Air Canada reports 2018 Annual Results

Lauren Eldershaw
By Lauren Eldershaw February 20, 2019 11:16

Air Canada reports 2018 Annual Results

Air Canada has reported full year 2018 EBITDAR of $2.851 billion compared to full year 2017 record EBITDAR of $2.928 billion. Air Canada reported an EBITDAR margin of 15.8 per cent, in line with its projections. The carrier reported 2018 operating income of $1.174 billion compared to 2017 operating income of $1.371 billion. The decrease of $1.862 billion in net income year-over-year is mainly due to an increase in net tax expense of $981 million, unfavourable foreign exchange results of $437 million and Air Canada having a recorded a loss on disposal of assets of $188 million in 2018.

“I am very pleased with Air Canada’s solid fourth quarter results with record EBITDAR of $543 million, and operating income of $122 million.  These quarterly results showed an improvement over last year’s fourth quarter on many fronts – including passenger revenues, traffic and yield – and complete a strong fiscal year.  Moreover, they demonstrate the resiliency of our business model and affirm that Air Canada has positioned itself for long-term, sustainable profitability. During the year, we successfully managed many challenges, including intensifying competition and a volatile fuel price environment which resulted in approximately $1 billion in additional costs or 30 per cent more than 2017,” said Calin Rovinescu, President and Chief Executive of Air Canada.

In 2018, on capacity growth of 7.1 per cent, record system passenger revenues of $16.223 billion increased $1.63 billion or 11.2 per cent from 2017.  The increase in system passenger revenues was driven by traffic growth of 8.5 per cent and a yield increase of 2.5 per cent.  An increase in average stage length of 2.1 per cent had the effect of reducing system yield by 1.2 percentage points. On a stage-length adjusted basis, system yield increased 3.7 per cent year-over-year.

In the business cabin, system passenger revenues increased $376 million or 13.2 per cent from 2017 on traffic and yield growth of 9.4 per cent and 3.5 per cent, respectively.

In 2018, operating expenses of $16.891 billion increased $2.01 billion or 14 per cent from 2017, mainly driven by higher fuel prices year-over-year and by the increase in capacity.

Air Canada’s cost per available seat mile (CASM) increased 6.0 per cent from 2017.  The airline’s adjusted CASM increased 0.3 per cent from 2017, in line with the range of no increase to an increase of 0.75 per cent projected in Air Canada’s October 31, 2018 news release.

Air Canada recorded adjusted net income of $677 million or $2.45 per diluted share in 2018 compared to adjusted net income of $1.145 billion or $4.11 per diluted share in 2017. In 2018, Air Canada recorded foreign exchange losses of $317 million and a loss on disposal of assets of $188 million.  In 2017, Air Canada recorded a deferred income tax recovery of $759 million and foreign exchange gains of $120 million.

Lauren Eldershaw
By Lauren Eldershaw February 20, 2019 11:16