Air Canada has demonstrated robust financial performance in the fiscal year 2023 compared to 2022, with notable improvements across key metrics. The airline's operating revenues reached CA$21.833 billion, marking a significant 32% increase driven by a 20% growth in operated capacity. Operating expenses rose to CA$19.554 billion, up 17%, primarily attributed to higher capacity and increased year-over-year traffic.
The operating income surged to CA$2.279 billion, reflecting an improvement of CA$2.466 billion and achieving an operating margin of 10.4%. Adjusted EBITDA followed suit, reaching CA$3.982 billion with an 18.2% margin, surpassing the high-end of the guidance provided in Air Canada's October 30, 2023, news release.
Net income for the year was CA$2.276 billion, accompanied by diluted earnings per share of CA$5.96, a notable turn-around from the previous year's net loss of CA$1.7 billion and diluted loss per share of CA$4.75. Adjusted net income also exhibited positive growth, reaching CA$1.713 billion, with adjusted earnings per diluted share of CA$4.56.
Adjusted CASM increased by 2.2%, reaching 13.49 cents in 2023, in line with the guidance range provided in Air Canada's October 30, 2023, news release. This uptick was primarily driven by higher traffic and selling costs, increased labour expenses, a favourable maintenance cost adjustment recorded in 2022, and inflationary pressures on certain line items.
Air Canada's strong financial performance is further underscored by increased net cash flows from operating activities, which reached CA$4.320 billion, marking a CA$1.952 billion increase. Free cash flow also saw a significant uptick, reaching CA$2.756 billion, up by CA$1.960 billion.
The net debt to adjusted EBITDA ratio improved substantially, standing at 1.1 on December 31, 2023, compared to 5.1 on December 31, 2022. This improvement is attributed to the increase in adjusted EBITDA and a CA$2.9 billion reduction in net debt.
Looking ahead, Air Canada aims to continue its growth trajectory, planning to increase its ASM capacity by approximately 10% in the first quarter of 2024 compared to the same quarter in 2023. (£1.00 = CA$1.70 at time of publication).
