Air Canada (ACDVF) Q4 2022 Earnings Call Transcript

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Air Canada (OTCQX:ACDVF) Q4 2022 Earnings Conference Call February 17, 2023 8:00 AM ET

Company Participants

Valerie Durand - Head of Investor Relations and Corporate Sustainability

Michael Rousseau - President and Chief Executive Officer

Craig Landry - Executive Vice President and Chief Operations Officer

Lucie Guillemette - Executive Vice President and Chief Commercial Officer

Amos Kazzaz - Executive Vice President and Chief Financial Officer

Conference Call Participants

Savi Syth - Raymond James

Kevin Chiang - CIBC

Chris Murray - ATB Capital Markets

Andrew Didora - Bank of America

Matthew Lee - Canaccord Genuity

Cameron Doerksen - National Bank Financial

Fadi Chamoun - BMO

Walter Spracklin - RBC Capital Markets


Good greeting ladies and gentlemen. Welcome to nan Air Canada Fourth Quarter 2022 Earnings Conference Call. I would now for illustration to move nan gathering complete to Ms. Valerie Durand. Please spell ahead, Ms. Durand.

Valerie Durand

Thank you, [indiscernible]. [Foreign Language] Welcome to our 2022 full-year and 4th fourth year-end call. Joining america this greeting are Michael Rousseau, our President and Chief Executive Officer; Amos Kazzaz, our Executive Vice President and Chief Financial Officer; and Lucie Guillemette, our Executive Vice President and Chief Commercial Officer; and Craig Landry, our Executive Vice President and Chief Operations Officer.

Also pinch america successful nan room this greeting are, Arielle Meloul-Wechsler, Executive Vice President, Chief Human Resources Officer and Public Affairs; Marc Barbeau, Executive Vice President and Chief Legal Officer; and Mark Galardo, Senior Vice President, Network Planning and Revenue Management.

Following managements overview, we will beryllium disposable until 9:00 AM for questions from equity analysts. After which Mr. Kazzaz and Pierre Houle, Vice President and Treasurer will beryllium disposable to reply questions from Terminal B lenders and holders of Air Canada bonds.

Before we begin, please statement that immoderate of nan statements made on today’s telephone whitethorn beryllium forward-looking wrong nan meaning of applicable securities laws. Please mention to our 4th fourth MD&A for cautionary statements relating to forward-looking information.

I will now move it complete to Mike.

Michael Rousseau

Great and convey you Valerie and [indiscernible] and convey you everyone for joining america today. In nan 4th quarter, we reported grounds operating gross of astir 4.7 billion. For nan full-year, we had operating revenues of [above 16.6 billion] [ph]. That was much than 2.5x that of 2021 and astir 87% of our 2019 operating revenues. The advancement is attributable to nan heavy resilience we person built into our institution for semipermanent stability. This is mostly a consequence of nan dedication and nan difficult activity of our employees.

I convey them for their committedness and professionalism. Not only successful past quarter, but done caller years. They've shown unthinkable adaptability, standard and teamwork successful dealing pinch nan illness of recreation early successful nan pandemic and past pinch nan unprecedented resurgence of postulation that began this past outpouring pinch nan [travel re-ban] [ph] successful Canada.

I besides commend nan members of our guidance squad who person remained focused connected executing our strategy. Our expertise to navigate done wide assortment of conditions we saw successful 2022 is owed to our early and dependable efforts initiated successful nan autumn of 2021 to rebuild this depth. Proof of their occurrence is that we achieved a full-year adjusted EBITDA separator of 8.8%, contempt a very challenging substance and inflationary environment. And wrong nan guidance, we provided nan expert organization connected Investor Day successful March of 20 22.

Adjusted EBITDA was 389 cardinal successful nan quarter. This was a important summation from nan adjusted EBITDA of 22 cardinal successful nan 4th fourth of 2021. And for nan full-year, our adjusted EBITDA was adjacent to 1.5 billion, compared to antagonistic adjusted EBITDA of astir 1.5 cardinal 2021, a astir $3 cardinal turnaround.

Our results besides bespeak nan occurrence of our strategy of diversifying our gross sources. Air Canada cargo gross successful nan 4th fourth of 2022 was 55% higher than that successful nan aforesaid play anterior to nan pandemic. Air Canada vacations besides delivered a beardown performance, and Aeroplan's progressive rank is astatine an all-time precocious and continuing to increase.

The operational and commercialized extent that enabled america to flooded nan unprecedented summation successful request done nan outpouring summertime of 2022, was again connected show astatine nan extremity of nan 4th quarter. Severe wintertime upwind disrupted nan operations of each North American carriers. Yet arsenic Craig will show you, we recovered very, very quickly.

On behalf of everyone astatine nan airline, I want to convey our customers for loyalty. I guarantee each customers that we are moving difficult each time to gain and clasp this loyalty and we look guardant to welcoming moreover much customers [aboard] [ph] our craft 2023.

Now, earlier I move it complete to Craig, I would for illustration to return a infinitesimal to admit nan unthinkable and outstanding contributions of one, Lucie Guillemette. As you know, this is Lucie’s past expert telephone earlier her retirement. After a singular profession pinch our airline. She has held a wide scope of ever much responsible positions that are excessively agelong to database here. But nan communal taxable is that pinch each role, she showed beardown leadership, inspired her colleagues, and made america and myself each better. Congratulations, Lucie. I cognize I speak for everyone astatine Air Canada erstwhile I opportunity convey you. And you will beryllium greatly missed connected some a master and a individual level.

Now, complete to Craig.

Craig Landry

Thank you, Mike. Good morning, and [Foreign Language]. Before looking astatine operational capacity successful nan quarter, let's recap immoderate of nan discourse I shared connected nan 2nd 4th telephone of 2022. As you will recall, compared to different markets, nan grade successful nan long of recreation and wellness restrictions successful Canada kept recreation astatine a adjacent standstill for almost 2 years. So, erstwhile recreation rebounded successful nan 2nd half of 2022, it did truthful astatine an accelerated pace.

To springiness you immoderate color, successful each of 2021, we operated astir 162,000 flights and carried astir 13.7 cardinal customers. Whereas for nan play of June 2022 until nan extremity of nan year, we operated complete 217,000 flights and carried complete 25 cardinal customers. That was an summation of 83% and customers carried successful conscionable a seven-month play arsenic compared to nan full-year 2021.

During nan summertime period, we managed our capacity and schedule conservatively, while continuing to callback prosecute and trained unit connected an unprecedented scale. During this first ramp up phase, we besides observed unexpected levels of instability from a scope of third-party support functions wrong nan recreation ecosystem. Combined pinch nan unsocial challenges of this period, this contributed to nan operating capacity seen successful June and July.

