net income.
Consolidated
financial statement
and notes
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Management
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The table below reflects the share amounts used in the computation of basic and diluted
earnings per share and of adjusted earnings per share.
(In millions)
Fourth Quarter
Full Year
2024
2023
2024
2023
Weighted average number of shares outstanding – basic
355
358
358
358
Effect of dilution
19
-
18
18
Weighted average number of shares outstanding –
diluted
374
358
376
376
Free cash flow
Air Canada uses free cash flow as an indicator of the financial strength and performance of its
business, indicating the amount of cash Air Canada can generate from operations and after
capital expenditures. Free cash flow is calculated as net cash flows from operating activities
minus additions to property, equipment, and intangible assets, and is net of proceeds from
sale and leaseback transactions. Refer to section 8.4 “Cash Flow Movements” of this MD&A
for a reconciliation of this non-GAAP financial measure to the nearest measure under GAAP.
Net debt
Net debt is a capital management measure and a key component of the capital managed
by Air Canada and provides management with a measure of its net indebtedness. Refer to
section 8.2 “Net Debt” of this MD&A for a reconciliation of this non-GAAP measure to the
nearest measure under GAAP.
Consolidated
financial statement
and notes
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Management
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21. Glossary
Adjusted CASM – Refers to operating expense per ASM that
is adjusted to remove the effects of aircraft fuel expense,
ground packages costs at Air Canada Vacations, freighter
costs and impairment of assets, if any. Adjusted CASM
is a non-GAAP ratio, refer to section 20 of this MD&A for
additional information.
Adjusted EBITDA – Refers to earnings before interest, taxes,
depreciation and amortization. When calculating adjusted
EBITDA, Air Canada excludes impairment of assets, if any.
Adjusted EBITDA is a non-GAAP financial measure, refer to
section 20 of this MD&A for additional information.
Adjusted EBITDA margin – Refers to adjusted EBITDA as a
percentage of operating revenue. Adjusted EBITDA margin is
a non-GAAP ratio, refer to section 20 “Non-GAAP Financial
Measures” of this MD&A for additional information.
Adjusted net income (loss) – Refers to the consolidated net
income (loss) of Air Canada, adjusted to remove the after-
tax effects of foreign exchange gains or losses, net interest
relating to employee benefits, gains or losses on financial
instruments recorded at fair value, gains or losses on the sale
and leaseback of assets, gains or losses on debt settlements
and modifications, gains or losses on disposal of assets and
impairment of assets, if any. Adjusted net income (loss) is
a non-GAAP financial measure, refer to section 20 of this
MD&A for additional information.
Adjusted pre-tax income (loss) – Refers to the consolidated
income (loss) of Air Canada before income taxes and
adjusted to remove the effects of foreign exchange gains or
losses, net interest relating to employee benefits, gains or
losses on financial instruments recorded at fair value, gains
or losses on the sale and leaseback of assets, gains or losses
on debt settlements and modifications, gains or losses on
disposal of assets and impairment of assets, if any. Adjusted
pre-tax income (loss) is a non-GAAP financial measure. Refer
to section 20 this MD&A for additional information.
Aeroplan – Refers to Aeroplan Inc.
Atlantic – When used in reference to airline operations,
refers to operations and revenues from flights that cross the
Atlantic Ocean with origins and destinations principally in
Europe, India, the Middle East and North Africa.
Available seat miles or ASMs – Refers to a measure of
passenger capacity calculated by multiplying the total
number of seats available for passengers by the miles flown.
Average stage length – Refers to the average mile per
departure seat and is calculated by dividing total ASMs by
total seats dispatched.
CASM – Refers to operating expense per ASM.
Domestic – When used in reference to airline operations,
refers to operations and revenues from flights within
Canada.
Free cash flow – Refers to net cash flows from operating
activities minus additions to property, equipment, and
intangible assets, and is net of proceeds from sale and
leaseback transactions. Free cash flow is a non-GAAP
financial measure. Refer to sections 8.4 “Cash Flow
Movements” and 20 “Non-GAAP Financial Measures” of this
MD&A for additional information.
Jazz – Refers to Jazz Aviation LP.
Leverage ratio – Also known as net debt to adjusted EBITDA
ratio. Refers to the ratio of net debt to trailing 12-month
adjusted EBITDA (calculated by dividing net debt by trailing
12-month adjusted EBITDA). Leverage ratio is a non-GAAP
financial measure. Refer to sections 8.2 “Net Debt” and 20
“Non-GAAP Financial Measures” of this MD&A for additional
information.
Net debt – Refers to total long-term debt liabilities (including
current portion) less cash, cash equivalents. and short- and
long-term investments. Refer to section 8.2 “Net Debt” of
this MD&A for a reconciliation of this capital management
measure to the nearest measure under GAAP.
Other – When used in reference to airline operations, refers
to operations and revenues from flights with origins and
destinations principally in Central and South America, the
Caribbean and Mexico.
Pacific – When used in reference to airline operations, refers
to operations and revenues from flights that cross the Pacific
Ocean with origins and destinations principally in Asia and
Australia.
Passenger load factor – Refers to a measure of passenger
capacity utilization derived by expressing Revenue
Passenger Miles as a percentage of ASMs.
Passenger revenue per available seat mile or PRASM –
Refers to average passenger revenue per ASM.
Percentage point (pp) – Refers to a measure for the
arithmetic difference of two percentages.
Revenue passenger carried – Refers to the International
Air Transport Association’s definition of passenger carried
whereby passengers are counted on a flight number basis
rather than by journey/itinerary or by leg.
Revenue passenger miles or RPMs – Refers to a measure of
passenger traffic calculated by multiplying the total number
of revenue passengers carried by the miles they are carried.
Seats dispatched – Refers to the number of seats on non-
stop flights. A non-stop flight refers to a single takeoff and
landing.
Shares – Refers to Air Canada’s Class A variable voting
shares and Class B voting shares.
U.S. Transborder – When used in reference to airline
operations, refers to operations and revenues from flights
between Canada and the United States.
Yield – Refers to average passenger revenue per RPM.
Consolidated
financial statement
and notes
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Management
discussion and
analysis
2024
Consolidated
financial
statements
and notes
February 13, 2025
Management
discussion and
analysis
Governance
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Summary
Consolidated
financial statement
and notes
The consolidated financial statements have been prepared by management. Management is
responsible for the fair presentation of the consolidated financial statements in conformity
with generally accepted accounting principles in Canada which incorporates International
Financial Reporting Standards, as issued by the International Accounting Standards Board
(“IFRS Accounting Standards”). Management is responsible for the selection of accounting
policies and making significant accounting judgments and estimates. Management is also
responsible for all other financial information included in management’s discussion and
analysis and for ensuring that this information is consistent, where appropriate, with the
information contained in the consolidated financial statements.
Management is responsible for establishing and maintaining adequate internal control over
financial reporting which includes those policies and procedures that provide reasonable
assurance over the safeguarding of assets and over the completeness, fairness and accuracy
of the consolidated financial statements and other financial information.
The Audit, Finance and Risk Committee, which is comprised entirely of independent directors,
reviews the quality and integrity of the Corporation’s financial reporting and provides its
recommendations in respect of the approval of the financial statements to the Board of
Directors; oversees management’s responsibilities as to the adequacy of the supporting
systems of internal controls; provides oversight of the independence, qualifications and
appointment of the external auditor; and pre-approves audit, audit-related, and non-audit
fees and expenses. The Board of Directors approves the Corporation’s consolidated financial
statements and management’s discussion and analysis disclosures prior to their release.
The Audit, Finance and Risk Committee meets with management, the internal auditors and
external auditors at least four times each year to review and discuss financial reporting,
disclosures, auditing and other matters.
The external auditor, PricewaterhouseCoopers LLP, conducts an independent audit of the
consolidated financial statements in accordance with Canadian generally accepted auditing
standards and express their opinion thereon. Those standards require that the audit is
planned and performed to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free of material misstatement. The external auditor has
unlimited access to the Audit, Finance and Risk Committee and meets with the Committee on
a regular basis.
Michael Rousseau
President and
Chief Executive Officer
John Di Bert
Executive Vice President and
Chief Financial Officer
February 13, 2025
Statement of management’s responsibility for
financial reporting
Management
discussion and
analysis
Governance
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| 2024 Annual Report
Consolidated
financial statement
and notes
Independent auditor’s report
To the Shareholders of Air Canada
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in
all material respects, the financial position of Air Canada and its subsidiaries (together,
the Corporation) as at December 31, 2024 and 2023, and its financial performance
and its cash flows for the years then ended in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board (IFRS
Accounting Standards).
What we have audited
The Corporation’s consolidated financial statements comprise:
• the consolidated statements of financial position as at December 31, 2024 and 2023;
• the consolidated statements of operations for the years then ended;
• the consolidated statements of comprehensive income for the years then ended;
• the consolidated statements of changes in equity for the years then ended;
• the consolidated statements of cash flow for the years then ended; and
• the notes to the consolidated financial statements, comprising material accounting policy
information and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We are independent of the Corporation in accordance with the ethical requirements that are
relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our
other ethical responsibilities in accordance with these requirements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the consolidated financial statements for the year ended
December 31, 2024. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the
key audit matter
Passenger and cargo revenue
recognition
Refer to note 2 – Basis of presentation
and summary of material accounting
policies and note 19 – Revenue to the
consolidated financial statements.
Passenger and cargo revenues are
recognized when the transportation is
provided. Total passenger and cargo
revenues recognized for the year
ended December 31, 2024 amounted
to $19,760 million and $991 million,
respectively.
Such transactions rely on multiple
Information Technology (IT) systems and
controls to process, record and recognize
a high volume of low value revenue
transactions through a combination
of IT systems and outsourced service
providers.
We considered this a key audit matter
due to the significance of passenger and
cargo revenues and the volume of these
transactions resulting in significant audit
effort to test the revenue recognized.
Our approach to addressing the matter
included the following procedures, among
others:
• Tested the operating effectiveness
of internal controls and performed
substantive testing on certain aspects
related to passenger and cargo revenue
recognition, which included the following:
−Tested the controls and performed
certain substantive procedures
over the relevant IT systems that
management used to recognize
passenger and cargo revenues.
−For the IT systems or processes
that are outsourced to third party
service providers, assessed the
assurance reports attesting to the
appropriateness and effectiveness
of the internal control systems
established by the service providers.
• Tested a sample of passenger and cargo
revenue transactions recorded during
the year by inspecting the consideration
received and the evidence of when
the transportation was provided for
passengers or cargo.
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Consolidated
financial statement
and notes
Key audit matter
How our audit addressed the
key audit matter
Measurement of the total benefit
obligations
Refer to note 2 – Basis of presentation and
summary of material accounting policies,
note 3 – Critical accounting estimates and
judgments, and note 9 – Pensions and
other benefit liabilities to the consolidated
financial statements.
The Corporation has net benefit assets of
$628 million, which include total benefit
obligations associated with pension benefit
obligations of $18,421 million and other
employee future benefit obligations of
$1,077 million as at December 31, 2024.
The total benefit obligations associated
with pension benefit obligations and
other employee future benefit obligations
are actuarially determined annually as
at December 31 and are prepared by
the Corporation’s consulting actuaries
(management’s experts). The total
benefit obligations are determined
using the projected unit credit method.
Management applied significant judgment
in determining the discount rates and
mortality assumptions to develop the
estimates for the total benefit obligations.
We considered this a key audit matter
due to the significance of the total benefit
obligations and the significant judgment
made by management, including the use of
management’s experts, in determining the
discount rates and mortality assumptions,
which resulted in a high degree of auditor
judgment and subjectivity in performing
procedures related to those assumptions.
The audit effort involved the use of
professionals with specialized skill and
knowledge in the field of actuarial services.
Our approach to addressing the matter
included the following procedures, among
others:
• Tested how management developed the
estimates for the total benefit obligations
which included the following:
−The work of management’s
experts was used in performing
the procedures to evaluate the
reasonableness of the total benefit
obligations associated with pension
benefit obligations and other
employee future benefit obligations.
As a basis for using this work,
management’s experts’ competence,
capabilities and objectivity were
evaluated, the work performed was
understood and the appropriateness
of the work as audit evidence was
evaluated. The procedures performed
also included evaluating the
methods and assumptions used by
management’s experts, testing the
data used by management’s experts
and evaluating their findings.
−Professionals with specialized
skill and knowledge in the field
of actuarial services assisted in
evaluating the appropriateness of the
projected unit credit method and the
reasonableness of the discount rates
and mortality assumptions.
• Tested the disclosures, including
the sensitivity analysis, made in the
consolidated financial statements with
regard to the measurement of the
pension benefit obligations and other
employee future benefit obligations.
Other information
Management is responsible for the other information. The other information comprises
the Management’s Discussion and Analysis, which we obtained prior to the date of this
auditor’s report and the information, other than the consolidated financial statements and
our auditor’s report thereon, included in the Annual Report, which is expected to be made
available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information
and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is
to read the other information identified above and, in doing so, consider whether the other
information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior
to the date of this auditor’s report, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this
regard. When we read the information, other than the consolidated financial statements and
our auditor’s report thereon, included in the Annual Report, if we conclude that there is a
material misstatement therein, we are required to communicate the matter to those charged
with governance.
Responsibilities of management and those charged with
governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with IFRS Accounting Standards, and for such internal
control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for
assessing the Corporation’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Corporation or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation’s financial
reporting process.
Management
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Consolidated
financial statement
and notes
Auditor’s responsibilities for the audit of the consolidated
financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with
Canadian generally accepted auditing standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we
exercise professional judgment and maintain professional skepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Corporation’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Corporation’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Corporation to cease
to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business units within the Corporation as a basis
for forming an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and review of the audit work performed for purposes of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is
Mario Longpré.
Montréal, Quebec
February 13, 2025
1
1
CPA auditor, public accountancy permit No. A123498
Management
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Governance
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Summary
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| 2024 Annual Report
Consolidated
financial statement
and notes
Consolidated Statements of Financial Position
(Canadian dollars in millions)
December 31, 2024
December 31, 2023
ASSETS
Current
Cash and cash equivalents
$
2,518
$
2,817
Short-term investments
4,464
5,734
Total cash, cash equivalents and short-term investments
6,982
8,551
Accounts receivable
Note 19
1,089
1,121
Aircraft fuel inventory
192
169
Spare parts and supplies inventory
Note 2P
199
168
Prepaid expenses and other current assets
600
251
Total current assets
9,062
10,260
Investments, deposits and other assets
Note 4
1,080
1,009
Property and equipment
Note 5
13,049
11,907
Pension assets
Note 9
2,535
2,588
Deferred income tax
Note 11
1,039
50
Intangible assets
Note 6
1,170
1,084
Goodwill
Note 7
3,273
3,273
Total assets
$
31,208
$
30,171
LIABILITIES
Current
Accounts payable and accrued liabilities
$
3,718
$
3,319
Advance ticket sales
Note 19
4,387
4,341
Aeroplan and other deferred revenue
Note 19
1,588
1,473
Current portion of long-term debt and lease liabilities
Note 8
1,755
866
Total current liabilities
11,448
9,999
Long-term debt and lease liabilities
Note 8
10,915
12,996
Aeroplan and other deferred revenue
Note 19
2,952
2,989
Pension and other benefit liabilities
Note 9
1,842
1,875
Maintenance provisions
Note 10
1,431
1,227
Other long-term liabilities
159
216
Deferred income tax
Note 11
73
73
Total liabilities
$
28,820
$
29,375
SHAREHOLDERS’ EQUITY
Share capital
Note 12
2,612
2,744
Contributed surplus
149
133
Accumulated other comprehensive loss
(48)
(57)
Deficit
(325)
(2,024)
Total shareholders’ equity
2,388
796
Total liabilities and shareholders’ equity
$
31,208
$
30,171
The accompanying notes are an integral part of the
consolidated financial statements.
On behalf of the Board of Directors:
Vagn Sørensen
Chair of the Board of
Directors
Christie J.B. Clark
Chair of the Audit, Finance
and Risk Committee
Management
discussion and
analysis
Governance
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Summary
74
| 2024 Annual Report
Consolidated
financial statement
and notes
Consolidated Statements
of Operations
For the year ended December 31
2024
2023
(Canadian dollars in millions except per share figures)
Operating revenues
Passenger
Note 19
$ 19,760
$ 19,403
Cargo
Note 19
991
924
Other
1,504
1,506
Total revenues
22,255
21,833
Operating expenses
Aircraft fuel
5,118
5,318
Wages, salaries and benefits
Note 9
4,880
3,955
Depreciation and amortization
Note 5
1,799
1,703
Airport and navigation fees
1,487
1,418
Aircraft maintenance
1,237
1,083
Sales and distribution costs
1,085
1,097
Capacity purchase fees
Note 2D
860
858
Ground package costs
782
720
Communications and information technology
649
555
Catering and onboard services
637
628
Other
Note 20
2,458
2,219
Total operating expenses
20,992
19,554
Operating income
1,263
2,279
Non-operating income (expense)
Foreign exchange gain (loss)
(400)
389
Interest income
431
416
Interest expense
Note 8
(763)
(944)
Interest capitalized
32
14
Financial instruments recorded at fair value
Note 16
28
115
Loss on debt settlements and modifications
Note 8
(8)
(10)
Other
(68)
(47)
Total non-operating expense
(748)
(67)
Income before income taxes
515
2,212
Income tax recovery
Note 11
1,205
64
Net income
$
1,720
$
2,276
Net income per share
Note 14
Basic earnings per share
$
4.81
$
6.35
Diluted earnings per share
$
4.72
$
5.96
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated Statements of
Comprehensive Income
For the year ended December 31
2024
2023
(Canadian dollars in millions)
Comprehensive income
Net income
$
1,720
$
2,276
Other comprehensive income, net of tax:
Note 11
Items that will not be reclassified to net income
Remeasurements on net employee benefits
Note 9
300
70
Remeasurements on equity investments
Note 4
9
(11)
Total comprehensive income
$
2,029
$
2,335
Management
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Governance
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| 2024 Annual Report
Consolidated
financial statement
and notes
Consolidated Statements of Changes in Equity
(Canadian dollars in millions)
Share capital
Contributed
surplus
Accumulated
other
comprehensive
loss
Deficit
Total
shareholders’
equity
(deficiency)
January 1, 2023
$
2,743
$
118
$
(46)
$ (4,370)
$
(1,555)
Net income
–
–
–
2,276
2,276
Remeasurements on net employee benefits
–
–
–
70
70
Remeasurements on equity investments
–
–
(11)
–
(11)
Total comprehensive income (loss)
–
–
(11)
2,346
2,335
Share-based compensation
–
15
–
–
15
Shares issued (Note 12)
1
–
–
–
1
December 31, 2023
$
2,744
$
133
$
(57)
$ (2,024)
$
796
Net income
–
–
–
1,720
1,720
Remeasurements on net employee benefits
–
–
–
300
300
Remeasurements on equity investments
–
–
9
–
9
Total comprehensive income
–
–
9
2,020
2,029
Share-based compensation
–
16
–
–
16
Shares purchased and cancelled under issuer bid (Note 12)
(155)
–
–
(340)
(495)
Shares issued (Note 12)
1
–
–
–
1
Deferred income tax recognition (Note 11)
22
–
–
19
41
December 31, 2024
$
2,612
$
149
$
(48)
$
(325)
$
2,388
The accompanying notes are an integral part of the consolidated financial statements.
