Q1 2025 Air Canada Earnings Call

Unknown Executive: Hello, Bonjour, welcome to Air Canada's first quarter 2025 results conference call. All participants are in a listen only mode. After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, please press star one on your telephone keypad. As a reminder, today's call is being recorded.

Hello puzzle welcome to Air Canada's first quarter 2025 results conference call. All participants are in a listen only mode.

After the Speakers' remarks, there will be a question and answer session and if you would like to ask a question. During this time. Please press star one on your telephone keypad.

As a reminder, today's call is being recorded.

Valérie Durand: I would now like to turn the conference over to Valerie Durand, Head of Investor Relations and Corporate Sustainability at Air Canada. You may begin. Thank you, Sarah.

Speaker Change: to Valerie Durand, Head of Investor Relations, Incorporate Sustainability at Air Canada. You may begin.

Valérie Durand: Hello, bonjour, et bienvenue à notre vue des résultats du premier trimestre 2025. Welcome and thank you for attending our first quarter 2025 earnings call.

Speaker Change: Thank you, Sarah. Hello, Benzour, Edivine, Notre-Vité-Risitade, premier trimestre, 2025. Welcome and thank you for attending our first quarter, 2025 earnings call.

Valérie Durand: Joining us this morning are Michael Rousseau, our President and CEO, Mark Galardo, now our EVP and Chief Commercial Officer and President of Cargo, John Deibert, our EVP and CFO. Other executives are with us as well. Arielle Meloul-Wexler, our Chief Human Resources Officer and Public Affairs, Craig Landry, now our Chief Innovation Officer and President of Aeroplan, Mark Barbeau, our Chief Legal Officer and Corporate Secretary, and Mark Nasr, now our EVP and Chief Operations Officer.

Speaker Change: Joining us this morning are Michael Rousseau, our President and CEO , Mark Galardo, now our EVP and Chief Commercial Officer and President of Cargo, John Debert, our EVP and CFO . Other executives are with us as well, Ariane Middler, Weisblur, our Chief Human Resources Officer and Public Affairs.

Speaker Change: Craig Landry, now our Chief Innovation Officer and President of Aeroplane, Mark Barbeau, our Chief Legal Officer and Corporate Secretary, and Mark Nasr, now our EVP and Chief Operations

Valérie Durand: After our prepared remarks, we will take questions from equity analysts. I remind you that today's comments and discussions 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.

Speaker Change: After our prepared remarks, we will take questions from equity analysts.

Speaker Change: I remind you that today's comments and discussions may contain forward-looking information about air Canada's outlook, objectives, and strategies that are based on assumptions, and subject to risks and uncertainties.

Valérie Durand: Please refer to our forward-looking statement in Air Canada's first quarter 2025 news release available on aircanada.com and on CDAR Plus.

Mike: Our actual results could differ materially from any stated expectations. Please refer to our forward-looking statement in Air Canada's first quarter, 2025 news release available on AirCanada.com and on Cedar Plus. And now I'd like to turn the call over to Mike.

Michael Rousseau: And now I'd like to turn the call over to Mike. Well, thank you, Valerie. And good morning. Bonjour. Thanks for joining us. We did experience some turbulence in the first quarter, however managed all of it very effectively. We focus on controlling what we can control, adding resiliency to guard against things we cannot. and continue to pursue our strategy to deliver on our long-term commitment. We reported first quarter revenues of $5.2 billion, which were essentially the same as last year. We had an operating loss of $108 million and adjusted EBITDA of $387 million, better than market expectations.

Mike: Well, thank you, Valerie, and good morning, Bonjour. Thanks for joining us.

Mike: We did experience some turbulence in the first quarter, however managed all of it very effectively.

Mike: We focus on controlling what we can control, adding resiliency to guard against things we cannot.

Mike: and continue to pursue our strategy to deliver on our long-term commitments.

Mike: We reported first quarter revenues of $5.2 billion, which were essentially the same as last year. [inaudible]

Mike: We're an operating loss of $1008 million, and an adjusted EBITDA of $387 million, better than market expectations.