Following extended efforts successful collaboration by each parties, operations recovered successful August and passim nan fall. By nan 4th quarter, operations had stabilized pinch operating metrics progressing good towards pre-pandemic levels. We besides proceed to make prudent adjustments to our schedule, while continuing to prosecute and build nan accomplishment sets of our labor pinch extended further training.

As we entered December 2022, we had 35,874 labor successful place. Maintaining our nonsubjective of having much labor than pre-pandemic levels to support little flying. We further built further operational resiliency into our scheme by mounting speech 15 aircraft, including wide assemblage craft that were not scheduled to alert to guarantee that we would person capable backup craft disposable for operational support and recovery.

Of course, arsenic often happens during this clip of nan year, wintertime upwind impacted our operations. This twelvemonth though, nan upwind events were much utmost than usual, moreover for Canada. It besides coincided pinch immoderate of nan highest highest recreation dates of nan vacation season. For example, during nan week of December 19, a continent wide upwind arena impacted each of our awesome hubs.

In Vancouver, 4-foot icicles formed connected craft and bridges, rendering nan assets unusable. In Calgary, nan utmost acold exceeded safe conditions for deicing activities. And successful Toronto, accommodation specified arsenic airdrome baggage handling systems started to freeze. And of course, pinch specified dense snowfall, snowfall removal activities heavy affected takeoff and landing times. Because we are a web carrier, upwind successful 1 location tin effect downline flights wherever upwind effect is little coming aliases moreover not present, some successful nan displacement of crews and aircraft.

Also, arsenic flights return progressive delays owed to weather, this tin origin our crews to transcend their maximum work days. In immoderate cases, wherever this cannot beryllium remediated, it tin lead to unplanned formation cancellations. Ensuring our customers person elasticity during these types of events is critical. We worked difficult to support our customers informed. We provided our customers nan action to alteration their flights astatine nary costs aliases to cancel their plans and person a afloat refund.

Furthermore, we besides provided goodwill compensation to customers successful galore circumstances, moreover beyond our regulated obligations. For nan full-year 2022, we spent astir $290 cardinal successful hotels, meals, and different forms of compensation for our customers. All of this said, our vacation wintertime cognition compared rather favorably to what was observed elsewhere successful nan manufacture complete nan aforesaid period.

Air Canada planes took disconnected almost each 90 seconds of each time during nan holidays. We operated astir 1,000 regular flights connected average. And connected Friday, December 23, which is nan busiest recreation time starring into nan holidays, which was besides hampered by utmost weather, we operated nan mostly of our flights and carried astir 90,000 customers.

For nan 4th arsenic a whole, nan results were moreover stronger. We carried complete 10 cardinal customers, and our baggage handling occurrence complaint was adjacent to 98%. We besides reached a formation completion complaint of complete 95%. I would surely for illustration to admit nan professionalism and nan committedness of our labor during this challenging operating environment.

As we participate 2023, our operational extent and resilience proceed to bolster our stableness moreover further. Our staffing and acquisition levels are connected scheme and a wide scope of initiatives are underway to elevate our customer experience, leveraging our important caller investments, including a caller and modern reservations and departure power system.

Our operating results proceed to amended pinch beardown on-time capacity successful February, really trending up of 2019 levels. We person nan elasticity basal to make nan investments we position arsenic a priority. But I would besides item that arsenic an industry, we stay limited connected improvements to airdrome accommodation and infrastructure.

We would promote authorities and airdrome authorities to urgently activity together to reside nan shortcomings of nan existing backing exemplary for airports, which is unsocial to Canada. Travelers, airlines, and different on-site users money this model, which has been a root of gross for nan government. This exemplary fails to redirect nan costs generated by nan manufacture backmost into nan manufacture and constrains nan captious investments that are needed successful our airports.

To conclude, we stay assured successful our expertise to execute connected our plan, and we'll activity pinch each cardinal manufacture stakeholders to guarantee we collectively execute and support pre-pandemic levels of operational stability.

And pinch that, I'll walk it complete to Lucie.

Lucie Guillemette

Yes, [Foreign Language] Thank you very much, Mike, for your benignant words. [Foreign Language] Good morning, everyone. Allow maine to thrust grade-in by discussing our rider revenues, which surpassed 4 cardinal successful nan quarter, astir doubling those successful nan 4th fourth of 2021. When compared pinch nan 4th fourth of 2019, that's an summation of astir 2% connected 85% of nan capacity and 87% of nan traffic. Yields successful nan 4th versus 2019 was 18% amended and gains were observed successful each geographies.

Our full-year results bespeak nan accelerated surge successful request pursuing nan easing of recreation restrictions successful nan 2nd half of 2022. As we see each geography, we performed very good successful home Canada pinch rider revenues of adjacent to 1.2 cardinal for nan quarter. That was an summation of 54% from nan 4th fourth of 2021 aliases a betterment of 95% of Q4 2019. This was achieved successful a competitory situation and speaks to nan spot of our connecting web and our expertise to successfully negociate our capacity. Domestic output improved contempt nan antagonistic effect connected output of longer home shape length.

Our [transcon markets] [ph] performed very well. Transborder marketplace capacity revenues of 916 cardinal surpassed nan 4th fourth of 2019 by 1% connected 7% little capacity, arsenic good arsenic little volumes of firm postulation connected short-haul flights. Long-haul and U.S. [Sun destinations] [ph] performed very well, and I'm pleased to opportunity our associated task pinch United Airlines, though successful nan early innings is surpassing our expectations pinch benefits for Air Canada, our waste and acquisition partners and our customers.

We're thrilled pinch nan results from nan transatlantic market. In nan 4th quarter, Atlantic rider revenues made up 27% of nan full rider revenues and reached astir 1.1 billion, that was 16% supra nan 4th fourth of 2019. As expected, leisure and sun markets were very successful. Fourth 4th Sun and South America rider revenues were 40% up of those successful nan 4th fourth of 2019 pinch capacity expanding 5% from that aforesaid period.

Consistent pinch beardown request for Sun and leisure destinations, different revenues were 62 million, aliases 23% higher than nan 4th fourth of 2019 pinch an important publication from crushed package revenues astatine Air Canada Vacations. We saw affirmative capacity successful Asia and nan Pacific, peculiarly successful Australia, New Zealand, Japan, and Korea, since definite recreation restrictions were eased.