Management
discussion and
analysis
Governance
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Summary
76
| 2024 Annual Report
Consolidated
financial statement
and notes
Consolidated Statements of
Cash Flow
For the year ended December 31
2024
2023
(Canadian dollars in millions)
Cash flows from (used for)
Operating
Net income
$
1,720
$
2,276
Adjustments to reconcile to net cash from operations
Deferred income tax
Note 11
(1,235)
(47)
Depreciation and amortization
Note 5
1,799
1,703
Foreign exchange (gain) loss
623
(239)
Employee benefit funding less than expense
Note 9
568
59
Financial instruments recorded at fair value
Note 16
(28)
(115)
Loss on debt settlements and modifications
Note 8
8
10
Change in maintenance provisions
192
56
Changes in non-cash working capital balances
214
711
Other
69
(94)
Net cash flows from operating activities
3,930
4,320
Financing
Proceeds from borrowings
Note 8
1,590
84
Repayment of long-term debt and lease liabilities
Note 8
(3,956)
(2,452)
Shares purchased for cancellation
Note 12
(473)
–
Issue of shares
Note 12
1
1
Financing fees
Note 8
(34)
(1)
Net cash flows used in financing activities
(2,872)
(2,368)
Investing
Short-term investments, net
633
457
Disposals of long-term investments
2,042
1,261
Purchase of long-term investments
(1,401)
(1,963)
Additions to property, equipment and intangible assets
(2,636)
(1,564)
Other
(1)
(18)
Net cash flows used in investing activities
(1,363)
(1,827)
Effect of exchange rate changes on cash and cash equivalents
6
(1)
Increase (decrease) in cash and cash equivalents
(299)
124
Cash and cash equivalents, beginning of year
2,817
2,693
Cash and cash equivalents, end of year
$
2,518
$
2,817
The accompanying notes are an integral part of the consolidated financial statements.
For the years ended December 31, 2024 and 2023
(Canadian dollars except where otherwise indicated)
1. General information
The accompanying audited consolidated financial statements (the “financial statements”)
are of Air Canada (the “Corporation”). The term Corporation also refers to, as the context may
require, Air Canada and/or one or more of its subsidiaries, including its principal wholly-owned
operating subsidiaries, Aeroplan Inc. (“Aeroplan”), Touram Limited Partnership doing business
under the brand name Air Canada Vacations® (“Air Canada Vacations”), and Air Canada Rouge
LP doing business under the brand name Air Canada Rouge® (“Air Canada Rouge”).
Air Canada is incorporated and domiciled in Canada. The address of its registered office is
7373 Côte-Vertu Boulevard West, Saint-Laurent, Quebec.
Air Canada is Canada’s largest domestic, U.S. transborder and international airline and the
largest provider of scheduled passenger services in the Canadian market, the Canada-U.S.
transborder market as well as the international market to and from Canada. Certain of the
scheduled passenger services offered on domestic and Canada-U.S. transborder routes are
operated under the brand name “Air Canada Express” by third parties including Jazz Aviation
LP (“Jazz”), a wholly-owned subsidiary of Chorus Aviation Inc. (“Chorus”), through capacity
purchase and other commercial agreements. Through Air Canada’s global route network,
virtually every major market throughout the world is served either directly or through Star
Alliance and other carriers. Air Canada also offers air cargo services on domestic and U.S.
transborder routes as well as on international routes between Canada and major markets in
Europe, Asia, South America and Australia.
Aeroplan operates a loyalty rewards and recognition program that allows individuals to enroll
as members and open an Aeroplan account, to accumulate Aeroplan Points through travel
on Air Canada and select partners, as well as through the purchase of products and services
from participating partners and suppliers, and to redeem Aeroplan Points for a variety of
travel, merchandise, gift card, and other rewards provided directly by participating partners or
made available through Aeroplan’s intermediary suppliers.
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| 2024 Annual Report
Consolidated
financial statement
and notes
2. Basis of presentation and
summary of material accounting
policies
The Corporation prepares its financial statements in accordance with generally accepted
accounting principles in Canada (“GAAP”) as set out in the CPA Canada Handbook –
Accounting (“CPA Handbook”) which incorporates International Financial Reporting Standards
as issued by the International Accounting Standards Board (“IFRS Accounting Standards”).
These financial statements were approved for issue by the Board of Directors of the
Corporation on February 13, 2025.
These financial statements are based on the accounting policies described below. These
policies have been consistently applied to all the periods presented.
Certain comparative figures have been reclassified to conform to the financial statement
presentation adopted for the current year.
A) BASIS OF MEASUREMENT
These financial statements have been prepared under the historical cost convention, except
for the revaluation of cash, cash equivalents, short-term investments, restricted cash, long-
term investments, the equity investment in Chorus, and derivative instruments which are
measured at fair value.
B) PRINCIPLES OF CONSOLIDATION
These financial statements include the accounts of Air Canada and its subsidiaries.
Subsidiaries are all entities which Air Canada controls. For accounting purposes, control is
established by an investor when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over
the entity. All inter-company balances and transactions are eliminated.
C) PASSENGER AND CARGO REVENUES
Passenger and cargo revenues are recognized when the transportation is provided, except
for revenue on unlimited flight passes which is recognized on a straight-line basis over the
period during which the travel pass is valid. The Corporation has formed alliances with other
airlines encompassing loyalty program participation, interline agreements and code sharing
and coordination of services including reservations, baggage handling and flight schedules.
Revenues are allocated based upon formulas specified in the agreements and are recognized
as transportation is provided. Passenger revenue also includes certain fees and surcharges
and revenues from passenger-related services such as seat selection and excess baggage
which are recognized when transportation is provided. Passenger revenues are reduced for
any passenger compensation for delayed and cancelled flights paid directly to a customer.
Airline passenger and cargo advance sales are deferred and included in Current liabilities.
The Corporation records an estimate of breakage revenue, which is recorded at the time
when transportation was scheduled to be provided, for tickets that will expire unused. These
estimates are based on historical experience and other considerations.
D) CAPACITY PURCHASE AGREEMENT
Air Canada enhances its domestic and transborder network through commercial agreements
with regional carriers, including Jazz. Under these agreements, Air Canada markets, tickets
and enters into other commercial arrangements relating to these flights and records the
revenue it earns under Passenger revenue when transportation is provided.
Capacity purchase fees are presented as a separate line item in the consolidated statement of
operations and exclude the component of fees related to aircraft costs which are accounted
for as lease liabilities in accordance with IFRS 16. Pass-through costs, which are direct costs
incurred by the regional carriers and charged to the Corporation and other costs incurred by
the Corporation which are directly related to regional carrier operations are included in the line
items to which they relate in the consolidated statement of operations.
E) AEROPLAN LOYALTY PROGRAM
The Aeroplan loyalty program generates customer loyalty by rewarding customers who
travel with Air Canada. This program allows program members to earn Aeroplan Points by
flying on Air Canada, Star Alliance partners and other airlines that participate in the Aeroplan
loyalty program. When travelling, program members earn redeemable Aeroplan Points
based on a number of factors including the passenger’s loyalty program status, distance
travelled, booking class and travel fare paid. Members can also earn Aeroplan Points through
participating Aeroplan program partners such as credit card companies, hotels, car rental
agencies and other program partners. Aeroplan Points are redeemable by members for air
travel on Air Canada and other participating airlines, and for other program awards, such as
hotel, car rentals, gift cards, merchandise and other non-air rewards.
Aeroplan members can earn Aeroplan Points: (i) through travel and (ii) based on spending with
program partners.
Points Earned with Travel
Passenger ticket sales earning Aeroplan Points under the Aeroplan loyalty program provide
members with (1) air transportation and (2) Aeroplan Points. As a revenue arrangement
with multiple performance obligations, each performance obligation is valued on a relative
standalone fair value basis. The value of Aeroplan Points issued is determined based on the
value a passenger receives by redeeming Points for a ticket rather than paying cash, which
is referred to as Equivalent Ticket Value (“ETV”). The ETV is adjusted for Points that are not
expected to be redeemed (“breakage”). The consideration allocated to the ETV for Points
earned with travel is recorded in Aeroplan deferred revenue.
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| 2024 Annual Report
Consolidated
financial statement
and notes
Points Earned through Program Partners
Aeroplan members can earn Aeroplan Points based on their spending with participating
Aeroplan partners such as credit card companies, hotels and car rental agencies and other
program partners. Aeroplan Points issued under program partner agreements are accounted
for as a single performance obligation being the future delivery of a redemption reward to
the Aeroplan member. The consideration received for Aeroplan Points issued to Aeroplan
members under these agreements is recorded as Aeroplan deferred revenue.
Breakage represents the estimated Aeroplan Points that are not expected to be redeemed
by Aeroplan members. The amount of revenue recognized related to breakage is based
on the number of Aeroplan Points redeemed in a period in relation to the total number of
Aeroplan Points expected to be redeemed. The number of Aeroplan Points redeemed in a
period also factors into any revised estimate for breakage. Changes in breakage are accounted
for as follows: in the period of change, the deferred revenue balance is adjusted as if the
revised estimate had been used in prior periods with the offsetting amount recorded as an
adjustment to passenger revenue; and for subsequent periods, the revised estimate is used.
F) OTHER REVENUES
Other revenue is primarily comprised of revenues from the sale of the ground portion of
vacation packages, ground handling services, on-board sales, lounge pass sales and loyalty
program marketing fees. Vacation package revenue is recognized as services are provided
over the period of the vacation. Other airline related service revenues are recognized as the
products are sold to passengers or the services are provided.
Redemption of Aeroplan Points for non-air goods and services is recorded in other revenue.
For non-air redemptions, the Corporation has determined that, for accounting purposes, it
is not the principal in the transaction between the member and the ultimate supplier of the
goods or service. When Points are redeemed for non-air goods and services, the net margin is
recorded in other revenue when the performance obligation is satisfied.
In certain subleases of aircraft to Jazz, for accounting purposes, the Corporation acts as an
agent and accordingly reports the sublease revenues net against capacity purchase fees. The
Corporation acts as lessee and sublessor in these matters.
G) EMPLOYEE BENEFITS
The cost of pensions, other post-retirement and post-employment benefits earned by
employees is actuarially determined annually as at December 31 and is prepared by the
Corporation’s consulting actuaries. The cost is determined using the projected unit credit
method and assumptions including discount rates, future increases in compensation,
retirement ages of employees, mortality rates, and health care costs.
Past service costs are recognized in the period of a plan amendment, irrespective of whether
the benefits have vested. Gains and losses on curtailments or settlements are recognized in
the period in which the curtailment or settlement occurs.
The current service cost and any past service cost, gains and losses on curtailments or
settlements are recorded in Wages, salaries and benefits generally. The interest arising
on the net benefit obligations are presented in Other in Non-operating income (expense).
Net actuarial gains and losses, referred to as remeasurements, are recognized in Other
comprehensive income and Retained earnings without subsequent reclassification to income.
The current service cost is estimated utilizing different discount rates derived from the yield
curve used to measure the defined benefit obligation at the beginning of the year, reflecting
the different timing of benefit payments for past service (the defined benefit obligation) and
future service (the current service cost).
The liability in respect of minimum funding requirements, if any, is determined using the
projected minimum funding requirements, based on management’s best estimates of the
actuarially determined funded status of the plan, market discount rates and salary escalation
estimates. The liability in respect of the minimum funding requirement and any subsequent
remeasurement of that liability are recognized immediately in Other comprehensive income
and Retained earnings (deficit) without subsequent reclassification to income.
Recognized pension assets are limited to the present value of any reductions in future
contributions or any future refunds.
H) EMPLOYEE PROFIT SHARING PLANS
The Corporation has employee profit sharing plans. Payments are calculated based on full
calendar year results and an expense recorded throughout the year, as applicable, as a charge
to Wages, salaries and benefits based on the estimated annual payments under the plans.
I) SHARE-BASED COMPENSATION PLANS
Certain employees of the Corporation participate in Air Canada’s Long-Term Incentive Plan,
which provides for the grant of stock options, performance share units (“PSUs”) and restricted
share units (“RSUs”), as further described in Note 13. PSUs and RSUs are notional share units
which are exchangeable on a one-to-one basis for Air Canada shares or the cash equivalent, as
determined by the Board of Directors.
Options are expensed using a graded vesting model over the vesting period. The Corporation
recognizes compensation expense and a corresponding adjustment to Contributed surplus
equal to the fair value of the equity instruments granted using the Black-Scholes option
pricing model taking into consideration forfeiture estimates. Compensation expense is
adjusted for subsequent changes in management’s estimate of the number of options that
are expected to vest.
PSUs and RSUs are accounted for as cash settled instruments based on settlement
experience. In accounting for cash settled instruments, compensation expense is adjusted
for subsequent changes in the fair value of the PSUs and RSUs taking into account forfeiture
estimates. The liability related to cash settled PSUs and RSUs is recorded in Accounts payable
and accrued liabilities and Other long-term liabilities.
Air Canada also maintains an employee share purchase plan. Under this plan, contributions
by the Corporation’s employees are matched to a specific percentage by the Corporation.
Management
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Summary
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| 2024 Annual Report
Consolidated
financial statement
and notes
Employees must remain with the Corporation and retain their shares until March 31 of the
subsequent year for vesting of the Corporation’s contributions. These contributions are
expensed in Wages, salaries, and benefits expense over the vesting period.
J) MAINTENANCE AND REPAIRS
Maintenance and repair costs for both leased and owned aircraft are charged to Aircraft
maintenance as incurred, with the exception of maintenance and repair costs related to return
conditions on aircraft under lease, which are accrued over the term of the lease, and major
maintenance expenditures on owned and leased aircraft, which are capitalized as described
below in Note 2Q.
Maintenance and repair costs related to return conditions on aircraft leases are recorded over
the term of the lease for the end of lease maintenance return condition obligations within
the Corporation’s leases, offset by a prepaid maintenance asset to the extent of any related
power-by-the-hour maintenance service agreements. Maintenance provisions for end-of-
lease return obligations are recorded, as applicable, on aircraft leases as a maintenance
expense over the term of the lease, taking into account the specific risks of the liability over
the remaining term of the lease. Interest accretion on the provision is recorded in Other non-
operating expense. Any changes to the provision for end-of-lease conditions are recognized as
an adjustment to the right-of-use asset and subsequently amortized to the income statement
over the remaining term of the lease. Any difference in the actual maintenance cost incurred
and the amount of the provision are recorded in Aircraft maintenance.
K) OTHER OPERATING EXPENSES
Included in Other operating expenses are expenses related to building rent and maintenance,
airport terminal handling costs, professional fees and services, crew meals and hotels,
advertising and promotion, insurance costs, and other expenses. Other operating expenses
are recognized as incurred.
L) FINANCIAL INSTRUMENTS
Recognition
Financial assets and financial liabilities, including derivatives, are recognized on the
consolidated statement of financial position when the Corporation becomes a party to the
financial instrument or derivative contract.
Classification
The Corporation classifies its financial assets and financial liabilities in the following
measurement categories: (i) those to be measured subsequently at fair value (either through
other comprehensive income or through profit or loss) and (ii) those to be measured at
amortized cost. The classification of financial assets depends on the business model for
managing the financial assets and the contractual terms of the cash flows. Financial liabilities
are classified as those to be measured at amortized cost unless they are designated as those
to be measured subsequently at fair value through profit or loss (irrevocable election at the
time of recognition). For assets and liabilities measured at fair value, gains and losses are
either recorded in profit or loss or other comprehensive income.
The Corporation reclassifies financial assets when and only when its business model for
managing those assets changes. Financial liabilities are not reclassified.
The Corporation has implemented the following classifications:
• Cash and cash equivalents, short-term investments, restricted cash, and long-term
investments are classified as assets at fair value through profit and loss and any period
change in fair value is recorded through Interest income and Financial instruments recorded
at fair value in the consolidated statement of operations, as applicable.
• The equity investment in Chorus is classified as an asset at fair value through other
comprehensive income and any period change in fair value is recorded through other
comprehensive income in the consolidated statement of comprehensive income, as
applicable.
• Accounts receivable and Aircraft-related and other deposits are classified as assets at
amortized cost and are measured using the effective interest rate method. Interest income is
recorded in the consolidated statement of operations, as applicable.
• Accounts payable, credit facilities, and long-term debt are classified as other financial
liabilities and are measured at amortized cost using the effective interest rate method.
Interest expense is recorded in the consolidated statement of operations, as applicable.
Measurement
All financial instruments are required to be measured at fair value on initial recognition, plus,
in the case of a financial asset or financial liability not at fair value through profit or loss,
transaction costs that are directly attributable to the acquisition or issue of the financial asset
or financial liability. Transaction costs of financial assets and financial liabilities carried at fair
value through profit or loss are expensed in profit or loss. Financial assets with embedded
derivatives are considered in their entirety when determining whether their cash flows are
solely payment of principal and interest.
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| 2024 Annual Report
Consolidated
financial statement
and notes
Subsequent to initial recognition, financial assets that are held within a business model whose
objective is to collect the contractual cash flows, and that have contractual cash flows that are
solely payments of principal and interest on the principal outstanding are generally measured
at amortized cost. All other financial assets including equity investments are measured at their
fair values at the end of subsequent accounting periods, with any changes taken through
profit and loss or other comprehensive income (irrevocable election at the time of recognition).
Impairment
The Corporation assesses all information available, including, on a forward-looking basis, the
expected credit losses associated with its assets carried at amortized cost. The impairment
methodology applied depends on whether there has been a significant increase in credit
risk. To assess whether there is a significant increase in credit risk, the Corporation compares
the risk of a default occurring on the asset as at the reporting date with the risk of default
as at the date of initial recognition based on all information available, and reasonable and
supportive forward-looking information. For trade receivables only, the Corporation applies
the simplified approach as permitted by IFRS 9 which requires expected lifetime losses to be
recognized from initial recognition of receivables.
Derivatives and Hedge Accounting
The Corporation enters into foreign currency, fuel derivatives and share forward contracts
to manage the associated risks. Derivative instruments are recorded on the consolidated
statement of financial position at fair value, including those derivatives that are embedded in
financial or non-financial contracts that are required to be accounted for separately. Changes
in the fair value of derivative instruments are recognized in Non-operating income (expense),
except for effective changes for designated fuel derivatives under hedge accounting
as described below. Derivative instruments are recorded in Prepaid expenses and other
current assets, Deposits and other assets, Accounts payable and accrued liabilities, and
Other long-term liabilities based on the terms of the contractual agreements. All cash flows
associated with purchasing and selling derivatives are classified as operating cash flows in the
consolidated statement of cash flow.
The Corporation applies hedge accounting for designated fuel derivatives. The Corporation
has established a hedge ratio of 1:1 for its fuel hedging relationships. Under hedge accounting,
to the extent effective, the gain or loss on fuel hedging derivatives is recorded in other
comprehensive income. Premiums paid for option contracts and the time value of the option
contracts are deferred as a cost of the hedge in other comprehensive income. Amounts
accumulated in other comprehensive income are presented as hedging reserve in equity and
are reclassified to Aircraft fuel expense when the underlying hedged jet fuel is used. Any
ineffective gain or loss on fuel hedging derivatives is recorded in
non-operating expense in Financial instruments recorded at fair value.
When a hedging instrument expires, is sold or terminated, or when a hedge no longer meets
the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of
hedging in equity at that time remains in equity until the forecast transaction occurs. When
the forecast transaction is no longer expected to occur, the cumulative gain or loss and
deferred costs of hedging that were reported in equity are immediately reclassified to profit or
loss.
M) FOREIGN CURRENCY TRANSLATION
The functional currency of Air Canada and its subsidiaries is the Canadian dollar. Monetary
assets and liabilities denominated in foreign currencies are translated into Canadian dollars
at rates of exchange in effect at the date of the consolidated statement of financial position.
Non-monetary assets and liabilities, revenues and expenses arising from transactions
denominated in foreign currencies, are translated at the historical exchange rate or the
average exchange rate during the period, as applicable. Adjustments to the Canadian dollar
equivalent of foreign denominated monetary assets and liabilities due to the impact of
exchange rate changes are recognized in Foreign exchange gain (loss).
N) INCOME TAXES
The tax expense for the period comprises current and deferred income tax. Tax expense is
recognized in the consolidated statement of operations, except to the extent that it relates to
items recognized in other comprehensive income or directly in equity, in which case the tax is
netted with such items.
The current income tax expense is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the jurisdictions where the Corporation
and its subsidiaries operate and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulations are
subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated
financial statements. Deferred income tax is determined using tax rates and laws that have
been enacted or substantively enacted by the balance sheet date and are expected to apply
when the related deferred income tax asset is realized or the deferred income tax liability is
settled.