Michael Rousseau: Uncertainty was for sure the main theme during the first quarter related both to tariffs and the potential impact on the broader economic environment. Further, as it has been widely reported, we observed a decline in interest among Canadians for travel to the U.S. The noise around terrorists and trade disputes definitely had an impact, but also we believe some travelers avoided the U.S. simply because it was expensive, with the Canadian dollar trading at levels not seen since 2020. That said, this remains contained as we are experiencing booking declines on the transborder market in the low teens on average over the next six months.

Mike: uncertainty was for sure the main theme during the first quarter related both the tariffs and the potential impact on the broader economic environment

Mike: Further as it has been widely reported, we observed a decline in interest among Canadians for travel to the US.

Mike: The noise around terrorists and trade disputes definitely had an impact, but also we believe some travelers avoided the U.S. simply because it was expensive for the Canadian dollar trading at levels not seen since 2020.

Michael Rousseau: And when compared to other network carriers, we have a much more diversified network, balanced between domestic, transborder and international, allowing us to connect Canada with six continents. So overall, booking trends remain stable, reflecting the diversification and resiliency of our network.

Mike: Between domestic Transborder and international, allowing us to connect Canada was six continents.

Mike: So overall booking trends remain stable, reflecting the diversification and resiliency of our network.

Mark Galardo: And Mark will have more to say about our revenue performance.

Mike: And Mark will have more to say about our revenue performance.

Michael Rousseau: Given this context, there are many things to be proud of this quarter. To begin, we acted quickly to reallocate capacity, moving to markets where demand was greater and de-risking our profile. Our established global footprint and fleet allowed us to adapt to travel trends and capitalize on them. Second, our advanced ticket sales grew by $1 billion from the end of 2024, driving $1.5 billion in cash from operations and $831 million in free cash flow generation in the quarter. Third party billings at Aeroplan continue to be very strong, growing 7% year over year and supporting cash generation.

Mark Galardo: Given this context, there are many things to be proud of this quarter.

To begin we acted quickly to reallocate capacity moving to markets, where demand was greater and Derisking our profile.

Mark Galardo: Our established global footprint and fleet allowed us to adapt to travel trends and capitalize on them.

Mark Galardo: Second our advanced ticket sales grew by $1 billion from the end of 2024, driving $1 5 billion in cash from operations and 831 million free cash flow generation in the quarter.

Mark Galardo: Third party billings that Aeroplan continues to be very strong growing 7% year over year and supporting cash generation.

Michael Rousseau: Our teams worked hard to maintain strong operational performance. We continue to build momentum on the improvements made in the last two years with gains in on-time performance, baggage delivery and customer satisfaction. And we are on track to meet or exceed our Net Promoter Score expectations for the year. Our core is fundamentally stronger as demonstrated by increased resiliency, for example, quicker recovery after large scale disruptions, as we saw at Toronto Pearson in February. Careful planning and good execution are yielding the intended operational benefits.

Mark Galardo: Our teams worked hard to maintain strong operational performance, we continue to build momentum on your promise made in the last two years with gains in on time performance baggage delivery and customer satisfaction.

Mark Galardo: And we are on track to meet or exceed our net promoter score expectations for the year.

Mark Galardo: Our core is fundamentally stronger as demonstrated by increased resiliency for example, quicker recovery after large scale disruptions as we saw at final Pearson in February.

Mark Galardo: Careful planning and good execution are yielding the intended operational benefits.

Michael Rousseau: And finally, we concluded the NCIB program announced last November, and we are continuing with our just announced substantial issuer bid, which we'll speak of in a bit. Looking ahead, we are being prudent and assuming market conditions will remain unsteady. Consequently, we are moderating some of our expectations and updating our full year guide. We continue to focus on those factors we can control. Chief among those is cost, which we will manage through greater efficiency and a $150 million cost reduction program for 2025. Our team has repeatedly demonstrated it is disciplined and adapts quickly to seize opportunities.

Mark Galardo: And finally, we concluded the NCI program announced last November and we are continuing with our just announced substantial issuer bid, which will speak up a bit.

