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The following is an overview of Air Canada's results of operations and financial position for the first quarter 2025 compared to the same period in 2024.

First Quarter 2025 Financial Results

• Operating revenues of $5.196 billion decreased $30 million or 1% on an operated capacity decline of 0.4% year over year.

• Operating expenses of $5.304 billion increased $89 million or 2%, driven by depreciation, ground package costs and the impact of an unfavourable foreign exchange variance year over year. Lower fuel prices year over year partially offset the increase.

• Operating loss of $108 million compared to operating income of $11 million in the same period in 2024.

• Adjusted EBITDA of $387 million, with an adjusted EBITDA margin of 7.4%, decreased $66 million and 1.3 percentage points, respectively.

• Adjusted pre-tax loss* of $215 million, compared to an adjusted pre-tax loss of $94 million in the same period in 2024.

• Net loss of $102 million and diluted loss per share of $0.40 compared to a net loss of $81 million and diluted loss per share of $0.22.

• Adjusted net loss* of $150 million and adjusted loss per diluted share of $0.45 compared to an adjusted net loss of $96 million and adjusted loss per diluted share of $0.27.

• Adjusted CASM* of 15.27 cents compared to 14.76 cents, an increase of 3.5%.

• Net cash flows from operating activities of $1,526 million decreased $66 million.

• Free cash flow* of $831 million decreased $225 million.

Outlook

For the second quarter of 2025, Air Canada plans to increase its ASM capacity between 2% and 2.5% from the same quarter in 2024.

For the full year 2025, Air Canada is updating some of its guidance and major assumptions to account for the recent trends in the commercial environment and fuel price expectations. The updated full year 2025 guidance is as follows:

Major Assumptions

Air Canada made assumptions in providing its guidance—including a marginal increase of Canadian GDP growth for 2025 (previously moderate growth). Air Canada continues to assume that the Canadian dollar will trade, on average, at C$1.40 per U.S. dollar for the full year 2025. Air Canada also assumes that the price of jet fuel will average C$0.88 (previously C$0.95) per litre for the full year 2025.

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.

Announcement of a Substantial Issuer Bid

Air Canada announced today that the Board of Directors has authorized a substantial issuer bid (the "Proposed Offer") pursuant to which Air Canada intends to offer to purchase for cancellation up to $500 million of its Class A Variable Voting Shares and Class B Voting Shares (collectively, the "Shares"). Air Canada anticipates that the terms and pricing of the Proposed Offer will be determined, and that the Proposed Offer will commence, during the next week and will be completed before the end of June 2025. Air Canada intends to fund the substantial issuer bid with cash on hand.

Shareholders wishing to accept the Proposed Offer will have the opportunity to tender their Shares by making (i) an "auction tender" at a specified price per Share within a range to be proposed by Air Canada (i.e. a modified "Dutch auction") and for a specified number of Shares (an "Auction Tender") or (ii) a "purchase price tender" at no specified price per Share,  agreeing to have a specified number of Shares purchased at the purchase price to be determined by the Auction Tenders. The maximum and minimum price range to be proposed by Air Canada under the modified Dutch auction will be determined in the context of the market price of its Shares shortly before the commencement of the Proposed Offer. The Proposed Offer will be optional for all shareholders, who will be free to choose whether to participate, how many Shares to tender and, in the case of Auction Tenders, at what price to tender within the specified range. Shareholders who do not tender any Shares (or whose Shares are not purchased under the Proposed Offer) will see a proportionate increase in their equity interest in Air Canada, to the extent any Shares are purchased under the Proposed Offer. The Proposed Offer will not be conditional upon any minimum number of Shares being tendered and will be subject to conditions customary for transactions of this nature.

The discussion in this news release relating to the Proposed Offer is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell Air Canada's Shares. The Proposed Offer referred to in this news release has not yet commenced. The solicitation and the offer to buy Shares will only be made pursuant to a separate issuer bid circular, which will contain full details of the Proposed Offer and will be filed with the securities regulatory authorities and mailed to Air Canada's shareholders.

2028 Targets

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

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, but not limited to, 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.

Non-GAAP Financial Measures

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.

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.

Adjusted CASM

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.

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.

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 March 31, 2025, and eight as at March 31, 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.

Adjusted CASM is reconciled to GAAP operating expense as follows:

Adjusted EBITDA and Adjusted EBITDA Margin

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.

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

Adjusted Pre-tax Income (Loss)

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.

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

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

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.

Adjusted net income (loss) and adjusted earnings (loss) per share are reconciled to GAAP net income as follows:

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:

Free Cash Flow

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.

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

Net Debt

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.

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

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.

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

For further information on Air Canada's public disclosure file, including Air Canada's latest Annual Information Form, consult SEDAR+ at www.sedarplus.ca.

First Quarter 2025 Conference Call

Air Canada will host its quarterly analysts' call on Friday, May 9, 2025, at 8:00 a.m. ET. Michael Rousseau, President and Chief Executive Officer, John Di Bert, Executive Vice President and Chief Financial Officer, and Mark Galardo, Executive Vice President and Chief Commercial Officer and President, Cargo, will present the results and be available for analysts' questions. Immediately following the analysts' Q&A session, Mr. Di Bert and Pierre Houle, Vice President and Treasurer, will be available to answer questions from term loan B lenders and holders of Air Canada bonds.