Deferred income tax assets are recognized only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilized.
O) EARNINGS PER SHARE
Basic earnings per share (“EPS”) is calculated by dividing the net income for the period
attributable to the shareholders of Air Canada by the weighted average number of shares
outstanding during the period.
Diluted EPS is calculated by adjusting the weighted average number of shares outstanding for
dilutive potential shares. The Corporation’s potentially dilutive shares are comprised of stock
options and convertible notes. The number of shares included with respect to time vesting
options is computed using the treasury stock method unless they are anti-dilutive. Under
this method, the proceeds from the exercise of such instruments are assumed to be used to
purchase shares at the average market price for the period and the difference between the
number of shares issued upon exercise and the number of shares assumed to be purchased
is included in the calculation. The number of shares included with respect to performance-
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based employee share options is treated as contingently issuable shares because their issue
is contingent upon satisfying specified conditions in addition to the passage of time. If the
specified conditions are met, then the number of shares included is also computed using the
treasury stock method unless they are anti-dilutive.
The weighted average number of shares outstanding in diluted EPS is also adjusted for
the number of shares that would be issued on the conversion of the convertible notes.
Additionally, the net income is adjusted for the after-tax effect of any changes to net income
that would result from the conversion of the convertible notes, including interest recognized
in the period, foreign exchange recognized on the debt principal, and the mark to market
revaluation of the embedded derivative unless the result of the adjustments is anti-dilutive.
P) AIRCRAFT FUEL INVENTORY AND SPARE PARTS AND
SUPPLIES INVENTORY
Inventories of aircraft fuel, spare parts and supplies are measured at cost being determined
using a weighted average formula, net of related obsolescence provision, as applicable.
The Corporation did not recognize any write-downs on inventories or reversals of any previous
write-downs during the periods presented. Included in Aircraft maintenance is $78 million
related to spare parts and supplies consumed during the year (2023 – $62 million).
Q) PROPERTY AND EQUIPMENT
Property and equipment are recognized using the cost model. Property under leases,
recognized as right-of-use assets, and the related obligation for future lease payments are
initially recorded at an amount equal to the lesser of fair value of the asset and the present
value of those lease payments.
The Corporation allocates the amount initially recognized in respect of an item of property
and equipment to its significant components and depreciates separately each component.
Property and equipment are depreciated to estimated residual values based on the
straight-line method over their estimated service lives. Aircraft and flight equipment are
componentized into airframe, engine, and cabin interior equipment and modifications.
Airframes and engines are depreciated over periods not exceeding 25 years, with residual
values initially estimated at 10% of the original cost and updated for changes in estimates over
time. Spare engines and related parts (“rotables”) are depreciated over the average remaining
useful life of the fleet to which they relate with residual values initially estimated at 10%. Cabin
interior equipment and modifications are depreciated over the lesser of eight years or the
remaining useful life of the aircraft. Cabin interior equipment and modifications to aircraft on
lease are amortized over the lesser of eight years or the term of the lease. Major maintenance
of airframes and engines, including replacement spares and parts, labour costs and/or third-
party maintenance service costs, are capitalized and amortized over the average expected
life between major maintenance events. Major maintenance events typically consist of more
complex inspections and servicing of the aircraft. All power-by-the-hour fleet maintenance
contract costs are charged to operating expenses in the income statement as incurred.
Buildings are depreciated on a straight-line basis over their useful lives not exceeding 50 years
or the term of any related lease, whichever is less. Leasehold improvements are amortized
over the lesser of the lease term or 10 years. Ground and other equipment is depreciated over
periods ranging from 3 to 25 years.
Residual values and useful lives are reviewed at least annually, and depreciation rates are
adjusted accordingly on a prospective basis. Gains and losses on disposals of property and
equipment are determined by comparing the proceeds with the carrying amount of the asset
and are included as part of non-operating gains and losses in the consolidated statement of
operations.
R) LEASES
Accounting for Leases and Right-of-Use Assets
Leases are recognized as a right-of-use asset and corresponding liability at the date of which
the leased asset is available for use by the Corporation. Each lease payment is allocated
between the liability and interest expense. The interest cost is charged to the consolidated
statement of operations over the lease period to produce a constant rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are accounted for under IAS 16 Property, Plant and Equipment. Aircraft
recorded as right-of-use assets have the same accounting policies as directly owned aircraft,
meaning the right-of-use assets are componentized and depreciated over the lease term.
Consistent with owned aircraft, any qualifying maintenance events are capitalized and
depreciated over the lesser of the lease term and expected maintenance life.
Changes to the terms and conditions, or events impacting the extension of a lease would
usually require an assessment of whether it is a lease modification which could involve
recalculating lease assets and liabilities using a revised discount rate.
Maintenance provisions for end-of-lease return obligations are recorded, as applicable, on
aircraft leases as a maintenance expense over the term of the lease. Any changes to the
provision for end-of-lease conditions are recognized as an adjustment to the right-of-use asset
and subsequently amortized to the income statement over the remaining term of the lease.
Aircraft Leases
As at December 31, 2024 the Corporation had 80 aircraft under right-of-use leases (75 aircraft
as at December 31, 2023) and recorded such aircraft as right-of-use assets and lease liabilities
of Air Canada in accordance with the requirements of IFRS 16. Additionally, Air Canada is the
lessee in respect of certain aircraft used by its regional carrier, Jazz, providing services under
a capacity purchase agreement and recorded such aircraft as right-of-use assets and lease
liabilities of Air Canada. As at December 31, 2024, there were 81 aircraft (81 aircraft as at
December 31, 2023) operating under these arrangements on behalf of Air Canada.
Property Leases
The Corporation has leases related to airport terminal operations space and other real
estate leases. For leases related to terminal operations space, there are generally effective
substitution rights in the hands of the lessor and therefore these are not considered lease
contracts under the standard. Leases with reciprocal termination rights with a notice period
of less than 12 months are considered short-term leases and therefore excluded from balance
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sheet recognition under the practical expedient. Finally, those airport terminal contracts with
entirely variable lease payments are also excluded since variable lease payments, other than
those based on an index or rate, are excluded from the measurement of the lease liability.
This results in a portfolio of property leases that are recorded as right-of-use assets and lease
liabilities under the standard which relate to dedicated space in Air Canada’s hub locations
of Toronto, Montreal and Vancouver, lease contracts on building space dedicated to the
Corporation for offices, airport and maintenance operations, Maple Leaf Lounges and land
leases.
S) INTANGIBLE ASSETS
Intangible assets are initially recorded at cost. Indefinite life intangible assets are not
amortized while assets with finite lives are amortized on a straight-line basis over their
estimated useful lives.
Estimated
Useful Life
Remaining
amortization
period as at
December 31, 2024
International route rights and slots
Indefinite
Not applicable
Marketing-based trade names
Indefinite
Not applicable
Technology-based (internally developed)
5 to 15 years
1 to 11 years
Contract-based (Aeroplan commercial agreements)
11.5 years
6 years
Air Canada has international route rights and slots which enable the Corporation to provide
services internationally. The value of the recorded intangible assets relates to the cost of route
and slot rights at Tokyo’s Narita International Airport, Washington’s Reagan National Airport
and London’s Heathrow Airport.
Air Canada and certain of its subsidiaries have trade names, trademarks, and domain names
(collectively, “Trade Names”). These items are marketing-based intangible assets as they are
primarily used in the sale and promotion of Air Canada’s and/or a subsidiary’s products and
services. If there were plans to cease using any of the Trade Names, the specific names would
be classified as finite and amortized over the expected remaining useful life.
Development costs that are directly attributable to the design, development, implementation
and testing of identifiable software products are recognized as technology-based intangible
assets if certain criteria are met, including technical feasibility and intent and ability to develop
and use the technology to generate probable future economic benefits; otherwise, they are
expensed as incurred. Directly attributable costs that are capitalized as part of the technology-
based intangible assets include software-related, employee and third-party development
costs and an appropriate portion of relevant overhead. Configuration or customization costs in
a cloud computing arrangement are also included when they meet the capitalization criteria as
an intangible asset.
T) GOODWILL
Goodwill represents the excess of the cost of an acquisition over the fair value of the
Corporation’s share of the net identifiable assets of the acquired business at the date of
acquisition. Goodwill is tested at least annually for impairment and carried at cost less
accumulated impairment losses. Impairment losses on goodwill are not reversed. For the
purpose of impairment testing, goodwill is tested for impairment at the lowest level within
the entity at which the goodwill is monitored for internal management purposes, being the
operating segment level (Note 2W).
U) IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets include property and equipment, finite lived intangible assets, indefinite
lived intangible assets and goodwill. Assets that have an indefinite useful life, including
goodwill are tested at least annually for impairment or when events or circumstances indicate
that the carrying value may not be recoverable. Assets that are subject to depreciation or
amortization are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment test is performed by
comparing the carrying amount of the asset or group of assets to their recoverable amount.
The recoverable amount is calculated as the higher of an asset’s or cash-generating unit’s
fair value less costs to dispose and its value in use. For the purpose of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash inflows
(cash-generating units or CGUs). Management has determined that the appropriate level
for assessing impairments is at the narrow-body and wide-body fleet levels for aircraft and
related assets supporting the operating fleet. Parked aircraft (not including aircraft that are
parked but are expected to be so temporarily and returned to service) not used in operations
and aircraft leased or subleased to third parties are assessed for impairment at the individual
asset level. An impairment loss is recognized for the amount by which the asset’s or cash-
generating unit’s carrying amount exceeds its recoverable amount.
Long-lived assets, other than goodwill, that suffered an impairment are reviewed for possible
reversal of the impairment at each reporting date. Management assesses whether there
is any indication that an impairment loss recognized in a prior period no longer exists or
has decreased. In assessing whether there is a possible reversal of an impairment loss,
management considers the indicators that gave rise to the impairment loss. If any such
indicators exist that an impairment loss has reversed, management estimates the recoverable
amount of the long-lived asset. An impairment loss recognized in prior periods for an asset
other than goodwill shall be reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognized. The
carrying amount of any individual asset in the CGU is not increased above the carrying value
that would have been determined had the original impairment not occurred. A reversal of an
impairment loss is recognized immediately in the consolidated statement of operations.
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V) PROVISIONS
Provisions are recognized when there exists a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources will be required to settle the
obligation, and a reliable estimate can be made of the obligation. If the effect is significant,
the expected cash flows are discounted using a rate that reflects, where appropriate, the
risks specific to the liability. Where discounting is used, interest accretion on the provision is
recorded in Other non-operating expense.
W) SEGMENT REPORTING
Air Canada is managed as one operating segment based on how financial information is
produced internally for the purposes of making operating decisions. The operating segment
is reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources
and assessing performance of operations, has been identified as the President and Chief
Executive Officer.
X) ACCOUNTING STANDARDS ADOPTED IN 2024
Amendments to IAS 1, Presentation of Financial Statements - Classification of
Liabilities as Current or Non-current
In October 2022, the IASB published amendments to the Classification of Liabilities as Current
or Non-current in IAS 1 Presentation of Financial Statements. The amendments aim to improve
the information companies provide when the right to defer settlement of a liability for at least
12 months is subject to the entity complying with covenants after the reporting date. The
amendments specify that covenants to be complied with after the reporting date do not affect
the classification of debt as current or non-current at the reporting date. The amendments
require an entity to disclose information about these covenants in the notes to the financial
statements. The amendments are effective for annual periods beginning on or after January 1,
2024. The Corporation adopted this amendment in the first quarter of 2024 with no impact to
the Corporation’s consolidated statement of financial position.
IAS 12 Income Taxes
In May 2023, the IASB issued an amendment to IAS 12. The amendment addresses accounting
for the global minimum tax as outlined in the two-pillar plan for international tax reform
developed by the Organisation for Economic Co-operation and Development. The objective
of the tax reform is to ensure that large multinational enterprises are subject to a minimum
income tax rate of 15% in each jurisdiction they operate. The amendment to IAS 12 includes
temporary mandatory relief from recognizing and disclosing deferred taxes related to the
implementation of Pillar Two global minimum tax rules.
In June 2024, the Global Minimum Tax Act was enacted in Canada which is a jurisdiction
where the Corporation has a constituent entity for the purposes of Pillar Two. The Corporation
adopted the amendments to IAS 12 in the second quarter of 2024 and applied the exception
to recognizing and disclosing information about deferred tax assets and liabilities related to
Pillar Two income taxes. This exception has been applied retrospectively but no adjustments
to previously reported figures were required. There is no material impact for the year ended
December 31, 2024.
Y) ACCOUNTING STANDARDS AND AMENDMENTS ISSUED BUT
NOT YET EFFECTIVE
The following accounting standards and amendments to accounting standards issued by the
IASB have not yet been adopted by the Corporation. The Corporation is evaluating the impact
of these standards and amendments on its consolidated financial statements.
IFRS 18 – Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18 which sets out requirements for the presentation and
disclosure of information in the financial statements. IFRS 18 will replace IAS 1 Presentation
of Financial Statements but carries forward many of the requirements from IAS 1. The
standard introduces new defined subtotals to be presented in the consolidated statements of
operations, disclosure of management-defined performance measures related to the income
statement and requirements for grouping of information. IFRS 18 is effective for annual
periods beginning on or after January 1, 2027, with earlier adoption permitted.
Amendments to the Classification and Measurement of Financial Instruments
In May 2024, the IASB issued Amendments to the Classification and Measurement of Financial
Instruments which amends IFRS 9 Financial Instruments and IFRS 7 Financial Instruments:
Disclosures (the Amendments). The narrow scope amendments clarify classification guidance
for financial assets with environmental, social and corporate governance features; and clarify
the date on which a financial asset or financial liability is derecognized when using electronic
payment systems. The amendments will be effective for annual reporting periods beginning
on or after January 1, 2026, with earlier adoption permitted.
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3. Critical accounting estimates and
judgments
The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts reported in these financial
statements and accompanying notes. These estimates and associated assumptions are
based on historical experience, future operating plans and various other factors believed to
be reasonable under the circumstances, and the results of such estimates form the basis of
judgments about carrying values of assets and liabilities. These underlying assumptions are
reviewed on an ongoing basis. Actual results could differ materially from those estimates.
Significant estimates and judgments made in the preparation of these financial statements
include the following areas, with further information contained in the applicable accounting
policy or note:
Impairment Considerations on Long-lived Assets
When required, an impairment test is performed by comparing the carrying amount of the
asset or cash-generating unit to their recoverable amount, which is calculated as the higher
of an asset’s or cash-generating unit’s fair value less costs to dispose and its value in use. Fair
value less costs to dispose may be calculated based upon a discounted cash flow analysis,
which requires management to make a number of significant market participant assumptions
including assumptions relating to cash flow projections, discount rates and future growth
rates. Refer to Note 6.
Employee Future Benefits
The cost and related liabilities of the Corporation’s pension, other post-retirement and post-
employment benefit programs are determined using actuarial valuations. The actuarial
valuations involve assumptions and estimates including discount rates and mortality
assumptions. Also, due to the long-term nature of these programs, such estimates are subject
to significant uncertainty. Refer to Note 9 for additional information.
Aeroplan Loyalty Program
Loyalty program accounting requires management to make several estimates including the
ETV of Aeroplan Points issued and the breakage on Aeroplan Points. The ETV of Aeroplan
Points issued is determined based on the value a passenger receives by redeeming Points for
a ticket rather than paying cash. This ETV is estimated with reference to historical Aeroplan
redemptions as compared to equivalent ticket purchases after considering similar fare
conditions, advance booking periods and other relevant factors including the selling price of
Points to third parties. ETV estimates and assumptions are considered for updates at least
annually. A change in the ETV rate is accounted for prospectively.
Breakage represents the estimated Points that are not expected to be redeemed. Breakage is
estimated by management based on the terms and conditions of membership and historical
accumulation and redemption patterns, as adjusted for changes to any terms and conditions
or other circumstances that may affect future redemptions. Management uses statistical
and simulation models to estimate breakage. Assumptions are reviewed for updates at least
annually. A change in assumptions as to the number of Points expected to be redeemed could
have a significant impact on revenue in the year in which the change occurs.
As at December 31, 2024, the Aeroplan Points deferred revenue balance was $3,785 million.
For the purposes of sensitivity analysis, a 1% change in the number of outstanding Points
estimated to be redeemed would result in an approximate impact of $38 million on revenue
with a corresponding adjustment to Aeroplan deferred revenue.
Passenger revenues - Breakage
The Corporation estimates the amount of advance ticket sales that will expire unused
(breakage) and recognizes revenue at the scheduled date of travel. Breakage estimates and
resulting amount of breakage revenues recorded are estimated by management based on
historical ticket breakage patterns and other applicable factors such as ticket contract terms.
Estimates of breakage may vary in future periods.
Depreciation and Amortization Period for Long-lived
Assets
The Corporation makes estimates about the expected useful lives of long-lived assets and the
expected residual value of the assets based on the estimated current and future fair values of
the assets, the Corporation’s fleet plans and the cash flows they generate. Changes to these
estimates, which can be significant, could be caused by a variety of factors, including changes
to maintenance programs, changes in jet fuel prices and other operating costs, changes in
utilization of the aircraft, and changing market prices for new and used aircraft of the same
or similar types. Estimates and assumptions are evaluated at least annually. Generally, these
adjustments are accounted for on a prospective basis, through depreciation and amortization
expense. For the purposes of sensitivity analysis on these estimates, a 50% reduction to
residual values on aircraft with remaining useful lives greater than five years results in an
increase of $16 million to annual depreciation expense. For aircraft with shorter remaining
useful lives, the residual values are not expected to change significantly.
Maintenance Provisions
The recording of maintenance provisions related to return conditions on aircraft leases
requires management to make estimates of the future costs associated with the maintenance
events required under the lease return condition and estimates of the expected future
maintenance condition of the aircraft at the time of lease expiry. These estimates take into
account current costs of these maintenance events, estimates of inflation surrounding these
costs as well as assumptions surrounding utilization of the related aircraft. Any difference in
the actual maintenance cost incurred at the end of the lease and the amount of the provision
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is recorded in Aircraft maintenance expense in the period. The effect of any changes in
estimates, including changes in discount rates, inflation assumptions, cost estimates or lease
expiries, is recognized as an adjustment to the right-of-use asset. Refer to Note 10(a) for
additional information.
Income Taxes
Since 2020, the net deferred income tax assets related to unused tax losses and other
deductible temporary differences have not been recognized. As a result of the COVID-19
pandemic, there was considerable negative evidence relating to losses that were incurred
at that time and assumptions as to the timing of reversal of temporary differences including
expectations about the future results of operations and future cash flows.
During the third quarter of 2024, Air Canada determined that it was probable that
substantially all of the deferred income tax assets, which include non-capital losses, other
post-employment benefits, maintenance and other temporary differences, would be realized.
Refer to Note 11 Income taxes for additional information on the recognition of deferred
income tax assets.
4. Investments, deposits and other
assets
(Canadian dollars in millions)
2024
2023
Long-term investments
$
770
$
744
Investment in Chorus (a)
49
40
Restricted cash (b)
104
89
Aircraft related deposit
53
47
Prepayments under maintenance agreements
60
47
Other investments
38
36
Other deposits
6
6
$ 1,080
$ 1,009
a) The investment represents Air Canada’s holding of 15,561,600 class B voting shares in the capital of Chorus.
b) Restricted cash represents funds held in trust with various financial institutions as collateral for letters of credit and other
items.