Mark Galardo: Looking ahead, we are being prudent in assuming market conditions will remain unsteady. Consequently, we are moderating some of our expectations and updating our full year guidance.

Mark Galardo: We continue to focus on those factors, we can control chief among those was cost, which we will manage through greater efficiency and a $150 million cost reduction program for 2025.

Mark Galardo: Our team has repeatedly demonstrated this discipline and adapt quickly to seize opportunities.

Michael Rousseau: We will continue to draw on these strengths to deliver on our long-term commitment.

Mark Galardo: We will continue to draw on these strengths to deliver on our long term commitments.

Michael Rousseau: And just before I hand it over to Mark, I want to thank our employees for their hard work and professionalism in taking care of and safely transporting more than 10 million customers this past quarter. And I'm certainly grateful to our customers for their loyalty in choosing Air Canada. Thank you.

Mark Galardo: And just before I hand, it over to Mark I want to thank our employees for their hard work and professionalism and taking care of and safely transporting more than 10 million customers this past quarter.

Mark Galardo: And I'm, certainly grateful to our customers for their loyalty in choosing air Canada. Thank.

Speaker Change: Thank you Mark.

Mark Galardo: Now, Steve, Mark. Thanks, Mike.

Speaker Change: Thanks, Mike and good morning, everyone.

Mark Galardo: And good morning, everyone. Bonjour à tous. J'aimerais d'abord remercier nos employés. Thanks to all our employees for their commitment and passion in helping us deliver these Q1 results. Our overall Q1 performance was impacted by several factors. As a quarter developed and despite a relatively strong start to the year, we witnessed progressive weakening of demand caused by raised levels of uncertainty, macroeconomic concerns, and trade tensions. This affected more acutely the trans-border market and was mostly felt in the month of March. We also saw during the quarter greater competitive capacity to markets including Asia Pacific, India in the Middle East, thus impacting results in a particular market such as China and Hong Kong.

Mark Galardo: I will add to us.

Mark Galardo: As it relates to about a <unk>. Thanks.

Mark Galardo: Thanks to all our employees for their commitment and passion in helping us deliver these Q1 results.

Mark Galardo: Our overall Q1 performance was impacted by several factors as the quarter developed and despite a relatively strong start to the year, we witnessed progressive weakening of demand caused by raise raise levels of uncertainty macroeconomic concerns and trade tensions.

Mark Galardo: This affected more acutely the trans border market and was mostly felt in the month of March.

Mark Galardo: We also saw during the quarter greater competitive capacity in markets, including Asia Pacific.

Mark Galardo: India and the middle East, thus impacting results and in particular markets, such as China and Hong Kong.

Mark Galardo: The shift of the Easter long weekend to Q2 also influenced the quarter and should be kept in mind when comparing to Q1 2024. Recall, we also sustained, within a week, two major winter storms and the accident involving a foreign carrier's aircraft. This brought significant travel disruptions in Toronto and Montreal. The estimated EBITDA impact of these events was around $35 million for the quarter. And lastly, as we think about Q125, we had a peak Airbus A220 out-of-service count and other fleet maintenance challenges. These influenced the operational and RASM qualities of the schedule we flew. In sum, quarterly passenger revenues totaled $4.3 billion, a decrease of 3% year-over-year.

Mark Galardo: The shift of the Easter long weekend to Q2 also influenced the quarter it should be kept in mind when comparing to Q1 2024.

Mark Galardo: Recall, we also sustained within a week two major winter storms and the accident involving a foreign carriers aircrafts. This brought significant travel disruptions in Toronto and Montreal, Yes.

Mark Galardo: The estimated EBITDA impact of these events is around $35 million for the quarter.

Mark Galardo: And lastly, as we think about Q1 dollars 25.

Mark Galardo: At a peak Airbus <unk> hundred 20 out of service count and other fleet maintenance challenges. These influence the operational and RASM qualities to schedule we flew.

Mark Galardo: In some quarterly passenger revenues totaled $4 3 billion, a decrease of 3% year over year, we carefully managed yields which grew slightly year over year.

Mark Galardo: We carefully managed yields, which grew slightly year-over-year. We also reduced capacity in anticipation of demand.