Specific rider revenues, postulation and capacity, respectively recovered to 74%, 52%, and 51% of 4th fourth of 2019 levels. These results are meaningful because they were achieved contempt continued challenges, including older formation restrictions, we are taxable to successful China.

Our strategy to diversify our web has allowed america to protect ourselves from nan lingering impacts of nan pandemic. At nan compartment level, successful nan first 4th of 2022, rider revenues and nan premium cabins accrued 13%, while those successful nan system compartment reached 98% of 4th fourth 2019 levels. We saw output gains crossed each cabins successful each markets, reflecting some beardown request and a favorable pricing environment.

Better fare operation successful premium and system cabins and higher mean fare levels contributed to nan beardown output performance. Aeroplan besides contributed to our output and gross upside and continues to transcend our expectations. Membership is astatine an all-time high, and nan programme continues to grow. Gross billings from points sold to 3rd parties were up astir 50% complete nan 4th fourth successful 2019. And we besides observed a 50% maturation successful full points redeemed complete nan aforesaid comparable period.

We besides proceed to make coagulated advancement pinch our strategy of increasing Aeroplan by diversifying beyond Canada. In 2022, world gross billings were 76% higher than successful 2019, making up an accrued stock of Aeroplan's third-party billings.

Now, arsenic we look ahead, we scheme to run astir 84% of first 4th 2019 capacity, and we're readying to scope 90% of 2019 for full-year 2023. We're very encouraged pinch respective cardinal indicators. Ticket income successful nan 4th fourth of 2022 were 102% supra those successful nan aforesaid play successful 2019 connected little capacity, and these stay beardown successful each services and successful each cabins successful 2023.

Advanced booking trends stay solid, some from a measurement and adjacent salary perspective, peculiarly successful our world services, giving america nan assurance to proceed rebuilding our world network. We've precocious started to work to Bangkok, our first nonstop work to Southeast Asia and nan only 1 betwixt North America and Thailand, allowing america to equilibrium seasonality. Japan and Korea are besides showing bully early demand.

[Indiscernible] is besides expected to beryllium very beardown successful nan 2nd and 3rd quarters of 2023 pinch a coagulated output situation retired successful nan United States. New routes specified arsenic Toronto Sacramento are designed to seizure this opportunity and thrust further benefits from our associated task pinch United Airlines.

We besides expect ACV to present a beardown capacity successful nan first 4th pinch mean package prices and margins holding very well. We expect nan home and leisure Sun markets to stay competitive, but we are good equipped pinch spot successful our commercialized exemplary to successfully manage.

Now, turning to cargo. Revenues declined 202 cardinal from nan 4th fourth of 2021. All converted cargo craft person returned to rider service. We person 3 Boeing 767 freighters presently successful work pinch much connected nan measurement this year. By nan extremity of 2024, we scheme to person a full of 9 767 freighters and 2 777 freighters.

Yields and demand, peculiarly successful nan Pacific region, person normalized, and we expect this softening to proceed successful Asia. That said, it's important to support successful mind that erstwhile compared to nan aforesaid play successful 2019, 4th fourth 2022 cargo revenues still accrued 55% aliases $102 million.

Lastly, earlier I move it complete to Amos, I would for illustration to opportunity really overmuch I person weighted my engagement pinch nan financial community. I besides consciousness blessed to person worked 36 years for an manufacture I love, a marque I adore, and pinch dedicated caring colleagues passim nan organization, I highly respect. I'm highly proud of nan gross optimization civilization we fostered successful nan commercialized products complete nan years, rooted successful a desired triumph to excel and to beryllium better, while ever being mindful that our customers person choices and our title is watching.

So, Mike convey you for your support, your activity and your guidance. I, too, will miss you and nan team, but will cheer from nan sidelines. I wish Mark Galardo and [Mark Nasr] [ph] nan very champion for nan future. [Foreign Language]

Amos Kazzaz

[Foreign Language] Good morning, everyone. Let's commencement pinch a speedy financial overview of nan quarter. As Mike antecedently mentioned, we reported 4th fourth operating revenues of astir 4.7 billion. These were 71% higher than nan 4th fourth of 2021 and astir 6% higher than nan 4th fourth of 2019.

Adjusted EBITDA was 389 cardinal successful nan 4th quarter, 367 cardinal amended than a twelvemonth ago. On a year-over-year summation successful postulation of 93% and an operated capacity of 59%, full operating expenses were 4.7 cardinal successful nan 4th fourth that's an summation of 1.5 cardinal aliases 46% from nan aforesaid play successful 2021. In summation to nan maturation successful postulation and operating capacity, nan summation is besides driven by a 60% year-over-year summation successful substance prices.

Now, let maine to quickly talk 2 statement items, successful particular, starting pinch fuel. Fuel disbursal of astir 1.5 cardinal accrued 794 cardinal from nan 4th fourth of 2021. The summation was mostly owed to nan summation successful substance prices, a 37% summation successful liters utilized owed to nan summation successful flying and an unfavorable overseas speech variance.

We surely stay vigilant connected monitoring nan value of substance and are taking various actions wherever imaginable to negociate its impact. This includes alternate proviso options and taking pricing actions arsenic needed and of course, monitoring our substance efficiency.

We person not changed our position connected hedging and are not doing truthful astatine this time. Wages, salaries, and benefits of 892 cardinal accrued 88 cardinal aliases 11% from nan 4th fourth of 2021. The summation was driven by an summation of 32% successful labor related to nan accrued capacity, partially offset by a one-time nett complaint of 104 cardinal recorded successful Q4 of 2021. You tin get much accusation connected these changes successful our 2022 yearly consolidated financial statements and notes.

Turning to nan full-year. In 2022, operating expenses of astir 16.7 cardinal roseate astir 7.3 cardinal aliases 77% compared to 2021. The year-over-year summation successful astir all-line items reflects nan surge successful postulation and operated capacity of astir 3.2x and 2.5x, respectively. The variance was besides attributable to a 74% summation year-over-year successful substance prices, compared to 2019 operating expenses decreased 738 cardinal aliases astir 4% connected capacity that represented 73% of 2019 levels.

Still a nonstop comparison versus 2019 full operating expenses is not needfully meaningful arsenic we still had pandemic-related challenges successful nan first half of 2022 and 2019 was impacted by nan grounding of nan MAX. We proceed to workout diligent costs control. In 2022, CASM decreased 28% and adjusted CASM declined 43% from 2021 versus 2019, adjusted CASM accrued 19%.

You will statement that this is conscionable 1 percent constituent supra nan precocious scope of nan guidance provided for adjusted CASM for nan twelvemonth and was chiefly owed to nan higher income and distribution costs, inflationary pressures connected each statement items, besides higher disruption costs and higher worker benefits expense.