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Consolidated
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5. Property and equipment
December 31, 2024
December 31, 2023
(Canadian dollars in millions)
Cost
Accumulated
depreciation
Net book value
Cost
Accumulated
depreciation
Net book value
Owned tangible assets
Aircraft and flight equipment
$
16,362
$
7,416
$
8,946
$
15,589
$
6,986
$
8,603
Buildings and leasehold improvements
1,225
736
489
1,122
676
446
Ground and other equipment
809
515
294
697
488
209
Purchase deposits and assets under development
1,414
-
1,414
685
-
685
Owned tangible assets
$
19,810
$
8,667
$
11,143
$
18,093
$
8,150
$
9,943
Right-of-use assets
Air Canada aircraft
$
4,088
$
2,905
$
1,183
$
4,117
$
2,966
$
1,151
Regional aircraft
1,598
1,206
392
1,591
1,130
461
Land and buildings
610
279
331
601
249
352
Right-of-use assets
$
6,296
$
4,390
$
1,906
$
6,309
$
4,345
$
1,964
Property and equipment
$
26,106
$
13,057
$
13,049
$
24,402
$
12,495
$
11,907
Additions to owned aircraft in 2024 included one new Airbus A220 and one new Boeing 787-9. Additions through the purchase of leased aircraft included two
Airbus A330. Additions to right-of-use assets included the delivery of one new Boeing 737-8 aircraft. Additions to owned aircraft in 2023 included one new
Airbus A220 and one new Boeing 787-9. Additions in 2023 through the purchase of leased aircraft included three Airbus A321, one Boeing 777-300ER, eight
Mitsubishi CRJ-200 and 10 Mitsubishi CRJ-900.
Included in aircraft and flight equipment are 33 aircraft and 13 spare engines (2023 – 28 aircraft and 13 spare engines) which are leased to Jazz with a cost of
$590 million (2023 – $485 million) less accumulated depreciation of $335 million (2023 – $252 million) for a net book value of $255 million (2023 – $233 million).
Depreciation expense for 2024 for these aircraft and flight equipment amounted to $59 million (2023 – $60 million).
Certain property and equipment are pledged as collateral as further described under the applicable debt instruments in Note 8.
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Consolidated
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(Canadian dollars in millions)
January 1, 2024
Additions
Reclass
Disposals
Depreciation
December 31,
2024
Owned tangible assets
Aircraft and flight equipment
$
8,603
$
1,149
$
223
$
(6)
$
(1,023)
$
8,946
Buildings and leasehold improvements
446
6
86
-
(49)
489
Ground and other equipment
209
126
-
-
(41)
294
Purchase deposits and assets under development
685
1,038
(309)
-
-
1,414
Owned tangible assets
$
9,943
$
2,319
$
-
$
(6)
$
(1,113)
$
11,143
Right-of-use assets
Air Canada aircraft
$
1,151
$
423
$
-
$
-
$
(391)
$
1,183
Regional aircraft
461
46
-
-
(115)
392
Land and buildings
352
8
-
-
(29)
331
Right-of-use assets
$
1,964
$
477
$
-
$
-
$
(535)
$
1,906
Property and equipment
$
11,907
$
2,796
$
-
$
(6)
$
(1,648)
$
13,049
(Canadian dollars in millions)
January 1, 2023
Additions
Reclass
Disposals
Depreciation
December 31,
2023
Owned tangible assets
Aircraft and flight equipment
$
8,625
$
764
$
171
$
(5)
$
(952)
$
8,603
Buildings and leasehold improvements
445
1
48
-
(48)
446
Ground and other equipment
173
67
3
-
(34)
209
Purchase deposits and assets under development
470
437
(222)
-
-
685
Owned tangible assets
$
9,713
$
1,269
$
-
$
(5)
$
(1,034)
$
9,943
Right-of-use assets
Air Canada aircraft
$
1,292
$
231
$
-
$
-
$
(372)
$
1,151
Regional aircraft
588
5
-
-
(132)
461
Land and buildings
357
23
-
-
(28)
352
Right-of-use assets
$
2,237
$
259
$
-
$
-
$
(532)
$
1,964
Property and equipment
$
11,950
$
1,528
$
-
$
(5)
$
(1,566)
$
11,907
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Consolidated
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Depreciation and amortization recorded in the consolidated statement of operations is
detailed as follows.
(Canadian dollars in millions)
2024
2023
Aircraft and flight equipment
$ 1,023
$
952
Buildings and leasehold improvements
49
48
Ground and other equipment
41
34
Owned tangible assets
1,113
1,034
Air Canada aircraft
391
372
Regional aircraft
115
132
Land and buildings
29
28
Right-of-use assets
535
532
Property and equipment
1,648
1,566
Spare part and supplies inventory
15
11
Intangible assets
136
126
Depreciation and amortization
$ 1,799
$ 1,703
6. Intangible assets
(Canadian dollars in millions)
International
route rights
and slots
Contract-
based
Marketing-
based trade
names
Technology-
based
(internally
developed)
Total
Year ended
December 31, 2023
At January 1, 2023
$
97
$
148
$
178
$
631
$
1,054
Additions
-
-
-
156
156
Amortization
-
(19)
-
(107)
(126)
At December 31, 2023
$
97
$
129
$
178
$
680
$
1,084
At December 31, 2023
Cost
$
97
$
225
$
178
$
1,259
$
1,759
Accumulated amortization
-
(96)
-
(579)
(675)
$
97
$
129
$
178
$
680
$
1,084
Year ended
December 31, 2024
At January 1, 2024
$
97
$
129
$
178
$
680
$
1,084
Additions
-
-
-
222
222
Amortization
-
(20)
-
(116)
(136)
At December 31, 2024
$
97
$
109
$
178
$
786
$
1,170
At December 31, 2024
Cost
$
97
$
225
$
178
$
1,425
$
1,925
Accumulated amortization
-
(116)
-
(639)
(755)
$
97
$
109
$
178
$
786
$
1,170
In 2024, technology-based assets with cost and accumulated amortization of $56 million
(2023 – $3 million) were retired.
International route rights and slots are pledged as security for Senior Secured Notes and debt
as described in Note 8.
Impairment Assessment of Indefinite Lived Intangibles
An assessment of the recoverable amount of the Corporation’s cash-generating units
compared to their carrying values was performed based on cash flow projections. This review
was also performed in conjunction with the annual impairment review conducted on all
intangible assets that have an indefinite life. The allocation of the indefinite lived intangible
assets to the cash-generating units was $172 million to wide-body aircraft and $103 million
to narrow-body aircraft. The recoverable amount of the cash-generating units has been
measured based on fair value less cost to dispose, using a discounted cash flow model. The
discounted cash flow model would represent a level 3 fair value measurement within the
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IFRS 13 fair value hierarchy. The cash flows are management’s best projections using current
and anticipated market conditions covering a five-year period.
The recoverable amount of both cash-generating units exceeded their respective carrying
values by an aggregate amount of approximately $13 billion. Management considered
reasonably possible changes in key assumptions using multiple modelling scenarios and
sensitivity analysis and determined such changes would not cause the recoverable amount
of each CGU to be less than their respective carrying value. In addition, management has
updated the impairment review to take into account the most recent projections from the
Corporation’s annual business plan.
Key assumptions used for the fair value less cost to dispose calculations in fiscal 2024 were as
follows:
Key
Assumption
2024
Approach used to determine values
Average
discount rate
8.89%
Derived from market participant assumptions regarding the
Corporation’s weighted average cost of capital adjusted for taxes and
specific risks applicable to each cash-generating unit being tested.
Inputs to the various scenarios ranged from 9.14%-10.64% for the wide-
body CGU and 7.14%-8.64% for the narrow-body CGU.
Long-term
growth rate
2.5%
Cash flows beyond the five-year period are projected to increase at
2.5% consistent with the long-term growth assumption of the airline
industry considering various factors such as the Corporation’s fleet
plans and industry growth assumptions.
Jet fuel price
range per
barrel
US$103 –
US$114
Jet fuel prices are assumed to follow the global market and represent
management’s best estimate of the range of future market conditions.
Emerging issues in climate-related matters, such as change in
regulations, may impact this assumption in future years.
7. Goodwill
Goodwill is tested at least annually for impairment. Goodwill is tested for impairment using the
fair value less cost to dispose model at the operating segment level. Air Canada is managed
as one operating segment based on how financial information is produced internally for
the purposes of making operating decisions, and it is the lowest level at which goodwill is
monitored for internal management purposes.
In assessing the goodwill for impairment, the Corporation compares the aggregate
recoverable amount consisting of the sum of its quoted equity market capitalization and
the fair value of its debt to the carrying value of its net assets excluding long-term debt. An
impairment charge is recognized to the extent that the carrying value exceeds the recoverable
amount. No impairment losses have been recorded against the value of goodwill since its
acquisition, including as a result of the reviews performed as at December 31, 2024 and 2023.
Reasonably possible changes in key assumptions would not cause the recoverable amount of
goodwill to fall below the carrying value.
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Consolidated
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8. Long-term debt and lease
liabilities
Final
Maturity
Weighted
Average
Interest
Rate (%)
December 31,
2024
(Canadian
dollars
in millions)
December 31,
2023
(Canadian
dollars
in millions)
Aircraft financing (a)
Fixed rate U.S. dollar financing
2025 – 2030
5.11
$
2,930
$
2,877
Floating rate U.S. dollar financing
2027
6.74
263
296
Fixed rate CDN dollar financing
2026 – 2030
3.78
147
165
Fixed rate Japanese yen financing
2027
1.84
107
110
Convertible notes (b)
2025
4.00
381
327
Credit facility – CDN dollar (c)
2028
1.21
1,131
1,091
Senior secured notes – CDN dollar (d)
2029
4.63
2,000
2,000
Senior secured notes – U.S. dollar (d)
2026
3.88
1,726
1,589
Senior secured credit facility – U.S. dollar (d)
2031
6.34
1,641
3,000
Long-term debt
4.53
10,326
11,455
Lease liabilities
Air Canada aircraft
2025 – 2036
5.59
1,381
1,377
Regional aircraft
2025 – 2035
5.51
619
711
Land and buildings
2025 – 2078
5.59
433
449
Lease liabilities (e)
5.57
2,433
2,537
Total debt and lease liabilities excluding
unamortized debt issuance costs and
discounts
4.72
12,759
13,992
Unamortized debt issuance costs and discounts
(89)
(130)
Total debt and lease liabilities
12,670
13,862
Current portion – Long-term debt
(1,163)
(359)
Current portion – Air Canada aircraft
(411)
(337)
Current portion – Regional aircraft
(153)
(144)
Current portion – Land and buildings
(28)
(26)
Total current portion
(1,755)
(866)
Long-term debt and lease liabilities
$ 10,915
$ 12,996
(a) Aircraft financing (US$2,220 million, CDN $147 million and JPY ¥11,743 million) (2023 –
US$2,396 million, CDN $165 million and JPY ¥11,749 million) is secured primarily by specific
aircraft with a carrying value of $3,585 million (2023 – $3,774 million). For the majority
of the financing, principal and interest is repayable quarterly until maturity and can be
repaid at any time with the payment of applicable fees. US$26 million of the financing is
supported by a loan guarantee by the Export-Import Bank of the United States.
In 2023, Air Canada drew on financing for the final two Airbus A220 aircraft under a
committed secured facility. The financing on these two aircraft was subsequently prepaid
when the Corporation prepaid loans of $1,112 million which had been used to finance the
acquisition of 33 Airbus A220-300 aircraft. Financing of $164 million previously used to
fund the acquisition of five Boeing 787-8 aircraft was also prepaid. A loss of $10 million
was recorded on these debt settlements.
(b) In June 2020, Air Canada closed US$748 million ($1,011 million) of convertible unsecured
notes (“Convertible Notes”), for net proceeds of $986 million. The Convertible Notes bear
interest semi-annually in arrears at a rate of 4.0% per annum and will mature on July 1,
2025, unless earlier repurchased, redeemed or converted. The Convertible Notes are
convertible at the Corporation’s election, into cash, or into Class A Variable Voting shares
and/or Class B Voting shares of the Corporation, or a combination of cash and shares.
The Convertible Notes are convertible prior to the close of business on the business
day immediately preceding March 1, 2025 only under the circumstances and subject to
satisfaction of the conversion conditions set out in the indenture for the Convertible Notes,
and at any time on or after March 1, 2025 until the close of business on June 27, 2025
(being the second scheduled trading day immediately preceding the July 1, 2025 maturity
date), regardless of the foregoing conditions, in each case at the option of the noteholders.
The conversion rate of the Convertible Notes is 65.1337 shares per US$1,000 principal
amount of Convertible Notes, or a conversion price of approximately US$15.35 per share,
subject to adjustment in certain events in accordance with the indenture.
The Corporation’s option to deliver cash or a combination of cash and shares on the
conversion date in lieu of shares (based on the daily conversion values for 40 consecutive
trading days) gives rise to an embedded derivative financial liability measured separately
at fair value through profit or loss. The carrying value of the underlying notes is accreted
to their face value using the effective interest method, which results in an effective
interest rate of 10.76%. The fair value of the embedded derivative was $320 million at
initial recognition. At December 31, 2024, the fair value was $45 million (2023 - $56 million)
and the Corporation recorded a gain of $11 million for the year ended December 31, 2024
($64 million gain for the year 2023). Refer to Note 16.
In 2022, the Corporation repurchased $635 million (US$473 million) aggregate principal
amount of its outstanding 4% Convertible Notes. As at December 31, 2024, $394 million
(US$274 million) aggregate principal amount of Convertible Notes remains outstanding
(US$274 million at December 31, 2023).
(c) Government of Canada unsecured credit facility to support customer refunds of non-
refundable tickets in 2021. The facility has a seven-year term maturing April 2028 with a
stated annual interest rate of 1.211%, with the balance due on maturity. The carrying value
of the debt was recognized at inception using an effective interest rate of 4.90%. The
difference accretes the carrying value of the underlying debt upwards to its face value
using the effective interest rate method.
The debt and equity instruments issued under the financing agreement with the
Government of Canada were measured at fair value at inception. The difference between
fair value and proceeds received was recognized for accounting purposes as a government
grant. The deferred grant income recorded at the inception of the agreement and taking
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Consolidated
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and notes
into account the amounts drawn under the ticket refund facility up to December 31,
2021, was $138 million. This deferred grant income reflects the aggregate net fair value
adjustments of the ticket refund facility, the shares issued and the vested warrants (which
were purchased and cancelled with settlement completed in January 2022) and was
amortized into Other revenues on a straight line basis over three years. The amortization
period was based on the Corporation’s approximation of the expected timing of the costs
for which the grant is intended to compensate. During 2024, grant income of $12 million
(2023 – $50 million) was recognized in Other revenues.
(d) In August 2021, Air Canada completed a private offering of $2.0 billion of 4.625% senior
secured notes due 2029 (the “Canadian Dollar Notes”) and US$1.2 billion of 3.875% senior
secured notes due 2026 (the “US Dollar Notes”, and together with the Canadian Dollar
Notes, the “Senior Secured Notes”). Air Canada also closed a US$2.9 billion senior secured
credit facility, comprised of a US$2.3 billion term loan B maturing in 2028 (the “Term
Loan”), together with a undrawn US$600 million revolving credit facility maturing in 2025
(the “Revolving Facility” and, together with the Term Loan, the “Senior Secured Credit
Facilities”).
In March 2024, Air Canada entered into US$2.15 billion senior secured credit facilities,
comprised of a US$1.175 billion term loan B maturing in 2031 and a US$975 million
revolving credit facility maturing in 2029. The aggregate gross proceeds of the new term
loan, together with cash from Air Canada’s balance sheet of US$1.09 billion, were applied
to refinance all of Air Canada’s indebtedness outstanding under its previous US$2.3 billion
term loan B. The new term loan B had interest at SOFR (Secured Overnight Financing
Rate) plus 250 basis points. The new revolving facility, which is the result of an increase
and extension of Air Canada’s previous US$600 million revolving credit facility previously
maturing in 2025 (and discussed above) is undrawn as of December 31, 2024. Concurrently
with the closing of these new senior credit facilities, Air Canada also terminated its
undrawn $200 million revolving credit facility maturing in 2026. The Corporation recorded
a loss of $46 million on debt settlements related to the write-off of unamortized debt
issuance costs associated with the extinguished debt instruments
In November 2024, Air Canada completed a repricing of its US$1.175 billion term loan B,
reducing the interest rate by 50 basis points, to an interest rate of 2% over SOFR. The
Corporation recorded a $38 million gain on debt modification related to this transaction.
Air Canada’s obligations under these new senior credit facilities are senior secured
obligations of Air Canada, secured on a first-lien basis, subject to certain permitted
liens and exclusions, by certain collateral comprised of substantially all of Air Canada’s
international routes, airport slots and gate leaseholds.
(e) Lease liabilities, related to facilities and aircraft, total $2,433 million ($391 million,
US$1,404 million and GBP £12 million) (2023 – $2,537 million ($406 million,
US$1,593 million and GBP £13 million)). The carrying value of aircraft and facilities
under lease liabilities amounted to $1,679 million and $331 million respectively (2023 –
$1,638 million and $352 million).
Cash interest paid on Long-term debt and lease liabilities in 2024 by the Corporation was
$696 million (2023 – $858 million).
The Corporation has recorded Interest expense as follows:
(Canadian dollars in millions)
2024
2023
Interest on debt
$
621
$
791
Interest on lease liabilities
Air Canada aircraft
82
85
Regional aircraft
36
45
Land and buildings
24
23
Interest expense
$
763
$
944
The consolidated statement of operations includes the following amounts related to leases
which have not been recorded as right-of-use assets and lease liabilities.
(Canadian dollars in millions)
2024
2023
Short-term leases
$
16
$
25
Variable lease payments not included in lease liabilities
65
43
Expense related to leases (included in Other operating expenses)
$
81
$
68
Total cash outflows for payments on lease liabilities was $678 million for the year ended
December 31, 2024 (2023 – $679 million), of which $536 million was for principal repayments
(2023 – $526 million).
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Consolidated
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Maturity Analysis
Principal and interest repayment requirements as at December 31, 2024 on Long-term debt
and lease liabilities are as follows. U.S. dollar amounts are converted using the December 31,
2024 closing rate of CDN$1.4384.
Principal
(Canadian dollars
in millions)
2025
2026
2027
2028
2029
Thereafter
Total
Long-term debt
obligations(1)
$
1,176
$ 2,528
$
1,102
$ 1,377
$ 2,309
$ 2,026
$10,518
Air Canada aircraft
411
347
257
183
91
92
1,381
Regional aircraft
153
54
43
42
42
285
619
Land and buildings
28
28
29
28
21
299
433
Lease liabilities
592
429
329
253
154
676
2,433
Total long-term debt
and lease liabilities
$ 1,768
$ 2,957
$ 1,431
$ 1,630
$ 2,463
$ 2,702
$12,951
Interest
(Canadian dollars
in millions)
2025
2026
2027
2028
2029
Thereafter
Total
Long-term debt
obligations(1)
$
458
$
397
$
273
$
234
$
218
$
134
$
1,714
Air Canada aircraft
71
51
33
21
10
10
196
Regional aircraft
29
22
19
17
15
45
147
Land and buildings
23
21
20
18
17
204
303
Lease liabilities
123
94
72
56
42
259
646
Total long-term debt
and lease liabilities
$
581
$
491
$
345
$
290
$
260
$
393
$ 2,360
(1) Assumes the principal balance of the convertible notes, $394 million (US$274 million), remains unconverted and includes
estimated interest payable until maturity in 2025. The full principal balance of $1,273 million for the unsecured credit
facility and $1,677 million (US$1,166 million) for the term loan B is included and the carrying value is described in Note 8(c)
and 8(d) respectively.
Principal repayments in the table above exclude discounts and transaction costs of $89 million
which are offset against Long-term debt and lease liabilities in the consolidated statement of
financial position.
Cash Flows from Financing Activities
Information on the change in liabilities for which cash flows have been classified as financing
activities in the statement of cash flows is presented below.