We also reduced capacity in anticipation of demand weakness.

Mark Galardo: But before I discuss per market, let me outline what stood out this quarter, which were the benefits of our balanced network, leading premium product and diversified loyal customer base. Now I'll begin with domestic passenger revenues. These were flat year-over-years, lower yields offset the traffic increase. Capacity grew 4% year-over-year as we reallocated some transborder capacity into the domestic market in March in response to the weaker demand for U.S. destinations. But we were fast to adapt and contend with a challenging commercial environment in the transborder market, while perhaps others lagged. We reduced exposure to certain U.S. destinations and reallocated some capacity to where we saw good demand opportunities, for example, in the sun market.

But before I discuss per market, let me outline what stood out this quarter, which were the benefits of our balance sheet balanced network, leading premium product and diversified loyal customer base.

Mark Galardo: I'll begin with domestic passenger revenues these were flat year over year as lower yields offset the traffic increase capacity grew 4% year over year as we reallocated some trans border capacity into the domestic market in March in response to the weaker demand for U S destinations.

Mark Galardo: But we were fast to adapt and contend with a challenging commercial environment in the trans border market, while perhaps others lagged we reduced exposure to certain U S destinations and reallocated some capacity to where we saw good demand opportunities for example in the Sun market.

Mark Galardo: We skillfully managed yields and contained the transborder revenue decline to 5% versus Q1 2024. Lastly, recall that Q1 is the quarter that sees the greatest proportional activity to sun leisure markets.

Mark Galardo: We skillfully managed yield and contain the trans border revenue declined 5% versus Q1 2024.

Mark Galardo: Lastly, recall that Q1 is the quarter that sees the greatest proportional activity the sudden leisure markets.

Mark Galardo: In Q2, our network shifts towards international markets, notably the transatlantic market, with higher quality margins. We remain vigilant for developments in the market and possess ample flexibility to manage capacity. Atlantic passenger revenues declined 4% due to lower traffic year-to-year, primarily due to increased industry capacity to the Middle East and the Indian subcontinent, and of course the shift of Easter to Q2. This was partially offset with better yields, mainly in Western Europe and in the UK. Six Freedom revenues grew 12% year-over-year, a good portion of which was into the Atlantic market, and we expect our Six Freedom traffic and revenues to remain solid this summer.

Mark Galardo: In Q2, our networks shifts towards international markets, notably the transatlantic market with higher quality margins.

Mark Galardo: We remain vigilant for developments in the market and possess ample flexibility to manage capacity.

Mark Galardo: Atlantic passenger revenues declined 4% due to lower traffic year over year, primarily due to increased industry capacity to the middle East and the Indian subcontinent and of course, the shift of Easter into Q2.

Mark Galardo: This was partially offset with better yields mainly in western Europe and in the U K.

Sixth freedom revenues grew 12% year over year, a good portion of which was into the Atlantic market.

Mark Galardo: And we expect our sixth freedom traffic and revenues to remain solid this summer.

Mark Galardo: Pacific passenger revenues declined 6% largely due to lower yields year-over-year as supply and demand bounced out, followed significant capacity growth in the market in 2024.

Mark Galardo: Specific passenger revenues declined 6% largely due to lower yields year over year as supply and demand and demand bounced out solid significant capacity growth in the market in 2024.

Mark Galardo: Our performance in our sun market is worth calling out. Traffic and yield grew year over year driving a 2% growth in other passenger revenue. Results were solid in Mexico and the Caribbean as Canadians look for alternative destinations. Jumping ahead to other revenues, the strong performance of Sun Destinations also boosted ground package revenues at our Canada vacations, which drove the 8% increase in other revenues. Our well-established premium offering remains attractive, with revenues increasing 2% on slightly less capacity from Q1 2024. And then finally, cargo revenues increased 16% to $250 million from the previous year as shippers tried to get ahead of tariffs and changes to U.S.

Mark Galardo: Our performance in our <unk> market is worth calling out <unk>.

Mark Galardo: Traffic and yield grew year over year, driving a 2% growth in other passenger revenues.