As we look crossed nan industry, ostentation has tally higher for airlines. We are, however, pleased pinch our comparative capacity against nan U.S. web carriers, successful peculiar and we tin consciousness we tin compete efficaciously from a costs perspective. For 2023, we expect adjusted CASM to beryllium astir 13% to 15% supra 2019 levels.

Now, for immoderate updates connected our fleet. All 40 Boeing MAX 8s [indiscernible] bid person been delivered. At nan extremity of 2022, we had 32 A220s successful nan fleet and a 33rd was received successful nan 2nd week of January. As you know, we now person [full orders] [ph] for 60 A220s. For nan remaining 27 aircraft, we are expecting 6 successful 2024, 6 successful 2025, and 15 successful 2026.

Our A220 and MAX deliveries, complemented pinch our announced 30 A321 XLR aircraft, will complete nan renewal of our narrow-body fleet. The deliveries for nan remaining 3 787s person shifted. They are now scheduled to beryllium delivered successful 2023, 1 successful nan outpouring and nan different complete nan summertime and nan past 1 successful 2024.

Now for a speedy connection connected liquidity. We began nan 4th pinch astir 10.2 cardinal of full liquidity and ended 2022 pinch full liquidity of much than 9.8 billion. The alteration successful liquidity considers wide CapEx and indebtedness repayments, arsenic good arsenic nan repurchase and cancellation of convertible elder notes, owed successful 2025 that we made successful nan quarter.

You whitethorn callback that backmost successful September 2022, we repurchased immoderate of our outstanding convertible elder notes for an aggregate rate value of astir 249 million, including accrued interest. Following this repurchase successful nan 4th quarter, we repurchased an further [USD 362 million] [ph], aggregate main of notes. That repurchase was down for an aggregate rate value of astir [USD 330 million] [ph], including accrued interest.

Now, a full of 274 cardinal remains outstanding. For 2023, deleveraging nan equilibrium expanse will stay a priority, arsenic you will person seen from our leverage ratio target for 2024. This target has been adjusted to relationship for nan further freighter investments that antecedently forecast. Net rate travel from operations successful nan 4th were 647 million, compared to nett rate flows from nan operations of 508 cardinal successful nan 4th fourth of 2021. On a full-year basis, these were adjacent to [2.4 million] arsenic opposed to a antagonistic 1.5 cardinal astatine nan extremity of 2021.

Now for nan information I cognize you are each waiting for, what astir those 2024 targets? You will person seen successful our 4th fourth merchandise that on pinch our guidance for 2023, we person restated immoderate of our 2024 targets for capacity, adjusted CASM, adjusted EBITDA, leverage ratio, yearly return connected invested capital, and cumulative rate flow. I won't spell complete each of these, arsenic I cognize you person cautiously publication nan release.

The 1 that I will telephone retired is nan adjusted EBITDA target. You will person noted that we person moved from an adjusted EBITDA separator to an absolute number for our adjusted EBITDA target range. We consciousness this caller target is simply a amended parameter to measure our financial performance. At nan core, this caller target for adjusted EBITDA scope is in-line pinch nan adjusted EBITDA reflected successful nan separator target communicated astatine nan 2022 Investor Day.

I will now move nan telephone backmost complete to Mike.

Michael Rousseau

Thank you, Amos. Certainly, nan beardown request situation that we knowledgeable successful nan 2nd half of past twelvemonth continues passim nan early booking curve, and we expect a coagulated request situation passim each of 2023.

Our beardown liquidity position, pricing power, expertise to make gross from aggregate sources and markets, diligence regarding our costs building and our expertise to execute connected nan wide strategical guidance provides america a instauration to efficaciously compete and beryllium very successful.

In 2022, Air Canada was named The Best Airline successful North America for nan 4th consecutive twelvemonth by our customers and nan readers of Global Traveler. We cognize we must activity difficult to support nan position and enactment up of nan competition, and we'll do this by improving processes, introducing caller features and investing successful our business, particularly successful customer service.

We judge customer work will beryllium a cardinal differentiator. And for this reason, past year, we launched our ECX program, elevating nan customer experience. It is simply a multiyear scheme that mobilizes virtually each portion of nan institution to consistently present work excellence. And we're investing to support ECX. For example, we improved our onboard system people eating and proceed to put successful and upgrade our Maple Leaf Lounges.

In November, we launched complementary unrecorded TV passim our in-flight intermezo systems. And we're nan only Canadian bearer offering this product, which has proven celebrated pinch sports and news fans. Our ongoing narrow-body fleet renewal programme pinch 30 Airbus A321 XLRs and an further 27 Airbus A220s will not only connection customers nan latest exertion and amended comfort, but besides let america to costs efficaciously grow our world scope by entering caller markets.

An basal constituent of customer work is making it easy to interact pinch america done technology. We proceed to create caller personalized mobile and [web services] [ph]. In airports, we are testing biometrics to velocity up various processes specified arsenic boarding and lounge access, and we're adopting caller exertion for baggage tracking.

Another important group of customers is our cargo shippers. Air Canada Cargo continues to grow its web and will support expanding options for customers, for example, done our caller cargo statement pinch Emirates. We besides cognize that competing for customers is 1 thing, but nan existent worth lies successful keeping their loyalty.

So on pinch fantabulous service, we are besides focused connected Aeroplan. We are connected way to transcend our target of 7 cardinal progressive members by nan extremity of 2023. Aeroplan is simply a compelling caller frontier to thief our halfway business acquire, prosecute and thief customers recreation much and recreation better.

We scheme to proceed upgrading nan programme specified arsenic done breathtaking caller partners and appealing programs for illustration edifice savers. It is difficult not to overstate nan value of Aeroplan. It is an attribute, we believe, provides a unsocial worth proposition to our customers successful a much fragmented hose market.

Its occurrence was recognized by galore awards successful 2022, and it is Canada's starring recreation loyalty program. Another important driver of loyalty is marque and reputation, particularly pinch respect to ESG. All of our stakeholders, customers, investors, employees, nan communities we service and others, request that we enactment responsibly.

And for this reason, because it is nan correct point to do, Air Canada is committing important resources to ESG. With respect to nan situation and ambiance change, each 1 of nan government, manufacture and others successful nan ambiance action concatenation must play its part. We critically trust connected each different to scope our corporate goals.

In summation to our ain soul programs to trim substance consumption, discarded and emissions we are investing pinch partners successful caller technologies, including SaaS, electrical aircraft, c capture, and a caller offset partner. And we cognize investors worth broad disclosures, truthful we've reduced our first TCFD study disposable connected our website.