Cash Flows
Non-Cash Changes
(Canadian dollars
in millions)
Jan. 1, 2024
Borrowings
Repayments
Financing
fees
Foreign
exchange
adjustments
Amortization
of financing
fees and
other
adjustments
New lease
liabilities
(new and
modified
contracts)
Dec. 31, 2024
Long-term debt
$ 11,455
$ 1,590
$(3,420)
$
-
$
589
$
112
$
-
$ 10,326
Air Canada aircraft
1,377
-
(363)
-
113
-
254
1,381
Regional aircraft
711
-
(146)
-
54
-
-
619
Land and buildings
449
-
(27)
-
2
-
9
433
Lease liabilities
2,537
-
(536)
-
169
-
263
2,433
Unamortized debt
issuance costs and other
adjustments
(130)
-
-
(34)
-
75
-
(89)
Total liabilities from
financing activities
$ 13,862
$ 1,590
$(3,956)
$ (34)
$
758
$
187
$
263
$ 12,670
Cash Flows
Non-Cash Changes
(Canadian dollars
in millions)
Jan. 1, 2023
Borrowings
Repayments
Financing
fees
Foreign
exchange
adjustments
Amortization
of financing
fees and
other
adjustments
New lease
liabilities
(new and
modified
contracts)
Dec. 31, 2023
Long-term debt
$ 13,445
$
84
$ (1,926)
$
-
$ (208)
$
60
$
-
$ 11,455
Air Canada aircraft
1,667
-
(343)
-
(34)
-
87
1,377
Regional aircraft
917
-
(154)
-
(17)
-
(35)
711
Land and buildings
454
-
(29)
-
-
-
24
449
Lease liabilities
3,038
-
(526)
-
(51)
-
76
2,537
Unamortized debt
issuance costs and other
adjustments
(177)
-
-
(1)
-
48
-
(130)
Total liabilities from
financing activities
$ 16,306
$
84
$(2,452)
$
(1)
$ (259)
$
108
$
76
$13,862
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Consolidated
financial statement
and notes
9. Pensions and other benefit
liabilities
The Corporation maintains several defined benefit and defined contribution pension plans, as
well as other post-retirement and post-employment benefit plans.
The Corporation is the administrator and sponsoring employer of eight domestic registered
plans (“Domestic Registered Plans”) with defined benefit commitments registered under
the Pension Benefits Standard Act, 1985 (Canada). The defined benefit components of the
Domestic Registered Plans are closed to new members, except for the hybrid component of
three plans which are open to new members. The Corporation also has a U.S. plan and a Japan
plan, which are international defined benefit plans covering members in those countries. In
addition, the Corporation maintains a number of supplementary pension plans which are not
registered. The defined benefit pension plans provide benefits upon retirement, termination
or death based on the member’s years of service and final average earnings for a specified
period. Assets are held in trust and used for benefit payments, and there are also a number
of unfunded plans where the Corporation meets the benefit payment obligation as it falls
due. Plan assets held in trusts are governed by regulations. The governance of the plans,
overseeing all aspects of the plans including investment decisions and contributions, lies
primarily with the Corporation. The Human Resources, Compensation and Pension Committee,
a committee of the Board of Directors, assists in the monitoring and oversight of the plans to
ensure pension liabilities are appropriately funded, pension assets are prudently invested, risk
is managed at an acceptable level and retirement benefits are administered in a proper and
effective manner.
Other employee benefits include health, life and disability. These benefits consist of both
post-employment and post-retirement benefits. The post-employment benefits relate to
disability benefits available to eligible active employees, while the post-retirement benefits are
comprised of health care and life insurance benefits available to eligible retired employees.
Pension Plan Cash Funding Obligations
As at January 1, 2024, the aggregate solvency surplus in the Domestic Registered Plans was
$4.1 billion which takes into account certain plan amendments made in conjunction with the
Air Line Pilots Association (ALPA) collective agreement. The next required valuation to be
made as at January 1, 2025 will be completed in the first half of 2025. With the Corporation’s
Domestic Registered Plans in a solvency surplus position as at January 1, 2024, past service
contributions were not required in 2024. In addition, in accordance with legislation and
applicable plan rules, the excess over 105% on a solvency basis can be used to reduce
current service contributions under the defined benefit component or to fund the employer
contributions to a defined contribution component within the same pension plan. Based on
that, and including the international and supplemental plans, the total employer pension
funding contributions during 2024 amounted to $102 million (net employer contributions of
$72 million reflect the $30 million of surplus used to fund employer contributions in defined
contribution components of the same plans). Pension funding contributions for 2025 are
expected to be $66 million.
Benefit Obligations and Plan Assets
These consolidated financial statements include all the assets and liabilities of all Corporation-
sponsored plans. The amounts recorded in the statement of financial position are as follows:
Pension Benefits
Other Employee
Future Benefits
Total
(Canadian dollars in millions)
2024
2023
2024
2023
2024
2023
Non-current assets
Pension assets
$
2,535
$ 2,588
$
-
$
-
$
2,535
$ 2,588
Current liabilities
Accounts payable and accrued
liabilities
-
-
65
65
65
65
Non-current liabilities
Pension and other benefit liabilities
830
842
1,012
1,033
1,842
1,875
Net benefit assets (obligations)
$
1,705
$
1,746
$ (1,077)
$ (1,098)
$
628
$
648
The current portion of the net benefit obligation represents an estimate of other employee
future benefits claims to be paid during 2025.
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Consolidated
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The following table presents financial information related to the changes in the pension and
other post-employment benefits plans:
Pension Benefits
Other Employee
Future Benefits
(Canadian dollars in millions)
2024
2023
2024
2023
Change in benefit obligations
Benefit obligations at beginning of year
$ 18,309
$ 16,927
$
1,098
$
1,007
Current service cost
190
162
25
32
Past service cost (a)
490
-
(2)
(2)
Interest cost
845
879
51
53
Employees’ contributions
76
73
-
-
Benefits paid
(1,027)
(1,038)
(43)
(46)
Effect of transfers
23
-
-
-
Settlement payments for UK plan
(283)
-
-
-
Remeasurements:
Experience loss (gain)
(33)
5
(18)
(19)
Loss (gain) from change in demographic assumptions
(14)
-
(27)
-
Loss (gain) from change in financial assumptions
(194)
1,297
(19)
76
Foreign exchange loss (gain)
39
4
12
(3)
Total benefit obligations
18,421
18,309
1,077
1,098
Change in plan assets
Fair value of plan assets at beginning of year
21,949
21,378
-
-
Return on plan assets, excluding amounts included in
Net financing expense
258
373
-
-
Interest income
1,005
1,105
-
-
Employer contributions
72
61
43
46
Employees’ contributions
76
73
-
-
Benefits paid
(1,027)
(1,038)
(43)
(46)
Settlement payments for UK plan
(300)
-
-
-
Administrative expenses paid from plan assets
(8)
(8)
-
-
Foreign exchange gain
36
5
-
-
Total plan assets
22,061
21,949
-
-
Surplus (deficit) at end of year
3,640
3,640
(1,077)
(1,098)
Asset ceiling / additional minimum funding liability
1,935
1,894
-
-
Net benefit assets (obligations)
$
1,705
$
1,746
$ (1,077)
$(1,098)
The actual return on plan assets was a gain of $1,263 million (2023 – $1,478 million gain).
The buy-out transaction for the annuity contract for the UK plan defined benefit pension
obligation was completed in 2024 and therefore is no longer included in the plan assets or
obligation.
The pension benefit deficit of only those plans that are not fully funded is as follows:
(Canadian dollars in millions)
2024
2023
Domestic Registered Plans
$
7
$
7
International plans
51
53
Supplementary plans
772
782
$
830
$
842
The weighted average duration of the defined benefit obligation is 12.6 years (2023 – 12.7
years).
Pension and Other Employee Future Benefit Expense
The Corporation has recorded net defined benefit pension and other employee future benefits
expense as follows:
Pension Benefits
Other Employee
Future Benefits
(Canadian dollars in millions)
2024
2023
2024
2023
Consolidated Statement of Operations
Components of cost
Current service cost
$
190
$
162
$
25
$
32
Past service cost (a)
490
-
(2)
(2)
Administrative and other expenses
8
8
-
-
Actuarial losses (gains), including foreign exchange
-
-
(6)
(9)
Total cost recognized in Wages, salaries and benefits
$
688
$
170
$
17
$
21
Net interest relating to employee benefits in Non-
operating-other
$
(74)
$
(78)
$
52
$
53
Total cost recognized in statement of operations
$
614
$
92
$
69
$
74
Consolidated Other Comprehensive (Income) Loss
Remeasurements:
Experience loss (gain), including foreign exchange
(30)
4
(4)
(14)
(Gain) from change in demographic assumptions
(14)
-
(27)
-
Loss (gain) from change in financial assumptions
(194)
1,297
(15)
75
Return on plan assets
(258)
(395)
-
-
Change in asset ceiling
(46)
(1,085)
-
-
Total cost (income) recognized in OCI
$
(542)
$
(179)
$
(46)
$
61
a) In September 2024, Air Canada concluded a four-year collective agreement with ALPA. The
agreement which is effective as of September 30, 2023 was ratified in October 2024. With
ratification of the collective agreement, the Corporation recorded a one-time pension past
service cost of $490 million in the fourth quarter of 2024 to reflect changes included in the
new collective agreement. Some of these changes are conditional on future pension solvency
financial position. Changes in assumptions associated with these conditional increases will be
recognized in other comprehensive income as actuarial gains and losses. The net impact of
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these changes will be funded out of the surplus in the Pilots’ domestic registered pension plan
and are not expected to impact the Corporation’s liquidity position.
The funding of employee benefits as compared to the expense recorded in the consolidated
statement of operations is summarized in the table below.
(Canadian dollars in millions)
2024
2023
Net defined pension and other future employee benefits expense
recorded in the consolidated statement of operations
Wages, salaries and benefits
$
705
$
191
Net interest relating to employee benefit liabilities
(22)
(25)
$
683
$
166
Employee benefit funding by the Corporation
Pension benefits
$
72
$
61
Other employee benefits
43
46
$
115
$
107
Employee benefit funding less than expense
$
568
$
59
Composition of Defined Benefit Pension Plan Assets
Domestic Registered Plans
The composition of the Domestic Registered Plan assets and the target allocation are the
following:
2024
2023
Target
Allocation
Fixed income investments
54%
62%
60%
Canadian equities
2%
2%
2%
Foreign equities
3%
3%
3%
Alternative investments
41%
33%
35%
100%
100%
100%
For the Domestic Registered Plan assets, approximately 59% of assets as of December 31,
2024 have a quoted market price in an active market. Assets that do not have a quoted
market price in an active market are mainly investments in privately held entities. The asset
composition in the table represents the allocation of plan assets to each asset type.
Included in plan assets, for determining the net benefit obligation for accounting purposes,
are 17,646,765 (2023 – 17,646,765) shares of Air Canada which were issued to a trust in
2009 in connection with pension funding agreements reached with all of the Corporation’s
Canadian-based unions. The trust arrangement provides that proceeds of any sale of the trust
shares will be retained and applied to reduce future pension solvency deficits, if any should
materialize. With the Corporation’s Domestic Registered Plans now in a surplus position on a
solvency basis, the accounting rules prevent the recognition of the value of the shares held in
trust as part of the pension assets. The shares held in trust have a fair value of $393 million at
December 31, 2024 (2023 – $330 million), although after giving effect to the asset ceiling, the
recognized accounting value of the trust asset is nil.
In November 2021, Air Canada announced that its Canadian unions and the Air Canada
Pionairs agreed in principle to permit certain other uses of the proceeds of the shares
discussed above. If certain conditions are met, the trust would gradually sell shares up to
the end of 2037, and the net proceeds from these sales would be used to make lump sum
payments to Canadian pensioners and to fund voluntary separation packages for senior
unionized employees and non-executive employees. There are several conditions to the
completion of the agreement in principle and effecting such sales and payments. These
include the conclusion of definitive documentation, and the receipt of all required regulatory
and other approvals which remain outstanding. While the satisfaction of the conditions is
being pursued, there can be no assurance that these or any other conditions will be satisfied.
The financial statements do not reflect any accounting consequences related to this, as these
would only be determined upon the conditions and required approvals being met.
The investments of the Domestic Registered Defined Benefit Plans, conform to their
Statement of Investment Policies and Procedures (SIP&P). As permitted under the SIP&P, the
actual asset mix may deviate from the target allocation from time to time. The investment
return objective is to achieve a total annualized rate of return that exceeds by a minimum of
1.0% before investment fees on average over the long term (i.e. 10 years) the total annualized
return that could have been earned by passively managing the Liability Replicating Portfolio.
The Liability Replicating Portfolio, which is referenced to widely used Canadian fixed income
indices (FTSE Canada), closely matches the characteristics of the pension liabilities.
Recognizing the importance of surplus risk management, the Corporation manages the
Domestic Registered Defined Benefit Plans in an effort to mitigate surplus risk (defined as
the difference between asset value and pension liability value), which is considered to be the
key risk to be minimized and monitored. In addition, the objective of the investment strategy
is to invest the plan assets in a prudent and diversified manner to mitigate the risk of price
fluctuation of asset classes and individual investments within those asset classes and to
combine those asset classes and individual investments in an effort to reduce overall risk.
In addition to the broad asset allocation, as summarized in the asset allocation section above,
the following policies apply to individual asset classes invested within the pension funds:
• The fixed income portfolio is oriented toward long-term investment grade securities rated
“BBB” or higher, with the exception of Government of Canada securities, or a province
thereof, or the U.S. Government, in which the plan may invest the entire fixed income
allocation.
• Within the broad equity portfolio (Canadian and foreign equities), limitations are placed on
the allocation to any individual security.
• Alternative investments are investments in non-publicly traded securities and in non-
traditional asset classes. They may comprise, but are not limited to, investments in real
estate, agriculture, timber, private equity, venture capital, infrastructure, emerging markets
debt, high yield bonds and commodity futures. The Alternative investments portfolio is
required to be diversified by asset class, strategy, sector and geography.
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As at December 31, 2024, approximately 90% of the Corporation’s Domestic Registered
Defined Benefit Plans’ assets were invested in fixed income instruments to mitigate a
significant portion of the interest rate (discount rate) risk related to its actuarial liabilities. This
comprises a combination of financial instruments including, but not limited to, bonds, bond
repurchase and reverse repurchase agreements, bond forwards, bond futures and interest
rate swaps.
Derivatives are permitted provided that they are used for managing a particular risk (including
interest rate risk related to pension liabilities) or to create exposures to given markets and
currencies. Counterparty credit risk associated with such financial instruments is mitigated
by receiving collateral from counterparties based on collateralization agreements, as well as
by monitoring the counterparties’ credit ratings (minimum credit rating of A) and ensuring
compliance with the SIP&P. The fair value of these derivative instruments is included in the
fixed income investments in the asset composition table and is not a significant component of
the fixed income fair values of the portfolio.
The trusts for the supplemental plans are invested 50% in a mix of indexed equity
investments and alternative investments, in accordance with their applicable SIP&P, with the
remaining 50% held by the Canada Revenue Agency as a refundable tax, in accordance with
tax legislation. Due to unrealized gains and losses on invested assets, the market value of
assets could deviate from this allocation from time to time.
Risks
Through its defined benefit pension plans, the Corporation is exposed to a number of risks,
the most significant of which are detailed below:
Asset risk
Asset risk is the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market price. Asset risk comprises currency risk, credit
risk, and other price risk. Currency risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign exchange rates. This risk is
mitigated through implementation of hedging strategies. Credit risk is the risk that one party
to a financial instrument will cause a financial loss for the other party by failing to discharge
an obligation. This risk is mitigated by receiving collateral from counterparties based on
collateralization agreements and by monitoring the issuers’ credit risk. Other price risk is
the risk the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices (other than those arising from currency risk), whether those changes
are caused by factors specific to the individual financial instrument or its issuer, or factors
affecting all similar financial instruments traded in the market. This risk is mitigated through
proper diversification of plan assets.
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument
will fluctuate because of changes in market interest rates. A decrease in corporate and/
or government bond yields will increase plan liabilities, which will be partially offset by an
increase in the value of the plans’ bond holdings. As at December 31, 2024, approximately
90% of the Corporation’s Domestic Registered Defined Benefit Plans’ assets were invested
in fixed income instruments to mitigate a significant portion of the interest rate risk (discount
rate risk).
Funding risk
Adverse changes in the value of plan assets or in interest rates, and therefore in the discount
rate used to value liabilities, could have a significant impact on pension plan solvency
valuations and future cash funding requirements.
Life expectancy
The majority of the plans’ obligations are to provide benefits for the life of the member, so
increases in life expectancy will result in an increase in the plans’ liabilities.
Assumptions
Management is required to make estimates about actuarial and financial assumptions to
determine the cost and related liabilities of the Corporation’s employee future benefits.
Discount Rate
The discount rate used to determine the pension obligation was determined by reference
to market interest rates on corporate bonds rated “AA” or better with cash flows that
approximate the timing and amount of expected benefit payments.
Future Increases in Compensation
Estimates surrounding assumptions of future increases in compensation are based upon the
current compensation policies, the Corporation’s long-range plans, labour and employment
agreements and economic forecasts.
Mortality Assumptions
Mortality tables and improvement scales issued by the Canadian Institute of Actuaries
(revised in 2014) were taken into account in selecting management’s best estimate mortality
assumption used to calculate the accrued benefit obligation as at December 31, 2024 and
2023.
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The weighted average assumptions used to determine the Corporation’s accrued benefit
obligations and cost are as follows:
Pension Benefits
Other Employee
Future Benefits
2024
2023
2024
2023
Discount rate used to determine:
Net interest on the net defined benefit obligation for the
year ended December 31
4.64%
5.28%
4.64%
5.28%
Service cost for the year ended December 31
4.65%
5.28%
4.65%
5.28%
Accrued benefit obligation as at December 31
4.70%
4.64%
4.70%
4.64%
Rate of future increases in compensation used to
determine:
Accrued benefit cost and service cost for the year ended
December 31
2.75%
2.75%
Not
applicable
Not
applicable
Accrued benefit obligation as at December 31
2.75%
2.75%
Not
applicable
Not
applicable
Sensitivity Analysis
Sensitivity analysis is based on changing one assumption while holding all other assumptions
constant. In practice, this may be unlikely to occur, and changes in some of the assumptions
may be correlated. When calculating the sensitivity of the defined benefit obligation to
variations in significant actuarial assumptions, the same method (present value of the
defined benefit obligation calculated with the projected unit credit method at the end of the
reporting period) has been applied as for calculating the liability recognized in the consolidated
statement of financial position.
Sensitivity analysis on 2024 pension expense, net interest relating to pension benefit liabilities
and pension obligation, based on different actuarial assumptions with respect to discount
rate is set out below. The effects on each pension plan of a change in an assumption are
weighted proportionately to the total plan obligation to determine the total impact for each
assumption presented.
0.25 Percentage Point
(Canadian dollars in millions)
Decrease
Increase
Discount rate on obligation assumption
Pension expense
$
34
$
(32)
Net interest relating to pension benefit liabilities
11
(9)
$
45
$
(41)
Increase (decrease) in pension obligation
$
604
$
(571)
The increase (decrease) in the pension obligation for a 0.25 percentage point change in the
discount rate relates to the gross amount of the pension liabilities and is before the impact of
any change in plan assets. As at December 31, 2024, approximately 90% of the Corporation’s
pension assets were invested in fixed income instruments to mitigate a significant portion of
the interest rate (discount rate) risk.
An increase of one year in life expectancy would increase the pension benefit obligation by
$433 million.
Assumed health care cost trend rates impact the amounts reported for the health care plans.
A 4.5% annual rate of increase in the per capita cost of covered health care benefits was
assumed for 2024 and thereafter, unchanged from the 2023 assumption. A one percentage
point increase in assumed health care trend rates would have increased the total of current
service and interest costs by $5 million and the obligation by $61 million. A one percentage
point decrease in assumed health care trend rates would have decreased the total of current
service and interest costs by $4 million and the obligation by $64 million.
A 0.25 percentage point decrease in discount rate for other employee future benefits would
have increased the total of current and interest costs by less than $1 million and the obligation
by $34 million. A 0.25 percentage point increase in discount rate would have decreased the
total of current and interest costs by less than $1 million and the obligation by $32 million.