Mark Galardo: Results were solid in Mexico, and the Caribbean as Canadians look for alternative destinations.

Mark Galardo: Jumping ahead to other revenues the strong performance of Sun destinations also boosted ground package revenues at Air, Canada, vacations, which drove the 8% increase in other revenues.

Mark Galardo: Our well established premium offering remains attractive with revenues, increasing 2% on slightly less capacity from Q1 2024.

Mark Galardo: And then finally cargo revenues increased 16% to $250 million from the previous year as shippers tried to get ahead of tariffs and changes to U S duties, we expect a more normal environment for the rest of the year.

Mark Galardo: duties. We expect a more normal environment for the rest of the year.

Mark Galardo: Now, as we look forward, we're almost halfway through the second quarter and have very good visibility into the third. We are encouraged by recent bookings, which are aligned with prior years trend. For the second quarter, we are booked close to 80% of our total forecast, which is typical at this point, and more than 50% for international for the third quarter. System-wide, as we look to Q2 and beyond, we've seen overall resilient demand trends. As we've often mentioned, Air Canada's network diversification is our key differentiator relative to our peers. This is on full display as we navigate the current uncertain environment.

Mark Galardo: Now as we look forward, we're almost halfway through the second quarter and have very good visibility into the third we are encouraged by recent bookings, which are aligned with prior year's trend.

Mark Galardo: For the second quarter, we are booked close to 80% of our total forecast, which is typical at this point and more than 50% for international for the third quarter.

Mark Galardo: System wide as we looked at Q2 and beyond we've seen overall resilient demand trend.

Mark Galardo: As is often mentioned air Canada network diversification is a key differentiator relative to our peers.

Mark Galardo: This is on full display as we navigate the current uncertain environment.

Mark Galardo: Our Q2-Q3 network is weighted heavily to international long-haul routes, which continue to show encouraging demand strength. Our lucrative transatlantic sector is rebounding after a year of normalization in 2024. Our six freedom traffic is booked well ahead of last year and out of our initial expectations for 2025. We do see favorable demand shifts to Europe, domestic Canada and certain Asia Pacific markets like Japan, Thailand and Australia. And our capacity reallocation strategy reflects these shifts. The point-to-point transborder market does remain the exception where we're experiencing booking declines of the low teens on average over the next six months.

Mark Galardo: Q2, Q3 network is weighted heavily to international long haul routes, which continued to show encouraging demand strength.

Mark Galardo: Our lucrative trans Atlantic sector is rebounding after a year of normalization in 2024, our sixth freedom traffic has booked well ahead of last year and out of our initial expectations for 2025.

Mark Galardo: We do see favorable demand shifts to Europe, domestic Canada, and certain Asia Pacific markets, like Japan, Thailand, and Australia and.

Mark Galardo: And our capacity reallocation strategy reflects the shifts.

Mark Galardo: The point to point Trans border market does remains the exception.

Mark Galardo: Where we're experiencing booking declines in the low teens on average over the next six months.

Mark Galardo: That being said, the transborder market typically books closer in. And as we've been doing, we will be leveraging our network diversity to reallocate capacity to where we see good demand. A good example of this is our new Montreal-Edinburgh flight. that starts in this upcoming summer using a 737 MAX, which we sourced from the capacity changes on our transborder network. But for sure, in making these changes to our U.S. network, we are strategically protecting our six freedom flows.

That being said the transborder market typically books closer end and.

Mark Galardo: And as we've been doing we will be leveraging our network diversity to reallocate capacity to where we see good demand.

Mark Galardo: Good example of this is our new Montreal, Edinburgh flight.

Mark Galardo: Starts in this upcoming summer using a 737, Max which we source from the capacity changes on our transport network.

Mark Galardo: For sure in making these changes to our U S network, where strategically protecting our sixth freedom flows.

Mark Galardo: Taking all this in, we have trimmed our system capacity growth for the year and now expect 2025 ASMs to grow between 1 and 3% from last year. And for the second quarter, we expect capacity to grow between 2 and 2.5%. We look forward to a progressive return to service of our Airbus A220 fleet. We will also be welcoming additional 737 MAX and A220 aircraft in the coming months. And as we advance into 2025, our schedule will have fewer red eye flights and fewer suboptimal departure times, creating a more convenient daytime schedule that will better promote connectivity at our three hubs.