And finally, portion of our ESG is processing our people. Our occurrence was highlighted successful 2022 arsenic among different recognitions we were named by Forbes arsenic 1 of nan world's champion employers and 1 of Canada's champion employers for diversity. And for nan ninth consecutive year, we classed among Montreal's apical employers. And we won nan champion firm societal work strategy astatine nan Canadian HR Awards successful 2022.

These are important recognitions. Engaged and motivated labor are essential, if we're going to win successful our ambitions to stay arsenic North America's starring hose and a Canadian world champion. That is our committedness and we person nan people, nan resources, and nan scheme to execute these goals and overmuch more.

Thank you, and complete to you, Valerie.

Valerie Durand

Thank you, Mike, and convey you each for joining america today. [Foreign Language] We are now fresh for questions. As usual, please limit yourself to 2 questions. Should you person further questions, we induce to interaction america astatine Investor Relations. Over to you, [indiscernible].

Question-and-Answer Session


Thank you Ms. Valerie. [Operator Instructions] We will return nan first mobility from Savi Syth, Raymond James. Please spell ahead.

Savi Syth

Hey bully greeting everyone and congrats and champion wishes Lucie connected nan pending retirement. And maybe, Lucie, if I tin commencement pinch you pinch nan first question. Just funny connected nan cargo front, what your expectations are and yields person been coming down rather a spot and yet your capacity is reasonably bully successful nan 4th fourth arsenic we, benignant of look to 2023 and 2024 against nan falling output environment, but increasing capacity from Air Canada. Just what are your, benignant of targets aliases expectations there?

Lucie Guillemette

So, first of all, convey you for nan benignant words, I admit it. With respect to cargo, decidedly connected nan output broadside of nan business, peculiarly successful nan Asian markets, we are seeing – we benignant of opportunity nan output is normalizing. What we were experiencing successful 2021, peculiarly successful those markets, was a small spot inflated. So that is normalizing. And arsenic we bring successful nan caller freighters, fewer opportunities up for us.

We person opportunity to seizure immoderate business and immoderate different transatlantic markets that will beryllium very bully for america connected nan cargo front. And we besides person nan expertise to attraction connected connectivity. Even successful nan cargo business, there's a immense opportunity for america to beryllium capable to link immoderate of this cargo traffic.

So, we're successful a small spot successful a modulation shape present because arsenic I deliberation I noted and Amos noted arsenic good that nan caller freighters are [en route] [ph]. We person a fewer that are – will beryllium in-service momentarily. And past by nan clip we scope nan extremity of 2024, we'll person our afloat complement. So, now we're a small spot successful a transition, but we're still very assured that successful different markets, Asia mightiness return immoderate time. But successful different markets, we'll beryllium capable to nutrient immoderate coagulated results.

Savi Syth

That's helpful. Thank you. And past if I mightiness ask, I don't cognize if this is for Craig aliases nan team, but if I look astatine your cancellations, it seems for illustration Air Canada mainline and Rouge are performing really well. But Jazz has had mediocre capacity passim -- and bully and bad days. And I recognize nan location aviator dynamics, I cognize we’re adjacent arsenic bad arsenic it is successful nan U.S. arsenic it is successful Canada, but I was wondering if this is simply a consequence of aviator proviso issues astatine Jazz and tin generally, benignant of what your expectations are arsenic we move done 2023?

Craig Landry

Hi. It's Craig. Yes, for sure, it's been a challenging operating situation for a number of reasons. When we person constraints astatine airports, there's a assortment of factors that travel into play successful position of really we find which flights request to beryllium canceled, that has to do pinch measurement of connecting passengers.

Our extremity is ever to maximize our customers to beryllium capable to get to their last destination connected time. So astatine times, immoderate of nan smaller craft tin free up nan gross for larger craft to beryllium capable to operate, and it makes amended consciousness for nan wide cognition for our customers. And that's ever what's benignant of our driving force.

With respect to nan aviator proviso side, arsenic I mentioned earlier, we don't person immoderate issues connected nan Air Canada side. On nan location side, location is immoderate activity betwixt nan location airlines. There's a flow-through statement successful spot wherever location pilots move into nan mainline environment. And to a definite extent, that is creating a impermanent magnitude of dislocation successful position of immoderate aviator resources. We position it arsenic impermanent and not material.

Savi Syth

Is that conscionable arsenic Air Canada builds that capacity? And past arsenic you benignant of normalize your hiring, that should normalize connected nan Jazz side, is that what you mean there?

Craig Landry

That's rather right, yes.

Savi Syth

Appreciate it. Thank you.


Thank you. The adjacent mobility is from Kevin Chiang, CIBC. Please spell ahead.

Kevin Chiang

Thanks for taking my mobility and I echo nan congratulations. Lucie, each nan champion successful your pending status present and congratulations to nan [indiscernible] moving forward. Maybe conscionable a mobility connected nan 2024 adjusted CASM guide. It looks for illustration immoderate of these costs are possibly structural. Maybe immoderate of these are related to nan faster ramp up of capacity. And I'm trying to get a consciousness of possibly wherever adjusted CASM yet ends up arsenic you, benignant of get done this accelerated ramp-up phase?

Because if I conscionable look astatine it simplistically, it looks for illustration your ASMs are going to beryllium up astir 10 points year-over-year. But your set CASM is down 5 astir connected either extremity of nan [indiscernible]. So, conscionable wondering really we should beryllium reasoning astir that inclination arsenic you look moreover past 2024 arsenic immoderate of those costs commencement to travel retired arsenic you normalize your growth?

Amos Kazzaz

Yes, thanks. Good morning, Kevin. So yes, our adjusted CASM, if you benignant of spell backmost successful clip of erstwhile we put that target out, it was – we were building our plans for Investor Day, it was backmost successful March. And certainly, backmost successful that clip frame, we put nan scheme together successful January-February, rolled it retired successful March and benignant of targets. And nan world surely has moved successful position of ostentation arsenic we, benignant of saw aft nan Ukraine [indiscernible] war. And truthful that's put unit really connected each benignant of our costs items.

And then, of course, arsenic we began building up and past arsenic we're putting capacity out, we're adding headcount earlier each nan capacity comes successful for each nan reasons we've talked astir comparative to operational performance. So, expect benignant of from a productivity ratio side, erstwhile we get benignant of past 2024, we'll beryllium much into an operational [indiscernible] backmost to benignant of matching capacity pinch labor and driving productivity. So we person this, benignant of interim portion present arsenic we get done that.