Media and the public may access this call on a listen-in basis. Details are as follows:

Webcast:                     https://edge.media-server.com/mmc/p/876izdz4

By telephone:              647-932-3411 or 1-800-715-9871 (toll-free)

Conference ID 6439503

                                  Please allow 10 minutes to be connected to the conference call.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

This news release includes forward-looking statements within the meaning of applicable securities laws. Forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may involve, but are not limited to, comments relating to guidance, strategies, expectations, planned operations or future actions, including statements relating to Air Canada's intention to undertake the Proposed Offer and the terms and conditions thereof (including the maximum dollar value of Shares that Air Canada may purchase under the Proposed Offer, the structure of the Proposed Offer including a modified Dutch auction procedure and the Proposed Offer not being conditional upon any minimum number of Shares being tendered), the timing for determination of the pricing, launch and completion of the Proposed Offer and Air Canada's intention to fund the Proposed Offer with cash on hand. Forward-looking statements are identified using terms and phrases such as "preliminary"; "anticipate"; "believe"; "could"; "estimate"; "expect"; "intend"; "may"; "plan"; "predict"; "project"; "will"; "would"; and similar terms and phrases, including references to assumptions.

Forward-looking statements, by their nature, are based on assumptions including those described herein and are subject to important risks and uncertainties, which are amplified in the current environment. Forward-looking statements cannot be relied upon due to, among other things, changing external events and general uncertainties of the business of Air Canada. Actual results may differ materially from results indicated in forward-looking statements due to a number of factors, including those discussed below.

Factors that may cause results to differ materially from results indicated in forward-looking statements include economic conditions, 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, geopolitical conditions such as the military conflicts in the Middle East and between Russia and Ukraine, Air Canada's ability to successfully achieve or sustain positive net profitability, industry and market conditions and the demand environment, competition, Air Canada's dependence on technology, cybersecurity risks, interruptions of service, climate change and environmental factors (including weather systems and other natural phenomena and factors arising from anthropogenic sources), Air Canada's dependence on key suppliers (including government agencies and other stakeholders supporting airport and airline operations), employee and labour relations and costs, Air Canada's ability to successfully implement appropriate strategic and other important initiatives (including Air Canada's ability to manage operating costs), energy prices, Air Canada's ability to pay its indebtedness and maintain or increase liquidity, Air Canada's dependence on regional and other carriers, Air Canada's ability to attract and retain required personnel, epidemic diseases, changes in laws, regulatory developments or proceedings, terrorist acts, war, Air Canada's ability to successfully operate its loyalty program, casualty losses, Air Canada's dependence on Star Alliance® and joint ventures, Air Canada's ability to preserve and grow its brand, pending and future litigation and actions by third parties, currency exchange fluctuations, limitations due to restrictive covenants, insurance issues and costs, and pension plan obligations as well as the factors identified in Air Canada's public disclosure file available at www.sedarplus.ca and, in particular, those identified in section 18 "Risk Factors" of Air Canada's 2024 MD&A and in section 14 "Risk Factors" of Air Canada's First Quarter 2025 MD&A.

Air Canada has and continues to establish targets, make commitments and assess the impact regarding climate change, and related initiatives, plans and proposals that Air Canada and other stakeholders (including government, regulatory and other bodies) are pursuing in relation to climate change and carbon emissions. The achievement of our commitments and targets depends on many factors, including the combined actions of governments, industry, suppliers and other stakeholders and actors, as well as the development and implementation of new technologies. In particular, our 2030 carbon emission-related targets and our related 2050 aspiration are ambitious and heavily dependent on new technologies, renewable energies and the availability of a sufficient supply of sustainable aviation fuels (SAF), which continues to present serious challenges. In addition, Air Canada has incurred, and expects to continue to incur, costs to achieve its goal of net-zero carbon emissions and to comply with environmental sustainability legislation and regulation and other standards and accords. The precise nature of future binding or non-binding legislation, regulation, standards and accords, on which local and international stakeholders are increasingly focusing, cannot be predicted with any degree of certainty, nor can their financial, operational or other impact. There can be no assurance of the extent to which any of our climate goals will be achieved or that any future investments that we make in furtherance of achieving our climate goals will produce the expected results or meet increasing stakeholder environmental, social and governance expectations. Moreover, future events could lead Air Canada to prioritize other nearer-term interests over progressing toward our current climate goals based on business strategy, economic, regulatory and social factors, and potential pressure from investors, activist groups or other stakeholders. If we are unable to meet or properly report on our progress toward achieving our climate change goals and commitments, we could face adverse publicity and reactions from investors, customers, advocacy groups or other stakeholders, which could result in reputational harm or other adverse effects to Air Canada.

The forward-looking statements contained or incorporated by reference in this news release represent Air Canada's expectations as of the date of this news release (or as of the date they are otherwise stated to be made) and are subject to change after such date. However, Air Canada disclaims any intention or obligation to update or revise any forward-looking statements whether because of new information, future events or otherwise, except as required under applicable securities regulations.

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Selected Financial Metrics and Statistics

The financial and operating highlights for Air Canada for the periods indicated are as follows:

SOURCE Air Canada

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