Record Q4 Revenue and Profitability
Q4 revenues reached $5.8 billion, up nearly 7% year-over-year, and Q4 adjusted EBITDA was a record $867 million (approximately a 25% increase YoY), representing a 15% margin in the quarter.
Air Canada
· ACDVF
February 12th, 2026
Summary
- Earnings Call Date:
- 2026-02-12
- Change Since:
- +20.20%
- Next Earnings Date:
- 2026-08-05
Earnings Call Sentiment
PositiveThe call emphasized strong execution in 2025 with an exceptional Q4: record quarterly revenues and EBITDA, robust cash generation, improved operations, and diversified revenue streams (international, Sixth Freedom, cargo, Aeroplan). Management acknowledged notable near-term headwinds—higher CASM driven by labor and depreciation, the carryover impact of summer labor stoppages, a peak CapEx cycle and transitional fleet timing that will pressure 2026 free cash flow and unit costs. However, leadership presented clear mitigation plans (cost reduction programs, sale-and-leasebacks, fleet modernization, pricing/route strategy) and confidence in medium-term margin and cash generation improvement driven by network scale and new aircraft economics. Overall, the positive financial results, strong balance sheet and strategic positioning materially outweigh the transitional cost challenges described.
Company Guidance
Air Canada’s guidance and 2025 results point to continued cash-generation and disciplined investment: Q4 revenues were $5.8B (≈+7% YoY) with record Q4 adjusted EBITDA of $867M (+$171M YoY, ~25% lift) at a ~15% margin; full-year revenues were $22.4B (+1%) with adjusted EBITDA of $3.1B (14% margin) and adjusted CASM of $0.147 (+6.7% YoY, including ~270 bps labor, ~140 bps depreciation and ~150 bps stoppage impacts). The company ended 2025 with $3.7B cash from operations, $747M free cash flow (3% of revenues), $7.5B liquidity and 1.7x net leverage, returned >$850M to shareholders in 2025 (>$1.3B since 2024) and has ~307M fully diluted shares (target <300M by 2028). For 2026 Air Canada expects capacity growth of 3.5%–5.5%, ~35 aircraft deliveries (including first A321XLR and 787‑10), net CapEx around 12% of revenue, adjusted CASM of $0.1505–$0.1535, adjusted EBITDA of $3.35B–$3.75B, free cash flow of $400M–$800M (≈100% conversion of EBITDA to cash), fuel assumption CAD $0.90/L and FX CAD 1.36/USD (≈17% H1 fuel hedged at CAD $0.69/L), plus $150M of new cost savings and up to $2B of sale‑and‑leasebacks (≈$1B assumed in 2026) to move fleet ownership toward a 65%–70% target.
Full-Year Revenue, EBITDA and Margins
2025 total revenues of $22.4 billion, up 1% YoY, with full-year adjusted EBITDA of about $3.1 billion and a 14% margin, exceeding guidance.
Strong Cash Generation and Shareholder Returns
2025 free cash flow of $747 million and cash from operations of $3.7 billion (over 100% conversion of adjusted EBITDA). Returned more than $850 million to shareholders in 2025 and over $1.3 billion since 2024 through buybacks and retirements.
Revenue Diversity and International Strength
International/network strength drove Q4 outperformance: passenger revenues hit a Q4 record of $5.0 billion with an all-time Q4 load factor of 85%. Sixth Freedom revenues grew 10% YoY and nearly 90% of Q4 revenue uplift was from international performance.
Ancillary Businesses Contributing to Growth
Other revenues increased 15% YoY; cargo revenues rose 4% YoY with Air Canada Cargo surpassing $1 billion in revenues (first time since 2022). Aeroplan third-party gross billings grew ~7% and Aeroplan reached over 10 million active members.
Premium and Corporate Demand Momentum
Premium revenues grew 2% YoY and accounted for about 30% of passenger revenue (outpacing economy by 3 percentage points). Corporate revenue accelerated, up 8% in Q4 YoY.
Balance Sheet Strength and Liquidity
Year-end liquidity of $7.5 billion, net leverage of 1.7x, and active capital allocation discipline with targeted net CapEx (~12% of revenues guidance) and planned sale-and-leaseback program to manage fleet ownership and flexibility.
Fleet Modernization and Network Growth
Planned 35 aircraft deliveries in 2026 including first A321XLRs and 787-10s; firm order for 8 A350-1000s (deliveries 2030–2032) to expand long-haul capability; 13 new destinations added in 2025 across four continents.
Operational Improvements and Industry Recognition
Improved on-time performance and Net Promoter Score; named Best Airline in North America (Skytrax 2025) and the only North American carrier in the global top 20, demonstrating customer satisfaction and brand strength.
2026 Financial Outlook
Guidance for 2026: adjusted EBITDA of $3.35–$3.75 billion; free cash flow expected $400–$800 million; adjusted CASM guidance $0.1505–$0.1535; assumptions include jet fuel at CAD 0.90/l and FX CAD 1.36/USD with ~17% of H1 fuel hedged around CAD 0.69/l.
""Operator
Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the Air Canada to present Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Amanda Murray, Head of Financial Planning, Strategy and Investor Relations. Amanda, please go ahead.\
Amanda Murray
Thank you, Krista. [Foreign Language] Welcome, and thank you for joining our fourth quarter and year-end 2025 earnings call. My name is Amanda Murray, and I am pleased to hold the role of Head of Financial Planning, Strategy and Investor Relations at Air Canada. I look forward to working with the capital markets and fostering strong relationships with our investment community. Joining us on the call are Michael Rousseau, our President and CEO; Mark Galardo, our CCO and President of Cargo; and John Di Bert, our CFO. Other executives are with us and available for the Q&A portion of the call. I remind you that today's comments and discussion may contain forward-looking information about Air Canada's outlook, objectives and strategies that are based on assumptions and subject to risks and uncertainties. Our actual results could differ materially from any stated expectations.
Please refer to our forward-looking statements in Air Canada's fourth quarter and year-end news release available on aircanada.com and on SEDAR+. And now I'd like to turn the call over to Mike.\
Michael Rousseau
Great. Thank you, Amanda, and welcome, Monsieur. Before I begin, I want to give a special welcome to Ama...
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