So, connected nan 1 hand, we person inflationary pressures connected nan lines. We person immoderate productivity items that we deliberation will travel back, but past fundamentally, arsenic you cognize us, we are relentlessly focused connected costs and costs transformation. So, we don't return this – nan further guidance arsenic possibly a notation that we've held our ft disconnected nan accelerator and going to push guardant connected costs simplification programs.

It is still portion of nan DNA present and we tin surely will power that successful position of our spend. We person a very beardown procurement section that really does conflict successful position of uncovering – mitigating options, driving fundamentally conflict pinch suppliers, but besides ensuring that we person proviso concatenation for what we request to thrust nan operations. Aside from that, we've made, arsenic you've seen, exertion investments, and we'll proceed to reap immoderate of nan benefits of that.

We're investing a batch successful position of AI successful position of optimizing attraction planning, continuing optimization of different elements of nan gross guidance world and continued benignant of process improvements, Mike talked connected immoderate of them connected nan airdrome side, arsenic we move into much self-service.

So, location are galore factors here, galore items that we're moving forward, but we person this expertise arsenic we're going successful done 2024 successful position of guidance that was anyplace was evidently higher than what we had thought backmost successful March. So, a agelong reply to your question, Kevin, but overall, we still are focused connected costs and still focused connected improving productivity and efficiency, and we'll proceed to return each opportunity to do so.

Kevin Chiang

Yes, and it does not want to beryllium immoderate of these costs, arsenic you mentioned, benignant of rotation disconnected arsenic your maturation normalizes present [Multiple Speakers] possibly upfront costs rotation complete arsenic well?

Amos Kazzaz

Yes. And certainly, that will, arsenic that benignant of normalizes. And past inflation, yes, there's been immoderate flimsy reductions present arsenic well. So that should – that situation should amended and we'll surely look for opportunities location arsenic that it comes down successful nan inflationary environment.

Kevin Chiang

That's great. Maybe conscionable a speedy follow-up present connected – you talked astir ACV, outlook is beautiful bully here. Just wondering what nan effect of Sunwing has had connected nan request situation for much leisure travelers, particularly successful your ACV brand? And obviously, they had immoderate difficulties successful December, it seems for illustration there's an opportunity to summation marketplace share.

Lucie Guillemette

It's a very bully question. And looking astatine nan capacity that we had pinch Air Canada Vacations, I would opportunity to you that it virtually had nary impact. Our load factors were solid. We saw separator maturation crossed each nan routes that we run in. So, I would opportunity to you that it did not effect us. We did very, very well.

Michael Rousseau

Right. Kevin, it's Mike. Just to further. I mean, we – ACV is an important portion of our programme here. And we're investing successful ACV to let it to compete overmuch amended and if possible, return marketplace stock distant from conscionable not Sunwing, but each nan different competitors that we compete with.

Kevin Chiang

Thank you very overmuch and person a awesome [indiscernible] everybody.


Thank you. The adjacent question, Chris Murray, ATB Capital Markets. Please spell ahead.

Chris Murray

Yes. Thanks folks. So, going backmost possibly a small spot to nan costs broadside of things. And possibly I'm conscionable trying to understand a small spot astir nan guidance. And possibly to travel connected Kevin's mobility a bit. Thinking astir costs arsenic we spell forward, you've talked astir a small spot astir labor, but are location immoderate different costs? I noticed for illustration nan different bucket was higher. I'm conscionable trying to get a consciousness for – is location thing structural that we should beryllium reasoning about? Or are immoderate of these costs whitethorn beryllium related to things for illustration nan cargo cognition aliases Aeroplan aliases different things that possibly – mightiness beryllium different aliases possibly worked benignant of like-for-like from 2019?

Amos Kazzaz

I deliberation erstwhile you benignant of look astatine – is location thing structural that's changed? I would opportunity nan move that has changed successful position of our various statement items are essentially, benignant of crushed handling costs, thing that has a labour constituent to it. And past connected nan catering side, we person surely unit benignant of connected nan nutrient side. So, you look astatine those statement items and you get into technology, truthful each of those areas are – we're seeing important inflationary pressures, again, because of labour shortages a small spot astir nan world.

So, crushed handling contracts done – crossed nan world are pressured up, catering costs from fundamentally nan commodity costs of nutrient are going up and nan labour component. And past again, technologies. So, I would opportunity those are benignant of 3 items that would expect that unit to travel disconnected arsenic we're seeing some commodity prices coming down successful definite areas, labor, dislocation now that's benignant of coming backmost in, labour is disposable again.

And so, it's thing that I deliberation it's temporary. We're getting done it done 2022 and seeing into 2023, but I deliberation arsenic we get retired into 2024 and 2025, we should spot that abate to a definite extent.

Chris Murray

Okay. That's helpful. And past my different mobility is astir cargo and possibly conscionable this is, benignant of a longer-term question. I'm trying to get a bully consciousness arsenic nan cargo cognition matures. How do we deliberation astir that comparative to either your longer-term EBITDA separator aliases margins aliases EBITDA [indiscernible]. Should we beryllium reasoning that this – and I admit that you did it to diversify your gross streams was portion of nan strategical rationale. But is this, benignant of a, we'll return nan incremental dollar publication – aliases is this – do you spot cargo longer-term really being overly margins connected a percent basis?

Amos Kazzaz

Look astatine it, Chris, we person invested successful nan cargo business. We position it arsenic a increasing opportunity for america and we wouldn't person made nan investments successful 777 freighters and 767, truthful we converted and purchased to beryllium – it will beryllium a contributor. And again, arsenic you said, portion of nan gross diversification, and it besides helps offset our seasonality that we person started successful done nan first quarter. So, fundamentally, cargo will beryllium a contributor to EBITDA arsenic we spell forward.

Chris Murray

And will it beryllium a contributor akin to rider aliases would it beryllium benignant of possibly additive, but not – but dilutive longer-term?

Amos Kazzaz

It's surely not – it's surely additive, but not dilutive. Our superior business is connected nan rider broadside and – but cargo will grow, and it will contribute.

Chris Murray

Okay. Thanks folks.


Thank you. The adjacent question, Andrew Didora, Bank of America. Please spell ahead.

Andrew Didora

Hi, bully greeting everyone. Amos, conscionable a speedy mobility connected your 2024 costs outlook, do you see immoderate caller labour deals successful nan 2024 CASM guidance?

Amos Kazzaz

Good morning, Andrew. Thanks for nan question. I cognize you're ever bully astatine trying to get to nan specifications here. But I'm not going to spell into nan item what's included into nan – successful nan adjusted CASM targets for 2024.

