Air Canada

Good morning and welcome to Air Canada's third quarter 2023 conference call. All participants are in a listen-only mode. After the speaker's presentation, we will conduct a question and answer session. To ask a question, you will need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Valérie Durand, Head of Investor Relations and Corporate Sustainability at Air Canada. Thank you. Please go ahead.

Thank you, Julianne. Hello, bonjour et bienvenue à notre troisième revue trimestrielle de 2023. Welcome and thank you for attending our third quarter earnings call of 2023. Joining us this morning are Michael Russo, our President and CEO, Mark Gallardo, our Executive Vice President of Revenue and Network Planning, and John Deibert, our Executive Vice President and CFO. Other members of the executive team are also with us today. Mike will begin this call with a brief overview of the quarter, followed by Mark with comments on our revenue, network updates and demand trends. John will cover our financial performance and guidance before turning it back to Mike. We will then take questions from equity analysts. Our comments and discussion today may contain forward-looking information about Air Canada's outlook, objectives and strategies that are based on assumptions and subject to risks and uncertainties. Our actual results could differ materially from any stated expectations. Please refer to our forward-looking statement in Air Canada's third quarter news release available on aircanada.com and on CDAR+. And now I'd like to turn the call over to Mike.

Thank you, Valerie, and good morning to everyone. Bonjour tout le monde. Thank you for joining us today. We are very pleased with today's results and the solid three quarters behind us. Air Canada's operating revenues in the quarter totaled about $6.3 billion, up 19% from the third quarter of 2022. Our operating income increased by $771 million to $1.4 billion, with an operating margin of 22.3%. Passenger revenues were nearly 22% higher year over year. Mark will provide more details on our revenues and the ongoing demand environment, which remains very stable. Arrow Plan membership continues to grow. Growth billings and redemptions also surpassed third quarter of 22 levels. Adjusted EBITDA grew by $773 million to $1.8 billion for the quarter. This translates into a market-leading adjusted EBITDA margin of nearly 29%. Adjusted net income of $1.281 billion, approved $850 million year-over-year. This brings us to an adjusted EPS of $3.41 compared to an adjusted EPS of $1.07 a year ago. We ended the quarter with nearly $10 billion in liquidity, while at the same time making progress on our stated goal of reducing leverage. And John will cover this in his remarks. The summer is always a peak travel season in Canada. Due to our careful preparations, we captured more than our share of traffic. and flew in excess of 12.6 million customers in the period. This was a 10% increase year-over-year, which resulted in an historic system load factor of almost 90%. While this signals that we use our assets very effectively, one consequence is that it puts extra pressure on the operations. That said, our on-time performance progressively improved throughout the quarter. With a 9 percentage point boost from July to August, and another eight percentage point sequential improvement in September, and continued improvement in October. I thank all our employees and management team for their hard work in safely transporting all our customers during the busy and demanding summer season. And their efforts are noted by our customers. For the fifth straight year, we were voted North America's favorite airline for 2023 in August in the Trazee Awards, which are geared to the important 25 to 45-year-old market. This followed on awards early this summer at the Skytrax World Airline Awards, where we won the world's most family-friendly airline in awards for best airline in Canada and best airline staff in Canada. And through their empathy and care, our people distinguish themselves in other, more important ways. We operated extra flights to Yellowknife in August to help evacuate residents from wildfires. And this month, we coordinated special flights with the government of Canada to bring Canadians home due to the conflict in the Middle East. These flights take a tremendous amount of work and planning, and I thank all our teams for this. It is with great sadness we witness a terrible impact of this situation on civilians and sincerely hope for a peaceful resolution soon. We continue to monitor the situation closely. Safety is always our number one priority, and we will reassess when our return is possible. Before I pass the call to Mark, I want to thank our customers for entrusting their travel with us and for their loyalty to our company. We know we must earn this loyalty every day, which is why we make elevating our customer service a top priority for Air Canada. Thank you, Mercy. Mark, over to you.