Defined Contribution Pension Plans
Certain of the Corporation’s management, administrative and unionized employees participate
in a defined contribution pension plan, a defined contribution component of a plan which also
includes a defined benefit component or a multi-employer plan which are accounted for as
defined contribution plans. The Corporation contributes an amount expressed as a percentage
of employees’ contributions with such percentage varying by group and for some groups,
based on the number of years of service. As permitted by legislation and applicable plan rules,
surplus in the defined benefit component can be used to cover the employer contributions
in the defined contribution component of such plan. As such, $30 million of surplus in the
defined benefit components of the Domestic Registered Plans was used to cover the employer
contributions in the defined contribution components during 2024 (2023 – $25 million).
The Corporation’s expense for these pension plans amounted to $115 million for the year
ended December 31, 2024 (2023 – $85 million). Net of the surplus in the defined benefit
components which can be used to fund the employer contribution to a defined contribution
component within the same pension plan, expected total employer contributions for 2025 are
$92 million.
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Consolidated
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10. Provisions for other liabilities
The following table provides a continuity schedule of all recorded provisions. Current
provisions are recorded in Accounts payable and accrued liabilities.
(Canadian dollars in millions)
Maintenance (a)
Asset
retirement (b)
Litigation
Total provisions
At December 31, 2023
Current
$
187
$
-
$
38
$
225
Non-current
1,227
29
-
1,256
$
1,414
$
29
$
38
$
1,481
Provisions arising during the year
$
174
34
-
208
Amounts utilized
(60)
-
(1)
(61)
Changes in estimated costs
(46)
5
3
(38)
Accretion expense
64
1
13
78
Foreign exchange loss
127
-
-
127
At December 31, 2024
$
1,673
$
69
$
53
$
1,795
Current
$
242
$
34
$
53
$
329
Non-current
1,431
35
-
1,466
$
1,673
$
69
$
53
$
1,795
(a) Maintenance provisions relate to the provision for the costs to meet the contractual return
conditions on aircraft under operating leases. The provision relates to leases with expiry
dates ranging from 2025 to 2036 with the average remaining lease term of approximately
3 years. The maintenance provisions take into account current costs of maintenance
events, estimates of inflation surrounding these costs as well as assumptions surrounding
utilization of the related aircraft. Assuming the aggregate cost for return conditions
increases by 5%, holding all other factors constant, there would be a cumulative balance
sheet adjustment to increase the provision by $83 million at December 31, 2024 and an
increase to maintenance expense in 2025 of approximately $9 million. Expected future
cash flows to settle the obligation are discounted. If the discount rates were to increase
by 1%, holding all other factors constant, there would be a cumulative balance sheet
adjustment to decrease the provision by $27 million at December 31, 2024. An equivalent
but opposite movement in the discount rate would result in a similar impact in the
opposite direction.
(b) Under the terms of certain land and facilities leases, the Corporation has an obligation
to restore the land to vacant condition at the end of the lease and to rectify any
environmental damage for which it is responsible. The related leases expire over terms
ranging from 2025 to 2078. These provisions are based on numerous assumptions
including the overall cost of decommissioning and remediation and the selection of
alternative decommissioning and remediation approaches. The non-current provision
is recorded in Other long-term liabilities. A charge of $34 million was recorded in
2024 in other operating expenses related to estimated costs related to contractual
lease obligations.
11. Income taxes
Income Tax Recovery
Income tax recorded in the consolidated statement of operations is presented below.
(Canadian dollars in millions)
2024
2023
Current income tax recovery (expense)
$
(30)
$
17
Deferred income tax recovery
1,235
47
Income tax recovery
$
1,205
$
64
For the year ended December 31, 2024, the Corporation recognized in the consolidated
statement of operations $1,503 million ($638 million in 2023) of previously unrecognized
deferred income tax assets, and ($268) million (($591) million in 2023) related to the
origination and reversal of temporary differences.
The income tax recovery (expense) differs from the amount that would have resulted from
applying the statutory income tax rate to income before income tax expense as follows:
(Canadian dollars in millions)
2024
2023
Income before income taxes
$
515
$
2,212
Statutory income tax rate based on combined federal and provincial rates
26.49%
26.46%
Income tax (expense) recovery based on statutory tax rates
(136)
(585)
Effects of:
Non-taxable (non-deductible) portion of capital gains (losses)
(70)
26
Recognition of deferred income tax assets
1,503
638
Unrecognized capital losses
(69)
-
Non-deductible items
(30)
(23)
Other
7
8
Income tax recovery
$
1,205
$
64
The applicable statutory tax rate is 26.49% (2023 – 26.46%). The Corporation’s applicable tax
rate is the Canadian combined tax rate applicable in the jurisdiction in which the Corporation
operates. The income tax recovery in the consolidated statement of operations differs from
the amount that would have resulted from applying the statutory income tax rate to the
income before income taxes in the consolidated statement of operations primarily due to
recognizing only certain of the deferred income tax assets prior to the third quarter of 2024,
as described further below.
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Income tax recorded in the consolidated statement of comprehensive income is presented
below.
(Canadian dollars in millions)
2024
2023
Remeasurements on employee benefit liabilities
- current income tax expense
$
(1)
$
(3)
- deferred income tax expense
(287)
(45)
Income tax expense
$ (288)
$
(48)
The income tax differs from the amount that would have resulted from applying the statutory
income tax rate to other comprehensive income before income tax expense as follows:
(Canadian dollars in millions)
2024
2023
Other comprehensive income before income taxes
$
597
$
107
Statutory income tax rate based on combined federal and provincial rates
26.49%
26.46%
Income tax expense based on statutory tax rates
(158)
(28)
Non-taxable (non-deductible) portion of capital gain (capital loss)
1
(1)
Recognition of deferred income tax liability
(129)
(19)
Other
(2)
-
Income tax expense
$ (288)
$
(48)
Income tax recorded in shareholders’ equity is presented below.
(Canadian dollars in millions)
2024
2023
Share based compensation - deferred income tax recovery
$
19
$ -
Share issue cost - deferred income tax recovery
22
-
Income tax recovery
$
41
$
-
Deferred Income Tax
Deferred income tax assets are recognized only to the extent that it is probable that future
taxable income will be available to realize them. In making this assessment, consideration
is given to available positive and negative evidence and relevant assumptions, including,
historical financial results, and expectations relating to future taxable income, the overall
business environment, and industry-wide trends.
Since 2020, the net deferred income tax assets related to unused tax losses and other
deductible temporary differences have not been recognized. As a result of the COVID-19
pandemic, there was considerable negative evidence at that time relating to losses that were
incurred and assumptions as to the timing of reversal of temporary differences including
expectations about the future results of operations and future cash flows.
In connection with the preparation of the financial statements for the period ended
September 30, 2024, Air Canada determined that it was probable that substantially all of the
deferred income tax assets, which include non-capital losses, other post-employment benefits,
maintenance and other temporary differences, would be realized. Accordingly, previously
unrecognized deferred income tax assets net of the origination and reversal of temporary
differences for the nine month period of $1,056 million were recognized in the third quarter of
2024, which resulted in a tax recovery recorded in the consolidated statement of operations
of $1,154 million, tax recovery recorded in the consolidated statement of changes in equity of
$41 million and tax expense recorded in the consolidated statement of comprehensive income
of $139 million related to remeasurements on net employee benefit liabilities.
As of December 31, 2024, deferred tax assets and liabilities of $1,039 million are recorded
net as a non-current deferred income tax asset on the consolidated statement of financial
position. Certain intangible assets with nominal tax cost and a carrying value of $275 million
have indefinite lives and accordingly, the associated deferred income tax liability of $73 million
(2023 – $73 million) is not expected to reverse until the assets are disposed of, become
impaired or amortizable and as a result is included as part of the non-current deferred income
tax liability.
The significant components of deferred income tax assets and liabilities were as follows:
(Canadian dollars in millions)
2024
2023
Deferred income tax assets
Non-capital losses
$
1,951
$
1,927
Accounting provisions not currently deductible for tax
129
7
Investment tax credits and recoverable taxes
40
-
Lease liabilities
768
783
Maintenance provisions
443
-
Deferred revenue
192
-
3,523
2,717
Deferred income tax liabilities
Post-employment obligations – pension and other employee future benefits
(167)
(460)
Property, equipment, technology-based and other intangible assets
(2,253)
(2,128)
Indefinite-lived intangible assets
(73)
(73)
Other
(64)
(79)
(2,557)
(2,740)
Net recognized deferred income tax assets (liabilities)
$
966
$
(23)
Balance sheet presentation
Deferred income tax assets
1,039
50
Deferred income tax liabilities
(73)
(73)
Net recognized deferred income tax assets (liabilities)
$
966
$
(23)
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The following table presents the variation of the components of deferred income tax balances:
(Canadian dollars in millions)
January 1,
2024
2024 income
statement
movement
2024 OCI
movement
2024 equity
movement
December 31,
2024
Non-capital losses
$
1,927
(16)
-
40
$
1,951
Accounting provisions not
currently deductible for tax
7
122
-
-
129
Investment tax credits and
recoverable taxes
-
40
-
-
40
Lease liabilities
783
(15)
-
-
768
Maintenance provisions
-
443
-
-
443
Deferred revenues
-
192
-
-
192
Post-employment obligations –
pension and other employee
future benefits
(460)
580
(287)
-
(167)
Property, equipment,
technology-based and other
intangible assets
(2,128)
(125)
-
-
(2,253)
Indefinite-lived intangible
assets
(73)
-
-
-
(73)
Other deferred tax assets
(liabilities)
(79)
14
-
1
(64)
Total recognized deferred
income tax assets (liabilities)
$
(23)
1,235
(287)
41
$
966
(Canadian dollars in millions)
January 1,
2023
2023 income
statement
movement
2023 OCI
movement
December 31,
2023
Non-capital losses
$
1,693
$
234
$
-
$
1,927
Accounting provisions not
currently deductible for tax
7
-
-
7
Lease liabilities
934
(151)
-
783
Post-employment obligations – pension
(423)
8
(45)
(460)
Property, equipment, technology-based and
other intangible assets
(2,103)
(25)
-
(2,128)
Indefinite-lived intangible assets
(73)
-
-
(73)
Other deferred tax assets (liabilities)
(60)
(19)
-
(79)
Total recognized deferred
income tax assets (liabilities)
$
(25)
$
47
$
(45)
$
(23)
As at December 31, 2024, the Corporation has net capital losses carryforwards of
approximately $241 million available for income tax purposes as well as unrealized deductible
foreign exchange losses and net capital losses of $354 million, for which no deferred income
tax asset has been recognized at this time as the ability to utilize these tax attributes is limited
to future taxable capital gains. While the net capital losses remain available for use, the
recognition criteria for accounting is not met at this time. Net capital losses do not have an
expiry date.
The following are the temporary differences and tax loss carryforwards for which no deferred
income tax assets could be recognized:
(Canadian dollars in millions)
2024
2023
Non-capital losses carryforwards
$
-
$
1,507
Post-employment obligations - other employee future benefits
-
1,104
Accounting provisions not currently deductible for tax
-
427
Maintenance provision
-
1,414
Deferred revenue
-
754
Net capital losses carryforwards
241
131
Unrealized deductible foreign exchange losses and net capital losses
354
202
Total unrecognized net temporary differences
$
595
$
5,539
Deferred income tax rate based on combined federal and provincial rates
26.49%
26.45%
$
158
$
1,465
Recoverable taxes
-
39
Total unrecognized net deferred income tax assets
$
158
$
1,504
The following are the Federal non-capital tax losses expiry dates:
(Canadian dollars in millions)
Tax Losses
2034
$
1
2040
1,367
2041
4,259
2042
1,621
2044
13
Non-capital losses carryforwards
$
7,261
Cash income taxes recovered in 2024 by the Corporation were $50 million (2023 – $45 million
paid).
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Consolidated
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12. Share capital
Number of
shares
Value
(Canadian dollars
in millions)
At January 1, 2023
358,362,258
$
2,743
Shares issued on the exercise of stock options
107,028
1
At December 31, 2023
358,469,286
2,744
Shares issued on the exercise of stock options
41,536
1
Shares purchased and cancelled under issuer bid
(18,671,700)
(155)
Deferred tax asset recognition
Note 11
-
22
At December 31, 2024
339,839,122
$
2,612
The issued and outstanding shares of Air Canada, along with the potential shares, were as
follows:
2024
2023
Issued and outstanding
Class A variable voting shares
102,314,033
82,887,375
Class B voting shares
237,525,089
275,581,911
Total issued and outstanding
339,839,122
358,469,286
Potential shares
Convertible notes
Note 8
17,856,599
17,856,599
Stock options
Note 13
9,230,773
6,642,516
Total outstanding and potentially issuable shares
366,926,494
382,968,401
Shares
As at December 31, 2024, the shares issuable by Air Canada consist of an unlimited number
of Class A Variable Voting Shares (“Variable Voting Shares”) and an unlimited number of
Class B Voting Shares (“Voting Shares”). The two classes of shares have equivalent rights as
shareholders except for voting rights as explained below.
Variable Voting Shares may only be held, beneficially owned or controlled, directly or indirectly,
by persons who are not Canadians (within the meaning of the Canada Transportation
Act). An issued and outstanding Variable Voting Share is converted into one Voting Share
automatically and without any further act of Air Canada or the holder, if such Variable Voting
Share becomes held, beneficially owned and controlled, directly or indirectly, otherwise than
by way of security only, by a Canadian, as defined in the Canada Transportation Act.
Voting Shares may only be held, beneficially owned and controlled, directly or indirectly,
by Canadians. An issued and outstanding Voting Share is converted into one Variable Voting
Share automatically and without any further act of Air Canada or the holder, if such Voting
Share becomes held, beneficially owned or controlled, directly or indirectly, otherwise than by
way of security only, by a person who is not a Canadian.
Air Canada’s articles provide that holders of Variable Voting Shares are entitled to one vote
per share unless (i) the number of Variable Voting Shares outstanding, as a percentage of the
total number of voting shares of Air Canada exceeds 49% or (ii) the total number of votes cast
by or on behalf of holders of Variable Voting Shares at any meeting exceeds 49% of the total
number of votes that may be cast at such meeting. If either of the above noted thresholds
would otherwise be surpassed at any time, the vote attached to each Variable Voting Share
will decrease proportionately such that (i) the Variable Voting Shares as a class do not carry
more than 49% of the aggregate votes attached to all issued and outstanding Voting Shares
of Air Canada and (ii) the total number of votes cast by or on behalf of holders of Variable
Voting Shares at any meeting do not exceed 49% of the votes that may be cast at such
meeting. Air Canada’s articles also provide for the automatic reduction of the voting rights
attached to Variable Voting Shares in the event any of the following limits are exceeded. In
such event, the votes attributable to Variable Voting Shares will be affected as follows:
• first, if required, a reduction of the voting rights of any single non-Canadian holder (including
a single non-Canadian holder authorized to provide an air service) carrying more than 25% of
the votes to ensure that such non-Canadian holder never carries more than 25% of the votes
which holders of Voting Shares cast at any meeting of shareholders;
• second, if required and after giving effect to the first proration set out above, a further
proportional reduction of the voting rights of all non-Canadian holders authorized to provide
an air service to ensure that such non-Canadian holders authorized to provide an air service,
in the aggregate, never carry more than 25% of the votes which holders of Voting Shares
cast at any meeting of shareholders; and
• third, if required and after giving effect to the first two prorations set out above, a
proportional reduction of the voting rights for all non-Canadian holders as a class to ensure
that non-Canadians never carry, in aggregate, more than 49% of the votes which holders of
Voting Shares cast at any meeting of shareholders.
Shareholder Rights Plan
Under the terms of the shareholder rights plan agreement (the “Rights Plan”), one right (a
“Right”) is issued with respect to each share of Air Canada issued and outstanding. These
Rights would become exercisable only when a person, including any party related to it,
acquires or announces its intention to acquire 20% or more of the outstanding shares of
Air Canada calculated on a combined basis, without complying with the “Permitted Bid”
provisions of the Rights Plan or, in certain cases, without the approval of the Board. Until
such time, the Rights are not separable from the shares, are not exercisable and no separate
rights certificates are issued. To qualify as a “Permitted Bid” under the Rights Plan, a bid must,
among other things: (i) be made to all holders of shares, (ii) remain open for a period of not
less than 105 days (or such shorter minimum period determined in accordance with National
Instrument 62-104 – Take-Over Bids and Issuer Bids (“NI 62-104”), (iii) provide that no shares
shall be taken up unless more than 50% of the then outstanding shares, other than the shares
held by the person pursuing the acquisition and parties related to it, have been tendered and
not withdrawn, and (iv) provide that if such 50% condition is satisfied, the bid will be extended
for at least 10 days to allow other shareholders to tender.
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Following the occurrence of an event which triggers the right to exercise the Rights and
subject to the terms and conditions of the Rights Plan, each Right would entitle the holders
thereof, other than the acquiring person or any related persons, to exercise their Rights and
purchase from Air Canada two hundred dollars’ worth of shares for one hundred dollars (i.e.
at a 50% discount to the market price at that time). Upon such exercise, holders of rights
beneficially owned and controlled by Qualified Canadians would receive Class B Voting Shares
and holders of rights beneficially owned or controlled by persons who are not Qualified
Canadians would receive Class A Variable Voting Shares.
The renewal of the Rights Plan was ratified at Air Canada’s 2023 annual meeting of
shareholders. The Rights Plan remains in effect until the day immediately following
Air Canada’s 2026 annual meeting of shareholders. It could then be further renewed for an
additional period of three years from 2026 to 2029 if the shareholders so choose at or prior to
their 2026 annual meeting.
Convertible Notes
As described in Note 8, as at December 31, 2024, $394 million (US$274 million) aggregate
principal amount of Convertible Notes remains outstanding. The Convertible Notes will mature
on July 1, 2025, unless earlier repurchased, redeemed or converted. The conversion rate of the
convertible notes is 65.1337 shares per US$1,000 principal amount of convertible notes.
Normal Course Issuers Bid
In November 2024, Air Canada received approval from the Toronto Stock Exchange (“TSX”) to
launch a normal course issuer bid allowing it to purchase for cancellation, in accordance with
the rules of the TSX and during the period from November 5, 2024 to November 4, 2025, up
to 35,783,842 shares representing approximately 10% of the public float of its shares as at
October 22, 2024.
In 2024, the Corporation purchased, for cancellation, 20,279,100 shares at an average cost of
$23.92 per share for aggregate consideration of $485 million (of which 1,607,400 shares were
cancelled in the first business days after December 31, 2024 related to administrative delay
between purchase and cancellation in the books of the registrar). The excess of the cost over
the average book value of $330 million was charged to Deficit, together with $10 million share
buyback tax. In January and February 2025, Air Canada purchased an additional 15,504,742
shares for aggregate consideration of $315 million effectively purchasing the maximum
amount of 35,783,842 shares available for purchase for cancellation under its Issuer Bid.
13. Share-based compensation
Air Canada Long-Term Incentive Plan
Certain of the Corporation’s employees participate in the Air Canada Long-term Incentive Plan
which provides for the grant of stock options, performance share units and restricted share
units to senior management and officers of Air Canada. With respect to the stock options,
4,945,982 shares are available for future grants of options under the Long-term Incentive
Plan. The outstanding performance share units and restricted share units will generally
not result in the issuance of new shares as these share units will be redeemed for shares
purchased on the secondary market (and not issued from treasury) and/or equivalent cash, at
the discretion of the Corporation.
Stock Options
The options to purchase shares granted under the Long-term Incentive Plan have a maximum
term of up to ten years and an exercise price based on the fair market value of the shares at
the time of the grant of the options. Fifty percent of options are time-based and vest over
four years. The remaining options vest based upon performance conditions, which are based
on operating margin (operating income over operating revenues) targets established by the
Air Canada Board over the same time period. Each option entitles the employee to purchase
one share at the stated exercise price.