Mark Galardo: Taking all this in we have trimmed our system capacity growth for the year and now expect 2025 ASM to grow between 1% and 3% from last year and for the second quarter, we expect capacity to grow between two and two 5%.

Mark Galardo: We look forward to a progressive return to service of our Airbus <unk> hundred 20 fleet.

Mark Galardo: We will also be welcoming additional 737, Max and <unk> hundred 20 aircrafts in the coming months.

Mark Galardo: And as we advance into 2025 are scheduled will have fewer red eye flights and fewer suboptimal departure times, creating a more convenient time schedule that will better promote connectivity at our three hubs.

Mark Galardo: And that's we will significantly improve our schedules in a variety of promising routes that will in turn boost overall margin capability to better yield and RAS and performance.

Mark Galardo: And thus, we will significantly improve our schedules and a variety of promising routes.

Mark Galardo: That will in turn boost overall margin capability to better yield and RASM performance.

Mark Galardo: And when we look further out, our schedule is being firmed up for the winter season. Earlier this week, we announced our largest network expansion to Latin America to date, with 16 percent more seat capacity beginning in late October. We will launch new nonstop routes from cities such as Halifax, Quebec City and Ottawa, and our presence in South America will grow with flights to Rio de Janeiro, Cartagena, Guatemala de Chile and Guadalajara. We built our Latin America schedule to capitalize both on local and transatlantic six-stream demand, including cargo opportunities. These strategic additions show how we can capture demand using the advantages of our robust and well-positioned hubs, our large wide-body fleet, our diverse network, our robust aero plan program, our strong premium product offering, and a compelling suite of brand affairs that appeal to various customer segments.

Mark Galardo: And when we look further out our schedule is being firmed up for the winter season earlier. This week, we announced our largest network expansion to Latin America to date with 15% more seat capacity beginning in late October.

Mark Galardo: We will launch new nonstop routes from cities, such as Halifax, Quebec City in Ottawa, and our presence in South America will grow with flights to Rio de Janeiro card Dania, while I'm out of the Hilli and <unk>.

Mark Galardo: We built our Latin America scheduled to capitalize both on local and transatlantic extreme demand including cargo opportunities.

Mark Galardo: These strategic additions show, how we can capture demand using the advantages of a robust and well positioned hubs are large wide body fleet, our diverse network a robust aeroplan program, our strong premium product offering and a compelling suite of branded fares that appeal to various customer segments.

Mark Galardo: In addition, we have successfully launched other revenue management initiatives, including updates to brand affairs in innovation, such as continuous pricing, both with initial positive results. We are navigating market changes and seizing opportunities with our strong commercial base and dedicated team to meet our long-term commitments.

Mark Galardo: In addition, we have successfully launched other revenue management initiatives, including updates to branded fares and innovation such as continuous pricing both with initial positive results.

Mark Galardo: We are navigating market changes and seizing opportunities with our strong commercial base and dedicated team to meet our long term commitments.

John Deibert: Thank you, merci, and John, over to you. Thanks, Mark. Good morning, everyone. Bonjour à tous. A special thanks to our employees for their hard work and perseverance during a challenging quarter. And thank you to all of you. In Q1, we reported an operating loss of $108 million and an adjusted EBITDA of $387 million, with an adjusted EBITDA margin of 7.4%. Operating expenses increased to $5.3 billion, driven by higher depreciation, ground package costs, and the year-over-year weakening of the Canadian dollar versus the U.S. dollar. Jet fuel prices fluctuated and averaged close to 98 cents Canadian in the quarter.

Speaker Change: Thank you Marci and John over to you.

Speaker Change: Thanks, Mark and good morning, everyone most of that to us.

Speaker Change: A special thanks to our employees for their hard work and perseverance during a challenging quarter and gold mill tier two legit.

Speaker Change: In Q1, we reported an operating loss of $108 million and adjusted EBITDA of 387.

Speaker Change: Adjusted EBITDA margin of seven 4%.

