Air Canada

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Air Canada Second Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I would now like to turn the call over to Amanda Murray, Head of the Financial Planning, Strategy, and Investor Relations. Please go ahead.

Thank you, Julianne. Hello, bonjour, et bienvenue à notre revue des résultats du deuxième trimestre 2026. Welcome to Air Canada's second quarter 2026 earnings call. Thank you for joining us today. On the call with me are Michael Rousseau, our President and Chief Executive Officer, Marc Galardo, our Chief Commercial Officer and President of Cargo, and John Di Bert, our Chief Financial Officer. Other members of our executive team are also with us and available for the Q&A portion of the call. Before we begin, I remind everybody that today's discussion may contain forward-looking information regarding Air Canada's outlook, objectives, and strategies. Actual results could differ materially due to various assumptions, risks, and uncertainties. Please refer to our Q2 2026 earnings release, our 2025 annual MDNA, and second quarter 2026 MDNA, and filings available on aircanada.com and on CDAR+. With that, I will turn the call over to Mike.

Well, thank you, Amanda. Bonjour, good morning, and thank you for joining us today. Air Canada delivered a strong second quarter with adjusted EBITDA of $719 million at the upper end of our guidance range, despite fuel prices being slightly higher than our expectations. We generated record operating revenues of $6.3 billion, up 11% from the same period in 2025 supported by a very strong total unit revenue growth and broad-based strength across our network. At the same time, our report results were negatively impacted by specific labor-related and other charges, primarily non-cash, that are not reflective of the underlying earning power of the business. John will provide more detail in a few minutes. More importantly, the quarter demonstrated the resilience of Air Canada's diversified business model, Our results reflected a strong pricing environment, resilient demand across the network, a continued focus on controllable cost execution, and strong contributions from our diversified businesses, including cargo, air canal vacations, and aeroplane. Together, these strengths helped us absorb a significant external fuel shock while still delivering adjusted EBITDA ahead of market expectations. Through our pricing actions, capacity management, and fuel hedging positions, we recovered about 50% of the incremental fuel expense in Q2. When compared to our expectations at the start of the year, we expect to recover a majority of the remaining fuel headwind in the second half of the year, with Q4 expected to be above 100%. The strong demand we experienced in Q2 has remained intact throughout the booking window and across the network. More importantly, Air Canada's diversified global reach, premium offering, loyalty platform, and cargo and Air Canada vacation businesses continue to support resilient revenue performance across varying market conditions. These strengths are central to our new Frontier strategy and remain key drivers of long-term value creation, the latest validation being the minority investment in Aeroplan establishing a $10 billion valuation. The quarter reinforced our confidence in Air Canada's strategy and the long-term value creation opportunity ahead. We continue to invest in the future of the airline. Our fleet and product initiatives remain central to our strategy, including the introduction of the Airbus 321XLR and ongoing fleet modernization. These investments are supporting our premium positioning, expanding our network opportunities, and improving the customer experience. Also, we will soon announce exciting new routes for next summer. As I mentioned, we announced yesterday a 25% equity minority investment in Aeroplan for $2.5 billion, valuing the program at $10 million. Aeroplan remains a core part of Air Canada's commercial strategy, and we continue to retain full control of the program's strategy, operations, partnerships, and member experiences. while monetizing a portion of its underlying value. There is no intention of relinquishing control of this valuable and strategically important component of Air Canada. And for greater clarity, there will be no changes to the way members earn or burn points or to any other element of the program because of this transaction. This transaction simply further strengthens our balance sheet, creates value for all stakeholders, Our people are the foundation and strength of Air Canada. We recently concluded four-year collective agreements with Unifor and the International Association of Machinists and Aerospace Workers. These agreements recognize the expertise and contributions of our employees. They reflect our commitment to constructive labor relations and to maintaining Air Canada as a competitive and attractive place to work. and the Position Air Canada to advance its New Frontiers objectives. I want to thank all our employees for their professionalism and dedication. The individual contributions and teamwork allows us to operate through volatility, care for our customers, and continue building a stronger airline and brand. As you know, I'll be retiring at the end of August after almost 19 years of realizing opportunities and managing challenges. I'm very proud of what we accomplished together. The airline has a strong and skilled leadership team in place with clear continuity in strategy and execution. I remain highly confident in its ability to continue delivering sustainable long-term value for shareholders and look forward to opportunities and successes that lie ahead for Air Canada. Before turning it over to Marc, I want to take a moment to thank the investment community for your engagement, questions, and perspectives over the years. Your interest in Air Canada has made us better, and I'm grateful for your support. Thank you, and over to you, Marc.