The number of Air Canada stock options granted to employees, the related compensation
expense recorded and the assumptions used to determine stock-based compensation
expense, using the Black-Scholes option valuation model are as follows:
2024
2023
Compensation expense ($ millions)
$
16
$
15
Number of stock options granted to Air Canada employees
2,674,553
1,644,782
Weighted average fair value per option granted ($)
$
6.59
$
10.01
Aggregated fair value of options granted ($ millions)
$
18
$
16
Weighted average assumptions:
Share price
$
18.23
$
19.88
Risk-free interest rate
2.72%-3.59%
2.81%-4.59%
Expected volatility
36.20%
58.60%
Dividend yield
0%
0%
Expected option life (years)
5.25
5.25
Expected volatility was determined at the time of grant using the share price on a historical
basis. It reflects the assumption that the historical volatility is indicative of future trends, which
may not necessarily be the actual outcome.
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| 2024 Annual Report
Consolidated
financial statement
and notes
A summary of the Long-term Incentive Plan option activity is as follows:
2024
2023
Options
Weighted
Average
Exercise Price/
Share
Options
Weighted
Average
Exercise Price/
Share
Beginning of year
6,642,516
$
25.10
5,304,745
$
26.39
Granted
2,674,553
18.23
1,644,782
19.88
Exercised
(41,536)
14.79
(107,028)
10.64
Expired
(38,533)
26.83
-
-
Forfeited
(6,227)
20.03
(199,983)
23.44
Outstanding options, end of year
9,230,773
$
23.15
6,642,516
$
25.10
Options exercisable, end of year
3,960,001
$
27.27
3,037,801
$
26.90
The weighted average share price on the date of exercise for options exercised in 2024 was
$21.20 (2023 – $20.73).
2024 Outstanding Options
2024 Exercisable Options
Range of
Exercise Prices
Expiry Dates
Number of Options
Outstanding
Weighted Average
Remaining Life (Years)
Weighted Average
Exercise Price/Share
Number of Exercisable
Options
Weighted Average
Exercise Price/Share
$9.41
2026
68,498
2
9.41
68,498
9.41
$12.83 – $26.40
2027
403,631
3
14.95
403,631
14.95
$22.53 – $27.75
2028
787,654
4
26.52
787,654
26.52
$33.11 – $43.22
2029
827,385
5
33.27
827,385
33.27
$15.35 – $32.42
2030
1,133,935
6
31.25
1,120,335
31.44
$23.80 – $26.93
2031
541,757
7
25.37
251,122
25.39
$17.37 – $24.61
2032
1,162,376
8
24.30
289,449
24.34
$17.61 – $24.19
2033
1,630,984
9
19.88
211,927
20.06
$16.47 – $18.32
2034
2,674,553
10
18.23
-
-
9,230,773
$
23.15
3,960,001
$
27.27
2023 Outstanding Options
2023 Exercisable Options
Range of
Exercise Prices
Expiry Dates
Number of Options
Outstanding
Weighted Average
Remaining Life (Years)
Weighted Average
Exercise Price/Share
Number of Exercisable
Options
Weighted Average
Exercise Price/Share
$9.41
2026
68,498
3
9.41
68,498
9.41
$12.83 – $26.40
2027
434,869
4
14.86
434,869
14.86
$22.53 – $27.75
2028
824,758
5
26.52
824,758
26.52
$33.11 – $43.22
2029
828,814
6
33.27
823,249
33.20
$15.35 – $32.42
2030
1,141,435
7
31.16
563,295
30.84
$23.80 – $26.93
2031
541,757
8
25.37
167,411
25.39
$17.37 – $24.61
2032
1,164,354
9
24.29
145,721
24.29
$17.61 – $24.19
2033
1,638,031
10
19.88
10,000
24.19
6,642,516
$
25.10
3,037,801
$
26.90
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| 2024 Annual Report
Consolidated
financial statement
and notes
Performance and Restricted Share Units
The Long-term Incentive Plan also includes performance share units (“PSUs”) and restricted
share units (“RSUs”). 75% of PSUs granted vest based on the Corporation achieving its
cumulative annual earnings target over a three-year period, while 25% of PSUs vest based on
relative total shareholder returns over the same three-year period. RSUs vest after three years
from their date of grant. The PSUs and RSUs granted are generally redeemed for Air Canada
shares purchased on the secondary market and/or equivalent cash at the discretion of the
Board of Directors.
The compensation expense related to PSUs and RSUs in 2024 was $35 million
(2023 – $23 million).
A summary of the Long-term Incentive Plan share unit activity is as follows:
2024
2023
Beginning of year
4,034,091
2,891,925
Granted
2,104,796
1,840,914
Settled
(801,791)
(574,614)
Forfeited
(118,155)
(124,134)
Outstanding share units, end of year
5,218,941
4,034,091
Employee Share Purchase Plan
Eligible employees can participate in the employee share purchase plan under which
employees can invest between 2% and 10% of their base salary for the purchase of shares
on the secondary market. Air Canada will match 33.33% of the contributions made by
employees. During 2024, the Corporation recorded compensation expense of $25 million
(2023 – $21 million) related to the Employee Share Purchase Plan.
14. Earnings per share
The following table outlines the calculation of basic and diluted earnings per share:
(in millions, except per share amounts)
2024
2023
Numerator:
Net income
$
1,720
$
2,276
Effect of assumed conversion of convertible notes
56
(33)
Adjusted numerator for diluted earnings per share
$
1,776
$
2,243
Denominator:
Weighted-average shares
358
358
Effect of potential dilutive securities:
Stock options
-
-
Convertible notes
18
18
Adjusted denominator for diluted earnings per share
376
376
Basic earnings per share
$
4.81
$
6.35
Diluted earnings per share
$
4.72
$
5.96
The calculation of earnings per share is based on whole dollars and not on rounded millions. As
a result, the above amounts may not be recalculated to the per share amount disclosed above.
Excluded from the 2024 calculation of diluted earnings per share were 6,811,000 (2023 –
4,975,000) outstanding options where the options’ exercise prices were greater than the
average market price of the shares for the year. Outstanding options that had exercise prices
lower than the average market price of the shares for the year were included in the calculation
of diluted earnings per share; using the treasury stock method, this resulted in less than
one million in potential dilutive securities.
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| 2024 Annual Report
Consolidated
financial statement
and notes
15. Commitments
Capital Commitments and Leases
Capital commitments consist of the future firm aircraft deliveries and commitments related to
acquisition of other property and equipment. The estimated aggregate cost of aircraft is based
on delivery prices that include estimated escalation. U.S. dollar amounts are converted using
the December 31, 2024 closing rate of CDN$1.4384. Minimum future commitments under
these contractual arrangements are shown below.
Capital commitments include the acquisition of 18 Boeing 787-10 aircraft which Air Canada
announced in 2023. Deliveries are scheduled to begin in 2026, and Air Canada now expects
delivery of the last four aircraft in 2030. The purchase agreement includes options for 12
additional Boeing 787-10 aircraft.
Capital commitments also include the purchase of one Boeing 787-9 aircraft scheduled to be
delivered in 2025 and deliveries for 31 firm orders of Airbus A220 aircraft planned between
2025 and into 2027.
Also included below are capital commitments relating to the acquisition of 30 extra-long range
(XLR) versions of the Airbus A321neo aircraft (Airbus A321XLR). Deliveries are scheduled
to begin in 2025 with the final aircraft scheduled to arrive in 2029. Of the 30 total aircraft,
15 aircraft will be leased and 15 are being acquired under a purchase agreement with
Airbus S.A.S that includes purchase rights to acquire up to 10 additional aircraft between 2030
and 2032. The amounts related to the periodic lease payments on the 15 leases are included
for the periods noted. Lease payments related to eleven Boeing 737 MAX 8 aircraft expected
to be delivered in 2025 and 2026 are also included.
(Canadian dollars
in millions)
2025
2026
2027
2028
2029
Thereafter
Total
Capital commitments
$ 2,289
$
2,746
$ 3,260
$
957
$
946
$
2,861
$ 13,059
In 2022, the Corporation announced it had entered into a purchase agreement for 30 ES-30
electric-hybrid aircraft under development by Heart Aerospace. Due to the developing design
and specifications of the aircraft, the final cost is not yet determinable and not included in the
table above, however the agreement provides for a price cap. The regional aircraft would not
be expected to enter service before 2029.
The Corporation leases and subleases certain aircraft and spare engines to its regional carrier,
Jazz, which are charged back to Air Canada through its capacity purchase agreement with
Jazz. These are reported net on the consolidated statement of operations. The leases and
subleases relate to 15 Mitsubishi CRJ-200 aircraft, 20 Mitsubishi CRJ-900 aircraft, 25 Embraer
175 aircraft, and 13 spare engines. The lease and sublease revenue and expense related to
these aircraft and engines amount to $116 million in 2024 (2023 – $119 million).
Related financing arrangements
In October 2024, Air Canada received a loan commitment from Export Development Canada
of up to US$975 million to finance a portion of the purchase price of up to 27 Airbus A220-300
aircraft expected to be delivered no later than October 2027.
Other Contractual Commitments
The future minimum non-cancellable commitment for the next 12 months under commercial
agreements with regional carriers is approximately $1,339 million which includes pass-through
costs to sustain the minimum flying commitment.
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Consolidated
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16. Financial instruments and risk management
Summary of Financial Instruments
Carrying Amounts
(Canadian dollars in millions)
December 31, 2024
Financial instruments classification
Fair value through
profit and loss
Fair value through
OCI
Assets at amortized
cost
Liabilities at
amortized cost
Total
December 31, 2023
Financial Assets
Cash and cash equivalents
$
2,518
$
-
$
-
$
-
$
2,518
$
2,817
Short-term investments
4,464
-
-
-
4,464
5,734
Accounts receivable
-
-
1,089
-
1,089
1,121
Investments, deposits and other assets
Long-term investments
770
-
-
-
770
744
Equity investment in Chorus
-
49
-
-
49
40
Restricted cash
104
-
-
-
104
89
Aircraft related and other deposits
-
-
59
-
59
53
Other investments
11
27
-
-
38
36
Derivative instruments
Foreign exchange derivatives
157
-
-
-
157
14
$
8,024
76
1,148
-
9,248
$
10,648
Financial Liabilities
Accounts payable
$
-
$
-
$
-
$
3,381
$
3,381
$
3,025
Foreign exchange derivatives
135
-
-
-
135
179
Embedded derivative on convertible notes
45
-
-
-
45
56
Current portion of long-term debt and lease liabilities
-
-
-
1,755
1,755
866
Long-term debt and lease liabilities
-
-
-
10,915
10,915
12,996
$
180
$
-
$
-
$
16,051
$
16,231
$
17,122
Summary of Gain on Financial Instruments Recorded at Fair Value
(Canadian dollars in millions)
2024
2023
Embedded derivative on convertible notes
Note 8
$
11
$
64
Short-term and long-term investments
17
45
Other
-
6
Gain on financial instruments recorded at fair value
$
28
$
115
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| 2024 Annual Report
Consolidated
financial statement
and notes
Risk Management
Under its risk management policy, the Corporation manages its market risk through the use of
various financial derivative instruments. The Corporation uses these instruments solely for risk
management purposes, not for generating trading profit. As such, any change in cash flows
associated with derivative instruments is designed to be an economic hedge and offset by
changes in cash flows of the relevant risk being hedged.
The fair values of derivative instruments represent the amount of the consideration that
could be exchanged in an arm’s length transaction between willing parties who are under no
compulsion to act. The fair values of these derivatives are determined using prices in active
markets, where available. When no such market is available, valuation techniques such as
discounted cash flow analysis are applied. The valuation technique incorporates all factors
that would be considered in setting a price, including the Corporation’s own credit risk as well
as the credit risk of the counterparty.
Liquidity risk
The Corporation manages its liquidity needs through a variety of strategies including by
seeking to sustain and improve cash from operations, sourcing committed financing for new
and existing aircraft, and through other financing activities.
Liquidity needs are primarily related to meeting obligations associated with financial liabilities,
capital commitments, ongoing operations, contractual and other obligations. The Corporation
monitors and manages liquidity risk by preparing rolling cash flow forecasts for a minimum
period of at least twelve months after each reporting period, monitoring the condition and
value of assets available to be used as well as those assets being used as security in financing
arrangements, seeking flexibility in financing arrangements, and establishing programs to
monitor and maintain compliance with terms of financing agreements.
At December 31, 2024, total liquidity was $9,154 million comprised of cash and cash
equivalents, short-term and long-term investments of $7,752 million, and $1,402 million
available under undrawn credit facilities. Cash and cash equivalents include $346 million
related to funds held in trust by Air Canada Vacations in accordance with regulatory
requirements governing advance sales for tour operators ($393 million at December 31, 2023).
Cash and cash equivalents include $115 million pertaining to investments with
original maturities of three months or less at December 31, 2024 ($364 million as at
December 31, 2023).
A maturity analysis of the Corporation’s principal and interest repayment requirements on
long-term debt and lease liabilities is set out in Note 8, and fixed operating commitments and
capital commitments are set out in Note 15.
Market Risks
Market risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate due to changes in market prices. Market risk can be further divided into the following
sub-classifications related to the Corporation: fuel price risk, foreign exchange risk, interest
rate risk, and share-based compensation risk.
Fuel Price Risk
Fuel price risk is the risk that future cash flows will fluctuate because of changes in jet fuel
prices. To manage its exposure to jet fuel prices and to help mitigate volatility in operating
cash flows, the Corporation can elect to enter into derivative contracts with financial
intermediaries. The Corporation may use derivative contracts based on jet fuel, heating oil
and crude-oil based contracts. The Corporation’s policy permits hedging of up to 75% of
the projected jet fuel purchases for the current calendar year, 50% of the projected jet fuel
purchases for the next calendar year, and 25% of projected jet fuel purchases for any calendar
year thereafter. These are maximum (but not mandated) limits. There is no minimum monthly
hedging requirement. There are regular reviews to adjust the strategy in light of market
conditions.
During 2024, the Corporation entered into jet fuel swap contracts covering a portion of 2024
fuel exposure. These derivative contracts cash settled with a fair value of $54 million in favor
of the counterparties, with a hedging loss of $54 million recorded in Aircraft fuel expense.
No hedge ineffectiveness was recorded. There were no outstanding fuel derivatives as at
December 31, 2024 nor as at December 31, 2023.
During 2023, the Corporation purchased jet fuel call options covering a portion of 2023 fuel
exposure. The cash premium related to these contracts was $44 million. Premium costs and
any hedging gains and losses are reclassified from other comprehensive income to Aircraft
fuel expense on settlement of the derivatives. Fuel derivative contracts cash settled with a
fair value of $95 million in favour of the Corporation, with a net hedging gain of $51 million
recorded in Aircraft fuel expense.
Foreign Exchange Risk
The Corporation’s financial results are reported in Canadian dollars, while a large portion of its
expenses, debt obligations and capital commitments are in foreign currencies, primarily in U.S.
dollars. Foreign exchange risk is the risk that fluctuations in foreign exchange rates may have
on operating results and cash flows. The Corporation’s risk management objective is to reduce
cash flow risk related to foreign denominated cash flows.
Air Canada generates certain sales in U.S. dollars and in other foreign currencies which are
converted to U.S. dollars under the Corporation’s risk management program. In 2024, these
net operating cash inflows totalled approximately US$3.7 billion and U.S. denominated
operating costs amounted to approximately US$7.3 billion. Non-operating cash outflows in
U.S. dollars, primarily related to interest payments on U.S. dollar denominated debt and net
financing outflows, amounted to approximately US$3.5 billion. For 2024, this resulted in a U.S.
dollar net cash flow exposure of approximately US$7.1 billion.
In 2024, the Corporation increased its target foreign currency derivative coverage from 60%
to 70% on a rolling 18 month basis to manage its net U.S. dollar cash flow exposure described
above utilizing the following risk management strategies:
• Holding U.S. dollar cash reserves as an economic hedge against changes in the value of
the U.S. dollar. U.S. dollar cash, short and long-term investment balances as at December
31, 2024 amounted to $805 million (US$561 million) ($1,123 million (US$845 million) as at
December 31, 2023). A portion of the cash and investment reserves are an economic hedge
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| 2024 Annual Report
Consolidated
financial statement
and notes
against long-term U.S. dollar debt while the remainder of the cash is operational cash and
investment reserves which are applied against the rolling 18 month net U.S. dollar cash flow
exposure. In 2024, a gain of $64 million (loss of $18 million in 2023) was recorded in Foreign
exchange gain (loss) reflecting the change in Canadian equivalent market value of the U.S.
dollar cash, short and long-term investment balances held.
• Locking in the foreign exchange rate through the use of a variety of foreign exchange
derivatives which have maturity dates corresponding to the forecasted dates of U.S. dollar
net outflows.
The level of foreign exchange derivatives entered into and their related maturity dates
are dependent upon a number of factors, which include the amount of foreign revenue
conversion available, U.S. dollar net cash outflows, as well as the amount attributed to aircraft
and debt payments. Based on the notional amount of currency derivatives outstanding at
December 31, 2024, as further described below, approximately 74% of net U.S. cash outflows
are hedged for 2025 and 60% for 2026, resulting in derivative coverage of 69% over the next
18 months. Operational U.S. dollar cash and investment reserves combined with derivative
coverage results in 70% coverage over the next 18 months.
As at December 31, 2024, the Corporation had outstanding foreign currency options
and swap agreements, settling in 2025 and 2026, to purchase at maturity $9,812 million
(US$6,847 million) of U.S. dollars at a weighted average rate of $1.3457 per US$1.00 (2023 –
$5,982 million (US$4,542 million) with settlements in 2024 and 2025 at a weighted average
rate of $1.3089 per US$1.00). The Corporation also has protection in place to sell a portion
of its excess Euros, Sterling, YEN, CNH, and AUD (EUR €341 million, GBP £172 million, JPY
¥38,610 million, CNH ¥711 million and AUD $242 million) which settle in 2025 and 2026
at weighted average rates of €1.1267, £1.2897, ¥0.0071, CNH ¥0.1435 and AUD $0.6810
per US$1.00, respectively (as at December 31, 2023 – EUR €276 million, GBP £166 million,
JPY ¥14,797 million, and AUD $124 million) with settlement in 2024 and 2025 at weighted
average rates of €1.1292, £1.2790, ¥0.0075, and AUD $0.6920 per US$1.00.
The hedging structures put in place have various option pricing features, such as knock-out
terms and profit cap limitations, and based on the assumed volatility used in the fair value
calculation, the net fair value of these foreign currency contracts as at December 31, 2024 was
$22 million in favour of the Corporation (2023 – $165 million in favour of the counterparties).
These derivative instruments have not been designated as hedges for accounting purposes
and are recorded at fair value. During 2024, a gain of $450 million was recorded in Foreign
exchange gain (loss) related to these derivatives (2023 – $139 million gain). In 2024, foreign
exchange derivative contracts cash settled with a net fair value of $265 million in favour of the
Corporation (2023 – $163 million in favour of the Corporation).
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates.
The Corporation enters into both fixed and floating rate debt and also leases certain assets
where the rental amount fluctuates based on changes in short-term interest rates. The
Corporation manages interest rate risk on a portfolio basis and seeks financing terms in
individual arrangements that are most advantageous taking into account all relevant factors,
including credit margin, term and basis. The risk management objective is to minimize
the potential for changes in interest rates to cause adverse changes in cash flows to the
Corporation. The cash and short-term investment portfolio which earns a floating rate of
return is an economic hedge for a portion of the floating rate debt.
The ratio of fixed to floating rate obligations outstanding is designed to maintain flexibility
in the Corporation’s capital structure and is based upon a long-term objective of 60% fixed
and 40% floating but allows flexibility to adjust to prevailing market conditions. The ratio
at December 31, 2024 is 84% fixed and 16% floating (75% and 25%, respectively as at
December 31, 2023).
Share-based Compensation Risk
The Corporation issues RSUs and PSUs to certain of its employees, as described in Note 13,
which entitles the employees to receive a payment in the form of one share, cash in the
amount equal to market value of one share, or a combination thereof, at the discretion of the
Board of Directors.
