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Third Quarter 2025 Financial Results

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Outlook

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For the full year 2025, Air Canada is updating its guidance and major assumptions as previously provided on September 24, 2025. The updated full year 2025 guidance is as follows:

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Major Assumptions

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Air Canada made assumptions in providing its guidance—including a marginal Canadian GDP growth for 2025. Air Canada assumes that the Canadian dollar will now trade, on average, at C$1.40 per U.S. dollar (previously C$1.39) for the full year 2025 and that the price of jet fuel will now average C$0.91 per litre (previously C$0.92) for the full year 2025.

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Air Canada’s guidance constitutes forward-looking information within the meaning of applicable securities laws and is subject to important risks and uncertainties, including in relation to statements or actions by governments and uncertainty relating to the imposition of (or threats to impose) tariffs on Canadian exports or imports and their resulting impacts on the Canadian, North American and global economies and travel demand. Please see the discussion below under Caution Regarding Forward-looking Information.

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Normal Course Issuer Bid

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Air Canada is also announcing today that the Toronto Stock Exchange (“TSX”) has accepted notice of its intention to make a normal course issuer bid (“NCIB”) allowing it to purchase for cancellation up to 29,557,428 of its Class A variable voting shares and Class B voting shares (collectively the “Shares”) in accordance with the rules of the TSX.

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Air Canada believes that the market price of its Shares from time to time may not fully reflect the underlying value of its business and future business prospects, and that purchases of Shares under the NCIB will allow it to continue addressing some of the shareholder dilution experienced from financing decisions necessary during the pandemic. In such circumstances, the purchase of Shares under the NCIB may be an attractive and appropriate use of its available cash, consistent with Air Canada’s priority of investing in its growth, maintaining balance sheet strength and generating shareholder value through a balanced capital allocation strategy.

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Air Canada is authorized by the TSX to purchase up to 29,557,428 Shares under the NCIB, being about 10% of the public float of its Shares. As at October 24, 2025, the number of outstanding Shares totaled 296,202,861 of which 295,574,288 Shares represented the public float. Purchases under the NCIB are authorized during the period from November 7, 2025 to November 6, 2026. Decisions regarding the amount and timing of purchases of Shares will be based on market conditions, share price and other factors. Air Canada may elect to modify, suspend or discontinue the NCIB at any time.

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Purchases will be made through open market transactions on the TSX or alternative Canadian trading systems, if eligible, or such other means as the securities regulatory authorities may allow, including block purchases, pre-arranged crosses or exempt offers, as well as private agreements under an issuer bid exemption order issued by a securities regulatory authority. Air Canada will pay the market price at the time of acquisition for any Share purchased, plus brokerage fees, or such other price as may be allowed. Any purchases made under an issuer bid exemption order would be at a discount to the prevailing market price of the Shares or otherwise in accordance with the terms of the order.

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The average daily trading volume (“ADTV”) of the Shares on the TSX was 3,104,384 Shares for the six months period ended October 31, 2025. Under TSX rules, Air Canada may accordingly purchase up to 776,096 Shares on the TSX on any trading day, being 25% of the ADTV. Air Canada may also, once weekly, purchase a block of Shares not directly or indirectly owned by insiders, which may exceed such daily limit, in accordance with TSX rules. All Shares purchased pursuant to the NCIB will be cancelled.

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Under its prior NCIB that commenced on November 5, 2024 and ended on November 4, 2025, Air Canada was authorized to purchase for cancellation up to 35,783,842 Shares, representing about 10% of Air Canada’s public float as of October 22, 2024. Air Canada purchased the full amount of Shares authorized under the prior NCIB, at a weighted average price of $22.34. All such Shares were purchased through the facilities of the TSX or alternative Canadian trading systems.

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Air Canada will enter into an automatic share purchase plan (the “Plan”) with its designated broker under which it may, but is not required to, instruct the broker to make purchases at times when it would ordinarily not be active in the market due to regulatory restrictions, self-imposed blackout periods or otherwise. Purchases by the designated broker made under the Plan, if any, will be based on parameters established by Air Canada in accordance with the rules of the TSX, applicable securities laws and the terms of the Plan. Shares may in Air Canada’s discretion be purchased under the NCIB outside of the self-imposed black-out or other restricted periods in compliance with the rules of the TSX and applicable securities laws.

