The flag carrier of Canada and the largest airline in the country, Air Canada, reported its second-quarter financial results on August 10. The Star Alliance founding member reported that its second quarter of this year was greatly improved when compared to its second quarter of last year when the airline reported a net income loss.

Financial results driven by increased travel demand

Air Canada reported operating revenue of nearly $5.5 billion in the second quarter, which was an increase of nearly $1.5 billion compared to last year. This was specifically driven by a 42% increase in passenger revenues.

Photo: Air Canada

The President and Chief Executive Officer of Air Canada, Michael Rousseau, spoke about the large increase in revenue. He stated,

"Air Canada's second-quarter results were driven by strong demand and show the effectiveness of our plan. As a result of the hard work of our people, the appeal of our growing global network, as well as our leading brand and product offering, operating revenues in the quarter reached $5.4 billion, an increase of 36 percent from a year ago."

Operating expenses also went up this year and increased by $391 million, compared to last year, to reach $4.625 billion. The operating expense increase was due to a higher operating capacity and more passengers traveling on the airline. However, the expenses were partially offset due to a nearly 32% decrease in jet fuel prices.

Rousseau continued about the increase in overall company performance. He stated,

"I thank the entire team for its continued dedication to serving our customers, including collaborating with our partners, who also share the responsibility of ensuring a smooth customer journey. We safely carried over 11 million customers across our global network in the quarter, a year-over-year increase of about 23 percent."

Air Canada works towards a positive quarterly income

Although both the revenue and expenses increased over the second quarter, it still led to a positive operating income. Air Canada posted an operating income of $802 million and an operating margin of 14.8%. This was a significant increase of over $1 billion compared to last year when the airline posted a loss of $253 million.

Photo: Angel DiBilio | Shutterstock

Overall, the net income for this year's second quarter was $838 million. This was a $1.2 billion improvement from the second quarter of 2022. This large income resulted in $2.34 diluted earnings per share. Last year's second quarter resulted in a diluted loss of $1.60 per share.

Additionally, the net cash flow from operating activities increased by $426 million and reached $1.490 billion for the quarter. This resulted in a free cash flow of $965 million.

The operations for the airline slightly increased in terms of adjusted cost per available seat mile (adjusted CASM). This quarter's adjusted CASM was 13.3 cents and increased by 1.6 cents from the second quarter of 2022. The unit cost was driven by higher costs specific to passengers due to higher traffic and selling costs. There was also a 24% increase in wages, salaries, and benefits for average full-time employees.