Speaker Change: Operating expenses increased to $5 3 billion driven by higher depreciation ground package costs and the year over year weakening of the Canadian dollar versus the U S dollar.

Speaker Change: Jet fuel prices fluctuated and averaged close to 98 cents Canadian dollars in the quarter.

John Deibert: an 8% decline year-over-year. this tailwind helped partially offset some of the cost increase. In April, we hedged about 20% and 17% of our anticipated jet fuel purchases for the second and third quarters, respectively, at an average price of $0.80 Canadian per litre. This includes taxes and other charges.

Speaker Change: An 8% decline year over year.

Speaker Change: This tailwind helped to partially offset some of the cost increases.

Speaker Change: In April we hedged about 20% and 17% of our anticipated jet fuel purchases for the second and third quarters, respectively.

Speaker Change: An average price of 80.

Speaker Change: Canadian per liter.

Speaker Change: This includes taxes and other charges.

John Deibert: Moving on to unit costs. Q1 adjusted CASM was 15.3 cents, up 3.5% from the previous year. that we contained the increase is significant considering the weaker Canadian dollar versus the U.S. dollar and lower than initially planned capacity. I'm proud to report that we have achieved our labor productivity targets in the first quarter. In March, we took delivery of the last 787-9 aircraft, bringing the total to 32 at the end of the quarter. This accounted for the year-over-year increase in CapEx in Q1. In the quarter, we purchased and canceled over 50 million shares for a total consideration of $350 million.

Speaker Change: Moving on to unit costs.

Speaker Change: Q1, adjusted CASM was $15 <unk>.

Speaker Change: Up three 5% from the previous year.

Speaker Change: That we contained the increase is significant considering the weaker Canadian dollar versus the U S dollar and lower than initially planned capacity.

Speaker Change: Proud to report that we have achieved our labor productivity targets in the first quarter.

Speaker Change: In March we took delivery of the last 787 dash nine aircrafts, bringing the total to 32 at the end of the quarter.

Speaker Change: This accounted for the year over year increase in Capex from Q1.

Speaker Change: In the quarter, we purchased and canceled over 50 million shares for total consideration of $350 million.

John Deibert: Effectively Completing the NCIB Program, announced last November. with 35.8 million shares purchased and Our capital allocation strategy remains consistent. generates strong cash from operations. make quality investments in our airlines. Maintain leverage below two times. and return cash to shareholders. Turning to our balance sheet, we ended the first quarter with $9.5 billion in available liquidity, with a net leverage ratio of 1.3, down from 1.4 at the end of Q4 2024. We feel comfortable with our liquidity profile. We generated $1.5 billion in cash from operations and $831 million in free cash flow in the first quarter. Cash flow is driven by the increase in advance ticket sales ahead of the peak travel season.

Speaker Change: Effectively completing the NCI program announced last November with.

Speaker Change: With $35 8 million shares purchased and canceled.

Speaker Change: Our capital allocation strategy remains consistent.

Speaker Change: <unk> strong cash from operations.

Speaker Change: Make quality investments and our airline.

Speaker Change: Maintaining leverage below two times.

Speaker Change: And return cash to shareholders.

Speaker Change: Turning to our balance sheet. We ended the first quarter with $9 5 billion in available liquidity with a net leverage ratio of one 3% down from one four at the end of Q4 of 2024.

Speaker Change: We feel comfortable with our liquidity profile.

Speaker Change: We generated $1 $5 billion in cash from operations and $831 million in free cash flow in the first quarter.

Speaker Change: Cash flow was driven by the increase in the advanced ticket sales ahead of the peak travel season, and this is in line with our expectations.

John Deibert: And this is in line with our expectations.

John Deibert: Solid Balance Sheet and Strong Cash Generation provide valuable flexibility, which we can leverage to create value.

Speaker Change: Our solid balance sheet and strong cash generation provide valuable flexibility, which we can leverage to create value.