Andrew Didora

Okay. I conjecture I asked and I cognize that nan aviator woody is up successful September, conscionable funny erstwhile will you commencement to fold that in, but I'll hold for early calls connected that one. Second question, conscionable astir nan CapEx, I deliberation successful nan MD&A, nan 2 cardinal per twelvemonth coming up successful nan MD&A is that a bully number to usage successful our exemplary aliases is location thing other that we request to deliberation about?

And past of nan $1 cardinal of little free rate flow, cumulative free rate travel that you talked astir successful your release, really overmuch of that comes from nan freighter investments? Because I deliberation I count astir possibly 5 caller freighters from your – versus your anterior release. So, conscionable trying to span that spread connected nan $1 cardinal free rate travel guideline down. Thanks.

Amos Kazzaz

Yes. So, I'll return nan 2nd portion first. It is nan mostly of nan freighter investments, truthful 777 freighters and caller 767 freighters. So, those are nan items that are driving nan rate travel alteration successful guidance from 3.5 down to 2 that we've benignant of talked astir location successful nan release. So, that's nan first part. And past – I'm sorry that was nan past portion of your question, and I forgot nan first portion of nan mobility was?

Andrew Didora

Just – is 2 cardinal a twelvemonth successful superior this twelvemonth and adjacent reasonable, I deliberation that's what was disclosed successful nan MD&A this morning.

Amos Kazzaz

Yes. So that is what we person correct now, and I deliberation that's nan number to beryllium utilizing we person successful nan MD&A.

Michael Rousseau

I conscionable want to adhd connected – this is Mike. I conscionable want to adhd connected to – it was consequence and benignant of combining pinch Chris' question. I mean rate travel is down because of nan important investments successful cargo. And there's not a batch of economical use aliases income use successful nan 2024 twelvemonth because they're conscionable coming connected stream. But that use will beryllium successful 2025 and 2026 and truthful unfortunately, we person to show a free rate travel number for that twelvemonth without nan corresponding economical betterment to EBITDA. But again, arsenic successful nan early consequence to Chris, we expect additive EBITDA successful station 2024.

Andrew Didora

Got it. Thank you.


Thank you. The adjacent mobility is from Matthew Lee. Please spell ahead.

Matthew Lee

Hi. It's Matt Lee from Canaccord. Congrats Lucie and acknowledgment for taking my questions. On nan premium cabin, it sounds for illustration 2023 still won't person business travels return 2019 levels, but successful your booking data, are you still seeing capable request from consumers to capable that spread aliases is location a imaginable slowdown conscionable fixed what we're seeing successful nan macro level for [indiscernible]?

Lucie Guillemette

First, convey you for your bully wishes. With respect to firm demand, connected nan North America side, things person stabilized a small bit. So we run astir minus 30% for North America, compared to what we would person had successful 2019, but what we are seeing is simply a dependable maturation connected firm for world markets.

So that has started to return a small spot later than what we were watching for North America. But now pinch respect to nan [J cabins] [ph], arsenic we developed a batch of these VFR markets and we look astatine opportunities for leisure premium travelers, arsenic we started to activity connected nan Aeroplan redemption models, we were capable to find really bully sources of gross for our premium cabin.

So, if you look astatine nan load factor, for example, successful North America, it would beryllium 10 points amended than it was successful 2019. So, there's galore products that we brought online, and we had opportunity to make caller request for nan world cabins. And if you look astatine nan world marketplace successful nan premium cabins, not only do we spot a coagulated request there, but we besides spot a very, very absorbing yields betterment arsenic well.

So, we would for illustration nan firm request to travel backmost to greater levels, but keeping successful mind that nan pricing situation is besides amended than it was successful 2019. From a gross standpoint, it's beautiful solid. And it gives america assurance arsenic good that if we ever faced slow down for immoderate reason, there's different marketplace segments for america to beryllium capable to recapture, but [J cabin] [ph], our premium compartment and besides premium [indiscernible] did very, very well, very well.


Thank you. The adjacent subordinate is Cameron Doerksen, National Bank Financial. Please spell ahead.

Cameron Doerksen

Thanks bully morning. Also my congratulations to Lucie. And possibly a mobility for you. Just wondering if you tin talk a small spot astir what you're seeing connected nan home markets. So, obviously, there's a batch of moving pieces present pinch WestJet benignant of retrenching retired of Eastern Canada into Western Canada, but you besides sewage the, I guess, announced plans per 4th starting up operations retired of Pearson. So, conscionable wondering what you're seeing from a pricing constituent of position successful Eastern Canada and wherever you spot nan competitory environment?

Lucie Guillemette

Well, listen, there's nary uncertainty that from a home standpoint, axenic home traffic, we are successful a very competitory environment, but looking astatine precocious bookings, truthful basically, nan posture looking guardant for home is still good. And contempt nan truth that we person this competitory environment, we are still capable to nutrient very bully output improvement.

In fact, if you set for shape magnitude connected home successful nan 4th fourth and moreover looking astatine ABRs, our output is successful nan 7% aliases 8% improvement. And nan J compartment truthful what we're capable to nutrient premium, of course, helps us. This caller redemption request that we've been capable to unlock pinch Aeroplan, but nan truth that we besides person nan expertise to provender our home web from our world services besides helps us.

So, we person what we request commercially to beryllium capable to clasp our position domestic. And immoderate of nan cardinal markets, of course, for illustration nan Transcon, we evidently watch those very, very closely, and we proceed to spot very bully beforehand bookings, but we're very mindful of nan competitory landscape, and we will proceed to beryllium very mindful of it.

Cameron Doerksen

Okay. That's great. And possibly conscionable a follow-up on, I guess, connected China. Obviously, China now reopened. I conjecture there's still very terrible restrictions connected a number of flights betwixt Canada and China conscionable done nan bilateral there. But I wonderment if you've sewage immoderate denotation arsenic to erstwhile immoderate of that capacity mightiness beryllium capable to beryllium added backmost for Air Canada?

Lucie Guillemette

At this constituent successful time, we don't – we dream to – present successful comparatively short period, but astatine this constituent successful time, we proceed to run nan schedule we have, fixed nan oversight rules, but astatine this point, we don't cognize what nan adjacent measurement will be.

Cameron Doerksen

Okay. Fair enough. Thanks very much.


Thank you. Next mobility is from Matthew Lee, Canaccord Genuity. Please spell ahead.

Lucie Guillemette

I deliberation we already had Matthew's question, if we could move to nan adjacent question.


Fadi Chamoun, BMO. Please spell ahead.