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2028 Targets and 2030 aspirations

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On December 17, 2024, Air Canada announced its long-term 2028 financial targets and 2030 aspirations described below:

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_{*Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), adjusted EBITDA margin, net cash flows from operating activities as a percentage of adjusted EBITDA, additions to property, equipment and intangible assets as a percentage of operating revenues,
free cash flow margin and return on invested capital are referred to in this news release. Such measures are non-GAAP financial measures, non-GAAP ratios, or supplementary financial 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.}

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The 2028 long-term targets and 2030 aspirations provided in this news release do not constitute guidance or outlook but rather are provided for the purpose of assisting the reader in measuring progress toward Air Canada’s objectives. The reader is cautioned that using this information for other purposes may be inappropriate. Air Canada may review and revise these targets and aspirations including as economic, geopolitical, market and regulatory environments change. These targets and aspirations are used as goals as Air Canada executes on its strategic priorities, and they assume a normal business environment. Air Canada’s ability to achieve these targets and aspirations is also dependent on its success in achieving initiatives and business objectives that are described in Air Canada’s 2024 Investor Day presentations, which are available at aircanada.com/investors, including those relating to increasing revenues, growing fleet and network capacity, and successfully executing on other key investments and initiatives, as well as other major assumptions, including those described in this news release, and are subject to a number of risks and uncertainties.

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Non-GAAP Financial Measures

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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.

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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.

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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.

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In the third quarter of 2025, Air Canada recorded a one-time pension past service cost and other labour related charges of $173 million, including from the pension plan amendments made in conjunction with the tentative agreement reached with CUPE. Air Canada has excluded this charge in computing its adjusted EBITDA, adjusted CASM, adjusted pre-tax income and adjusted net income.

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Adjusted CASM

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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.

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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.

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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 September 30, 2025, and September 30, 2024. 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.

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The following tables provide the adjusted CASM reconciliation to GAAP operating expense for the periods indicated.

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Adjusted EBITDA and Adjusted EBITDA Margin

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Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and impairment) 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, amortization and impairment 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.

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Adjusted EBITDA and adjusted EBITDA margin are reconciled to GAAP operating income as follows:

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Adjusted Pre-tax Income (Loss)

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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.

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A corporate charge for the settlement of tax matters related to the 2019 acquisition of Aeroplan $26 million was recorded in the first nine months of 2025. As this item is non-recurring and cash-neutral to Air Canada, since a related tax refund was also recorded, it has been excluded from adjusted pre-tax income.

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Adjusted pre-tax income is reconciled to GAAP income before income taxes as follows:

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Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share – Diluted

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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.

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A corporate charge for the settlement of tax matters related to the 2019 acquisition of Aeroplan $26 million was recorded in the first nine months of 2025. As this item is non-recurring and cash-neutral to Air Canada, since a related tax refund was also recorded, it has been excluded from adjusted pre-tax income.

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Adjusted net income and adjusted earnings per share – diluted are reconciled to GAAP net income as follows:

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The table below reflects the share amounts used in the computation of basic and diluted earnings per share on an adjusted earnings per share basis:

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Free Cash Flow

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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.

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The table below reconciles free cash flow to net cash flows from (used in) operating activities for the periods indicated.

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Net Debt

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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.

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Net Debt to Trailing 12-Month Adjusted EBITDA (Leverage Ratio)

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Net debt to trailing 12-month adjusted EBITDA ratio (also referred to as “leverage ratio”) is commonly used in the airline industry and is used by Air Canada as a means to measure financial leverage. Leverage ratio is calculated by dividing net debt by trailing 12-month adjusted EBITDA.

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The table below reconciles leverage ratio to Air Canada’s net debt balances as at the dates indicated.

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The tables below present comparative figures for the twelve-month periods ending December 31, 2023 and 2024, in reference to Air Canada’s full-year 2025 guidance, 2028 financial targets, and 2030 aspirations.

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_{¹Percentage amounts in the table above may not calculate exactly due to rounding.}

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The 2028 long-term targets and 2030 aspirations provided in this news release do not constitute guidance or outlook but rather are provided for the purpose of assisting the reader in measuring progress toward Air Canada’s objectives. The reader is cautioned that using this information for other purposes may be inappropriate. Air Canada may review and revise these targets and aspirations including as economic, geopolitical, market and regulatory environments change. These targets and aspirations are used as goals as Air Canada executes on its strategic priorities, and they assume a normal business environment. Air Canada’s ability to achieve these targets and aspirations is also dependent on its success in achieving initiatives and business objectives that are described in Air Canada’s 2024 Investor Day presentations, which are available at

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