Air Canada (TSX: AC) has finally disclosed the financial impact of strikes that occurred over the summer. The firm last night released updated guidance for the year alongside certain estimated results for the third quarter, highlighting that the labour disruption had a significant impact on their operations.
For the third quarter, operated capacity is expected to decline by 2% on a year over year basis as a result of over 3,200 flights being cancelled. Operating income meanwhile is to be between $250 and $300 million, while adjusted EBITDA will be between $950 million and $1.0 billion. Also included in the impact here is a $175 million one-time non-cash pension plan amendment and other labour related charges.
For comparison, Q3 2024 saw operating income of $1.04 billion, and adjusted EBITDA of $1.52 billion, meaning significant year over year declines are anticipated as a result of the labour strike.
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Specifically, the strike is said to have resulted in a $375 million impact to both operating income and adjusted EBITDA. The revenue impact meanwhile is quoted as being $430 million, while cost avoidances totaled $145 million, which were offset by $90 million in incremental costs associated with reimbursements to customers.
For the full year, adjusted EBITDA is now expected to be in the range of $2.9 to $3.1 billion, down from the prior range of $3.2 to $3.6 billion. While ASM capacity is to increase by 0.5% to 1.5% versus 2024, versus prior estimates of a 1% to 3% increase, with adjusted CASM to be between 14.6 to 14.7 cents, up from the prior 14.25 to 14.5 cents guidance. Finally, free cash flow is now expected to be negative $50 million to positive $150 million, versus prior estimates of breakeven to plus or minus $200 million.
Air Canada last traded at $18.38 on the TSX.
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