Fadi Chamoun

Thank you. Good greeting and congrats Lucie connected nan retirement. Amos, tin you springiness america guidance astir [CASM X for Q1] [ph]? What do you expect to person successful Q1?

Amos Kazzaz

Good morning, Fadi. No, astatine this point, we're not going to get into quarterly CASM guidance aliases CASM X guidance. Right now, we're conscionable providing guidance for nan year, arsenic we've outlined successful nan release.

Fadi Chamoun

Okay. The 2nd mobility is connected FTEs. You benignant of vanished nan 2022 astatine 33.2, which is astir nan aforesaid level you were astatine successful 2019, obviously, pinch capacity still acold little behind, is this a number that you think, benignant of stays stable-ish going into nan adjacent mates of years you turn into it? Is location drivers that are pushing nan FTE numbers higher, contempt nan productivity communicative connected nan exertion side?

Craig Landry

It's Craig. Just picking up connected a remark Amos made earlier. To nan grade that we're operating little than 100% of our pre-pandemic capacity, there's a definite inherent deficiency of productivity successful that because you request labor to beryllium capable to unit a afloat time of operations, let's say, astatine an airport. But you're not operating, you person a spot of peaks and valleys during nan people of nan day. So, arsenic capacity increases, we'll turn into that productivity, and we expect that to hap complete nan adjacent 12 to 18 months. So, that's our superior anticipation astatine this point.

Fadi Chamoun

Okay. So, we should expect that to beryllium benignant of much aliases little unchangeable arsenic you turn into it. Okay. Really, nan main mobility I person is nan guidance for 2024, nan mediate of nan scope is astir 3.7. Obviously, that's in-line pinch wherever you were successful 2019, but astatine nan aforesaid time, you person a stronger loyalty program, you person a bigger cargo business by 2024 versus 2019. It conscionable feels for illustration nan situation isn't absorbing nan inflationary costs issues that were highlighted. Is this a competitory issue? Is this marketplace much competitory than possibly you'd expect it earlier aliases are location different things astatine play here?

Michael Rousseau

Yes. Fadi, it's is Mike. Good morning. Interesting question. Certainly, I would opportunity nan home marketplace is astir apt much competitory than what we had envisioned successful March 2022. And arsenic Lucie said, we'll get done that pinch each nan strengths we person and immoderate of nan responses to immoderate of nan caller competitors.

The world markets proceed – are earlier performing nan measurement we thought they would perform, frankly. And truthful it’s intolerable for america to reconcile your expectations versus our guidance connected 2024 EBITDA, obviously. But obviously, our extremity is to overachieve wherever accordant wherever we were successful March 2022 arsenic to EBITDA levels.

And again, you're perfectly right, Aeroplan is stronger than we expected. Cargo will proceed to adhd much to our profitability, but I would say, connected nan different hand, nan home marketplace is astir apt a small much competitory than what we had initially envisioned.

Fadi Chamoun

Okay, great. Thank you.


Thank you. The adjacent mobility is from Walter Spracklin, RBC Capital Markets. Please spell ahead.

Walter Spracklin

Yes. Thanks very overmuch and bully luck, Lucie, I'm judge you're going to miss these calls dearly. Mike, you mentioned successful your prepared remarks that you expect nan request situation successful 2023 to stay strong. In nan property release, you mentioned that you're assuming, I think, it's a mean GDP maturation successful 2023. So, americium I correct successful assuming that nan underlying presumption for your 2023 is that location is nary recession aliases that you expect recreation request to stay robust moreover during a recession successful 2023?

Michael Rousseau

Yes. Another really absorbing point, Walter. So, obviously, we've sewage nan use of a guardant curve. And we said to nan market, request is very beardown done that guardant curve, successful fact, amended than 2019 levels basically. And that's pinch each nan interest astir either a soft landing aliases immoderate level of recession. And again, historically, and we've been successful this business a agelong time, Walter, that hose recreation is typically a multiplier of GDP.

I don't cognize if that exists astatine this constituent successful clip successful this benignant of modulation period. And clip will show whether recreation behaviors person changed permanently aliases successful nan transitional [indiscernible]. But certainly, we're taking afloat advantage of it while it's here. And so, we're continuing to spot beardown request done nan booking curve.

Despite nan fact, arsenic Lucie said, firm recreation is not coming backmost to 100% astatine this constituent successful time, but surely leisure and VFR is making much than that up. And we've pivoted arsenic a institution to beryllium capable to return advantage of that demand. And so, from an economical perspective, I deliberation that humanities narration is – shouldn't – we should – again, clip will find whether that it comes backmost to that humanities relationship, but today, we don't spot that.

Walter Spracklin

Okay. That's great. On nan cargo side, fixed that it's becoming a bigger portion of your business now, tin you talk to america a spot astir nan strategy, peculiarly astir really you get caller contracts present aliases caller business? Is it nether contract? Are you going ACMI connected immoderate of this stuff? And what is nan consequence to your belly capacity, presumably galore of your customers, erstwhile we commencement a caller freight aliases you spell pinch your – immoderate of your existing customers, really overmuch is that cannibalizing, if astatine all, what's going into nan belly of your aircraft?

Lucie Guillemette

Yes. In fact, it's a small spot nan other because astir of nan freighters are operating successful markets wherever we don't person capable belly capacity aliases they're operating markets wherever we don't really run passenger. So, we really person opportunity, arsenic I mentioned a spot earlier, for feed, but it does not cannibalize astatine all.

Now, pinch respect to wherever do we spell get these customers? It's a small spot for illustration connected nan rider side, meaning erstwhile we participate immoderate of these caller markets, location are, astatine times, customers who specialize successful nan type of cargo that is destined to those destinations.

So, of course, our income squad has been very engaged successful nan past 18 months securing that business, but we do activity pinch astir of nan ample freight for orders and cargo operators. But location is virtually nary consequence of cannibalization because again, immoderate of nan ample cargo markets wherever we run rider nan incremental – nan marketplace tin return that demand.

Walter Spracklin

Fantastic. Appreciate nan time.


Thank you. This is each nan clip we person for nan question-and-answer session. I would now for illustration to move nan gathering backmost complete to you, Mr. Durand.

Valerie Durand

Thank you, [indiscernible]. Thank you very overmuch for joining america this morning. We were connected a tight schedule. So, if we did not get to your question, please interaction america astatine Investor Relations, and we will beryllium successful interaction pinch you. [Foreign Language] Have a bully day.


Thank you. The convention has now ended. Please disconnect your lines astatine this time. Thank you for your participation.

Editor: Naga

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