In 2023, to hedge the share price exposure, the Corporation entered into share forward
contracts to hedge PSUs and RSUs that vested in 2023. The forward dates for the share
forward contracts coincided with the vesting terms and planned settlement dates of 325,000
PSUs and RSUs in 2023. These contracts were not designated as hedging instruments for
accounting purposes. Accordingly, changes in the fair value of the contracts were recorded
in Gain (loss) on financial instruments recorded at fair value in the period in which they arose.
During 2023, a gain of less than $1 million was recorded. Share forward contracts cash settled
with a fair value of $6 million in favour of the Corporation in 2023.
There was no share forward contract activity in 2024 or contracts outstanding as at
December 31, 2024 nor as at December 31, 2023.
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
Summary
109
| 2024 Annual Report
Consolidated
financial statement
and notes
Credit Risk
Credit risk is the risk of loss due to a counterparty’s inability to meet its obligations. As at
December 31, 2024, the Corporation’s credit risk exposure consists mainly of the carrying
amounts of cash and cash equivalents, short-term investments, accounts receivable, long-
term investments and derivative instruments. Cash and cash equivalents and short and long-
term investments are in place with major financial institutions, various levels of government
in Canada, and major corporations. Accounts receivable are generally the result of sales
of passenger tickets to individuals, largely through the use of major credit cards, through
geographically dispersed travel agents, corporate outlets, or other airlines. Similarly, accounts
receivable related to cargo revenues relate to accounts from a large number of geographically
dispersed customers. Accounts receivable related to agreements for the issuance of Aeroplan
Points are mainly with major financial institutions and any exposure associated with these
customers is mitigated by the relative size and nature of business carried on by such partners.
Credit rating guidelines are used in determining derivative counterparties. In order to manage
its exposure to credit risk and assess credit quality, the Corporation reviews counterparty
credit ratings on a regular basis and sets credit limits when deemed necessary.
Sensitivity Analysis
The following table is a sensitivity analysis for each type of market risk relevant to the
significant financial instruments recorded by the Corporation as at December 31, 2024.
The sensitivity analysis is based on certain movements in the relevant risk factor. These
assumptions may not be representative of actual movements in these risks and may not
be relied upon. Given potential volatility in the financial and commodity markets, the actual
movements and related percentage changes may differ significantly from those outlined
below. Changes in income generally cannot be extrapolated because the relationship of
the change in assumption to the change in income may not be linear. For purposes of
presentation, each risk is contemplated independent of other risks; however, in reality,
changes in any one factor may result in changes in one or more several other factors, which
may magnify or counteract the sensitivities.
The sensitivity analysis related to foreign exchange derivative contracts is based on the
estimated fair value change applicable to the derivative as at December 31, 2024 considering
a 5% change in the U.S. dollar versus the Canadian dollar while holding all other assumptions
constant.
Interest rate risk
Foreign exchange
rate risk(1)
Other price risk(2),(3)
Income
Income
Income
(Canadian dollars in millions)
1%
increase
1%
decrease
5%
increase
5%
decrease
10%
increase
10%
decrease
Cash and cash equivalents
$
25
$ (25)
$
(6)
$
6
$
-
$
-
Short–term investments
$
45
$ (45)
$ (24)
$
24
$
-
$
-
Long-term investments
$
8
$
(8)
$ (10)
$
10
$
-
$
-
Aircraft related deposits
$
-
$
-
$
(3)
$
3
$
-
$
-
Long-term debt and lease liabilities
$ (19)
$
19
$ 456
$ (456)
$
-
$
-
Foreign exchange derivatives
$
-
$
-
$
(1)
$
1
$
-
$
-
Embedded derivative on convertible
notes
$
-
$
-
$
-
$
-
$
(5)
$
5
(1) Increase (decrease) in foreign exchange relates to a strengthening (weakening) of the Canadian dollar versus the U.S.
dollar. The impact on long-term debt and lease liabilities includes $5 million related to the Canadian dollar versus the
Japanese yen. The impact of changes in other currencies is not significant to the Corporation’s financial instruments.
(2) The sensitivity analysis for the embedded derivative on the convertible notes is based on a total 10% change in value.
For Air Canada’s equity investment in Chorus, a 10% increase (decrease) to the Chorus share
price would increase (decrease) Other comprehensive income by $5 million.
Covenants in Credit Card Agreements
The Corporation’s principal credit card processing agreements for credit card processing
services contain triggering events upon which the Corporation is required to provide the
applicable credit card processor with cash deposits. The obligations to provide cash deposits
and the required amount of deposits are each based upon a matrix measuring, on a quarterly
basis, both a fixed charge coverage ratio for the Corporation and the unrestricted cash and
short-term investments of the Corporation. In 2024, the Corporation made no cash deposits
under these agreements (nil in 2023).
Management
discussion and
analysis
Governance
Our climate-related
ambition
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Summary
110
| 2024 Annual Report
Consolidated
financial statement
and notes
Financial Instrument Fair Values in the Consolidated
Statement of Financial Position
The carrying amounts reported in the consolidated statement of financial position for short-
term financial assets and liabilities, which includes Accounts receivable and Accounts payable
and accrued liabilities, approximate fair values due to the immediate or short-term maturities
of these financial instruments. Cash equivalents and short and long-term investments are
classified as held for trading and therefore are recorded at fair value.
The carrying amounts of derivatives are equal to fair value, which is based on the amount at
which they could be settled based on estimated current market rates.
Management estimated the fair value of its long-term debt based on valuation techniques
including discounted cash flows, taking into account market information and traded values
where available, market rates of interest, the condition of any related collateral, the current
conditions in credit markets and the current estimated credit margins applicable to the
Corporation based on recent transactions. Based on significant unobservable inputs (Level 3
in the fair value hierarchy), the estimated fair value of debt is $10,256 million compared to its
carrying value of $10,326 million.
Following is a classification of fair value measurements recognized in the consolidated
statement of financial position using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements.
December 31,
2024
Fair value measurements at reporting
date using:
Recurring measurements
(Canadian dollars in millions)
Quoted prices
in active
markets for
identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Financial Assets
Held–for–trading securities
Cash equivalents
$
115
$
-
$
115
$
-
Short-term investments
4,464
-
4,464
-
Long-term investments
770
-
770
-
Equity investment in Chorus
49
49
-
-
Derivative instruments
Foreign exchange derivatives
157
-
157
-
Total
$ 5,555
$
49
$ 5,506
$
-
Financial Liabilities
Derivative instruments
Foreign exchange derivatives
$
135
-
135
$
-
Embedded derivative on convertible
notes
45
-
45
-
Total
$
180
$
-
$
180
$
-
Financial assets held by financial institutions in the form of cash and restricted cash have been
excluded from the fair value measurement classification table above as they are not valued
using a valuation technique.
The Corporation’s policy is to recognize transfers into and transfers out of fair value hierarchy
levels as of the date of the event or change in circumstances that caused the transfer. There
were no transfers within the fair value hierarchy during 2024.
Offsetting of Financial Instruments in the Consolidated
Statement of Financial Position
Financial assets and liabilities are offset and the net amount reported in the consolidated
statement of financial position where the Corporation has a legally enforceable right to set-off
the recognized amounts and there is an intention to settle on a net basis or realize the asset
and settle the liability simultaneously. In the normal course of business, the Corporation enters
into various master netting arrangements or other similar arrangements that do not meet
the criteria for offsetting in the consolidated statement of financial position but still allow for
the related amounts to be set-off in certain circumstances, such as the termination of the
contracts or in the event of bankruptcy or default of either party to the agreement.
Air Canada participates in industry clearing house arrangements whereby certain accounts
receivable balances related to passenger, cargo and other billings are settled on a net basis
with the counterparty through the clearing house. These billings are mainly the result of
interline agreements with other airlines, which are commercial agreements that enable the
sale and settlement of travel and related services between the carriers. Billed and work in
process interline receivables are presented on a gross basis and amount to $107 million as
at December 31, 2024 ($126 million as at December 31, 2023). These balances will be settled
at a net value at a later date; however, such net settlement amount is unknown until the
settlement date.
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
Summary
111
| 2024 Annual Report
Consolidated
financial statement
and notes
The following table presents the recognized financial instruments that are offset, or subject to
enforceable master netting arrangements or other similar arrangements but not offset, as at
December 31, 2024 and 2023, and shows in the Net column what the net impact would be on
the consolidated statement of financial position if all set-off rights were exercised.
Financial assets
Amounts offset
Amounts not
offset
Net
(Canadian dollars in millions)
Gross
assets
Gross
liabilities
offset
Net amounts
presented
Financial
instruments
December 31, 2024
Derivative assets
$
229
$
(72)
$
157
$
-
$
157
$
229
$
(72)
$
157
$
-
$
157
December 31, 2023
Derivative assets
$
43
$
(29)
$
14
$
-
$
14
$
43
$
(29)
$
14
$
-
$
14
Financial liabilities
Amounts offset
Amounts not
offset
Net
(Canadian dollars in millions)
Gross
liabilities
Gross
assets
offset
Net amounts
presented
Financial
instruments
December 31, 2024
Derivative liabilities
$
239
$
(104)
$
135
$
-
$
135
$
239
$
(104)
$
135
$
-
$
135
December 31, 2023
Derivative liabilities
$
257
$
(78)
$
179
$
-
$
179
$
257
$
(78)
$
179
$
-
$
179
17. Contingencies, guarantees and
indemnities
Contingencies and Litigation Provisions
Various lawsuits and claims are pending by and against the Corporation and provisions have
been recorded where appropriate. It is the opinion of management that final determination of
these claims will not have a material adverse effect on the financial position or the results of
the Corporation.
Guarantees
The Corporation participates in fuel facility arrangements operated through nine Fuel
Facility Corporations, and three aircraft de-icing service facilities, along with other airlines
that contract for fuel and de-icing services at various major airports in Canada. These
entities operate on a cost recovery basis. The aggregate debt of these entities that has not
been consolidated by the Corporation under IFRS 10 Consolidated Financial Statements is
approximately $1,425 million as at December 31, 2024 (December 31, 2023 – $1,215 million),
which is the Corporation’s maximum exposure to loss before taking into consideration the
value of the assets that secure the obligations and any cost sharing that would occur amongst
the other contracting airlines. The Corporation views this loss potential as remote. Each
contracting airline participating in these entities shares pro rata, based on system usage, in
the guarantee of this debt. The maturities of these debt arrangements vary but generally
extend beyond five years.
Indemnification Agreements
In the ordinary course of the Corporation’s business, the Corporation enters into a variety
of agreements, such as real estate leases or operating agreements, aircraft financing
or leasing agreements, technical service agreements, and director/officer contracts,
and other commercial agreements, some of which may provide for indemnifications to
counterparties that may require the Corporation to pay for costs and/or losses incurred by
such counterparties. The Corporation cannot reasonably estimate the potential amount, if any,
it could be required to pay under such indemnifications. Any such amount would also depend
on the outcome of future events and conditions, which cannot be predicted. While certain
agreements specify a maximum potential exposure, certain others do not specify a maximum
amount or a limited period. Historically, the Corporation has not made any significant
payments under these indemnifications.
The Corporation expects that it would be covered by insurance for most extra-contractual
liabilities and certain contractual indemnities.
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
Summary
112
| 2024 Annual Report
Consolidated
financial statement
and notes
18. Capital disclosures
The Corporation views capital as the sum of Long-term debt and lease liabilities, the
embedded derivative on convertible notes, and the book value of Shareholders’ equity. The
Corporation also monitors its net debt which is calculated as the sum of Long-term debt and
lease liabilities less cash and cash equivalents, and short-term and long-term investments.
The Corporation’s main objectives when managing capital are:
• To ensure the Corporation has access to capital to fund contractual obligations as they
become due and to ensure adequate cash levels to withstand deteriorating economic
conditions;
• To ensure capital allocation decisions generate sufficient returns and to assess the efficiency
with which the Corporation allocates its capital to generate returns;
• To structure repayment obligations in line with the expected life of the Corporation’s
principal revenue generating assets;
• To maintain an appropriate balance between debt supplied capital versus investor supplied
capital; and
• To monitor the Corporation’s credit ratings to facilitate access to capital markets at
competitive interest rates.
In order to maintain or adjust the capital structure, the Corporation may adjust the type or
amount of capital utilized, including purchase versus debt financing versus lease decisions,
defer or cancel aircraft expenditures by not exercising available options or selling aircraft
options, redeeming or issuing debt securities, issuing equity securities, and repurchasing
outstanding shares, all subject to market conditions and the terms of the underlying
agreements (or any consents required) or other legal restrictions.
The total capital and net debt as at December 31 are calculated as follows:
(Canadian dollars in millions)
December 31,
2024
December 31,
2023
Long-term debt and lease liabilities
$
10,915
$ 12,996
Current portion of long-term debt and lease liabilities
1,755
866
Total long-term debt and lease liabilities
12,670
13,862
Embedded derivative on convertible notes
45
56
Shareholders’ equity
2,388
796
Total Capital
$
15,103
$
14,714
Total long-term debt and lease liabilities
$ 12,670
$ 13,862
Less Cash and cash equivalents, and short-term and long-term investments
(7,752)
(9,295)
Net debt
$
4,918
$
4,567
19. Revenue
Disaggregation of revenue
The Corporation disaggregates revenue from contracts with customers according to the
nature of the air transportation services. The nature of services is presented as passenger,
cargo and other revenue on its consolidated statement of operations. The Corporation
further disaggregates passenger and cargo air transportation service revenue according to
geographic market segments.
A reconciliation of the total amounts reported by geographic region for Passenger revenues
and Cargo revenues on the consolidated statement of operations is as follows:
Passenger Revenues
(Canadian dollars in millions)
2024
2023
Canada
$ 5,255
$
5,106
U.S. Transborder
4,275
4,123
Atlantic
5,754
6,049
Pacific
2,792
2,380
Other
1,684
1,745
$ 19,760
$ 19,403
Cargo Revenues
(Canadian dollars in millions)
2024
2023
Canada
$
106
$
94
U.S. Transborder
58
45
Atlantic
375
432
Pacific
311
222
Other
141
131
$
991
$
924
Passenger and cargo revenues are based on the actual flown revenue for flights with an
origin and destination in a specific country or region. Atlantic refers to flights that cross the
Atlantic Ocean with origins and destinations principally in Europe, India, the Middle East and
North Africa. Pacific refers to flights that cross the Pacific Ocean with origins and destinations
principally in Asia and Australia. Other passenger and cargo revenues refer to flights with
origins and destinations principally in Central and South America and the Caribbean and
Mexico.
Other operating revenues are principally derived from customers located in Canada and
consist primarily of revenues from the sale of the ground portion of vacation packages,
redemption of Aeroplan Points for non-air goods and services, buy on board and related
passenger ancillary services and charges, and other airline-related services.
Management
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analysis
Governance
Our climate-related
ambition
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Summary
113
| 2024 Annual Report
Consolidated
financial statement
and notes
Contract balances
The following table provides information about receivables, contract assets, and contract
liabilities from contracts with customers.
(Canadian dollars in millions)
December 31,
2024
December 31,
2023
Receivables, which are included in Accounts receivable
$
770
$
852
Contract costs which are included in Prepaid expenses
and other current assets
124
127
Contract liabilities – Advance ticket sales
4,387
4,341
Contract liabilities – Aeroplan deferred revenue (current and long-term)
3,785
3,562
Contract liabilities – Other deferred revenue (current and long-term)
755
900
Receivables include passenger, cargo and other receivables from contracts with customers.
The Corporation sells passenger tickets and related ancillary services via cash, credit card
or other card-based forms of payment with payment generally collected in advance of the
performance of related transportation services. Passenger ticket and ancillary receivables
are amounts due from other airlines for interline travel, travel agency payment processing
intermediaries or credit card processors associated with sales for future travel and are
included in Accounts receivable on the consolidated statement of financial position. Proceeds
from Aeroplan Points issued pursuant to Aeroplan program partner arrangements are based
on member accumulations and which billings are generally settled monthly. Cargo and
other accounts receivable relate to amounts owing from customers, including from freight
forwarders and interline partners for cargo and other services provided.
Contract costs include payment card fees, commissions and global distribution system
charges on passenger tickets. These costs are capitalized at time of sale and expensed at the
time of passenger revenue recognition.
Airline passenger and cargo sales transactions rely on multiple information technology
systems and controls to process, record, and recognize a high volume of low value
transactions, through a combination of internal information technology systems and
outsourced service providers, including industry clearing houses, global distribution systems,
and other partner airlines. Passenger sales and the ground portion of vacation packages
are deferred and included in Current liabilities. A portion of the passenger sale related to the
equivalent ticket value of any Aeroplan Points issued is separated and deferred in Aeroplan
deferred revenue. The Advance ticket sales liability is recognized in revenue when the related
flight occurs or over the period of the vacation. Depending on the fare class, passengers may
exchange their tickets up to the time of the flight or obtain a refund, generally in exchange
for the payment of a fee. The Corporation performs regular evaluations on the advance ticket
sales liability.
The practical expedient in IFRS 15 allows entities not to disclose the amount of the remaining
transaction prices and its expected timing of recognition for performance obligations if the
contract has an original expected duration of one year or less. The Corporation elects to use
this practical expedient for the passenger travel performance obligation as passenger tickets
expire within a year if unused.
Air Canada offers and has issued and outstanding non-expiring travel credits. Customers
have the ability to use the travel credits within the next 12 months and the Corporation does
not have an unconditional right to defer settlement beyond the next 12 months. As such, the
entire liability amount as at December 31, 2024 of $263 million (2023 - $325 million) related to
these credits has been recorded in current liabilities even though some could be used after the
next 12 months.
The following table presents financial information related to the changes in Aeroplan deferred
revenue:
(Canadian dollars in millions)
2024
2023
Aeroplan deferred revenue, beginning of year
$ 3,562
$ 3,409
Proceeds from Aeroplan Points issued pursuant to program partner
arrangements
1,845
1,678
Equivalent ticket value of Aeroplan Points issued
325
294
Aeroplan Points redeemed
(1,947)
(1,819)
Aeroplan deferred revenue, end of year
$ 3,785
$ 3,562
Proceeds from Points issued pursuant to Aeroplan program partner arrangements and
the equivalent ticket value of Points issued through travel are deferred until the Points are
redeemed and the reward is provided to the member. The Corporation expects the majority of
the Points outstanding will be redeemed within three years.
Management
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analysis
Governance
Our climate-related
ambition
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Summary
114
| 2024 Annual Report
Consolidated
financial statement
and notes
20. Other operating expenses
The following table provides a breakdown of other operating expenses for the periods
indicated.
(Canadian dollars in millions)
2024
2023
Terminal handling
$
546
$
501
Crew cycle
300
266
Building rent and maintenance
323
294
Miscellaneous fees and services
254
218
Remaining other expenses
1,035
940
Total other operating expenses
$ 2,458
$ 2,219
21. Related party transactions
The Corporation sponsors and provides management services to a number of post-retirement
plans which are related parties. Refer to Note 9 for additional information on these plans,
including contributions made by the Corporation to these plans.
Compensation of Key Management
Key management includes Air Canada’s Board of Directors and its Executive Officers
(President and Chief Executive Officer, Executive Vice President and Chief Financial Officer,
Executive Vice President and Chief Operations Officer, Executive Vice President Marketing and
Digital, Executive Vice President, Revenue and Network Planning, Executive Vice President
and Chief Human Resources Officer and Public Affairs, and Executive Vice President, Chief
Legal Officer and Corporate Secretary). Amounts reported are based upon the expense
as reported in the consolidated financial statements, which in the case of Pension and
post-employment benefits, includes actuarial gains or losses, as applicable. Share-based
compensation is further described in Note 13 and is impacted by Air Canada’s share price.
Compensation to key management is summarized as follows:
(Canadian dollars in millions)
2024
2023
Salaries and other benefits
$
11
$
10
Pension and post-employment benefits
3
5
Share-based compensation
27
16
$
41
$
31
Management
discussion and
analysis
Governance
Our climate-related
ambition
Rise Higher
Summary
115
| 2024 Annual Report
Consolidated
financial statement
and notes