John Deibert: We're delighted with the announcement of our substantial issuer bid for the purchase and cancellation of up to $500 million worth of share. This bid reflects our confidence in our future and our commitment to building shareholder value while creating a world-class global airline for our loyal customers and our stakeholders. remains focused on managing risk responsibly. Preserving our Strong Balance Sheet and Seizing Opportunity. Our buyback program is consistent with our capital allocation roadmap and our strategic plan shared at our December 2024 investment. Details will be announced next week when we launch the bid.

Speaker Change: We're delighted with the announcement of our substantial issuer bid for the purchase and cancellation of up to $500 million worth of shares.

Speaker Change: This bid reflects our confidence in our future and our commitment to delivering shareholder value, while creating a world class global airline for our loyal customers and all stakeholders.

Speaker Change: We remain focused on managing risk responsibly.

Speaker Change: Preserving our strong balance sheet and seizing opportunities.

Speaker Change: Our buyback program is consistent with our capital allocation roadmap and our strategic plan shared at our December 2020 for Investor Day.

Speaker Change: Details will be announced next week, when we launched a bit.

Speaker Change: Yeah.

John Deibert: Also ahead, we plan to settle our outstanding convertible notes in cash at maturity, effectively reducing potential equity dilution by about 18 million shares. Factoring this in, together with our soon-to-be-launched substantial issuer bid, we are well on track to reach our target to be below 300 million shares by 2020.

Speaker Change: Also ahead, we plan to settle our outstanding convertible notes in cash at maturity.

Speaker Change: Effectively reducing potential equity dilution by about 18 million shares.

Speaker Change: Factoring. This then together with our soon to be launched substantial issuer bid.

Speaker Change: We are well on track to reach our target to be below 300 million shares by 2028.

John Deibert: Now turning to our fleet plan. We expect to receive eight A220s this year. In April, we received the 737 MAX aircraft, reaching a total of 46 aircraft in our operating fleet.

Speaker Change: Now turning to our fleet plan.

Speaker Change: We expect to receive $8 820 of this year.

Speaker Change: In April we received a 737 Max aircraft, reaching a total of 46 aircraft in our operating fleet.

John Deibert: The Airbus A321XLR will be delayed by a few months with the first aircraft now due to be delivered in 2026.

Speaker Change: The Airbus <unk> hundred 21, XLR will be delayed by a few months with the first aircraft now due to be delivered in 2026.

Speaker Change: The 787 Dash 10 deliveries were also delayed and.

John Deibert: The 787-10 deliveries are also delayed, and the first two aircraft are now expected in 2020. We are proactively managing, working with our partners to mitigate impacts of the OEM delivery delays in 2026 through 2028. The capital commitment table in our Q1 documents reflects these fleet changes. Our fleet strategy is not only financially accretive, it also benefits our customers, unlocking new destinations. and allowing us to enhance our existing services and onboard products.

Speaker Change: In the first two aircrafts are now expected in 2026.

Speaker Change: We are proactively managing and working with our partners to mitigate impacts of the OEM delivery delays in 2026 through 2028.

Speaker Change: The capital commitments table in our Q1 documents reflects these fleet changes.

Speaker Change: Our fleet strategy is not only financially accretive it also benefits our customers unlocking new destinations.

Speaker Change: And allowing us to enhance our existing services and onboard products.

Speaker Change: Okay.

John Deibert: Yesterday, we updated our full year guidance in our earnings release to account for recent changes in market trends and expectations. Now let me dive a little further into some of those components. We now expect 2025 adjusted EBITDA to be between $3.2 and $3.6 billion. This range accounts for our updated revenue expectations for the year, as well as the evolving fuel pricing environment. Jet fuel should average about $0.88 per liter for the full year, which is lower than our prior expectation of $0.95 per liter. Our forecast considers the lower than initially planned operated capacity in the first quarter, as well as our updated plans for the rest of 2025.

Speaker Change: Yesterday, we updated our full year guidance in our earnings release to account for our recent changes and market trends and expectations.

Speaker Change: Now, let me dive a little further into some of those components.

Speaker Change: We now expect 2025, adjusted EBITDA to be between three 2% and $3 6 billion.

Speaker Change: This range accounts for our updated revenue expectations for the year as well as the evolving fuel pricing environment.

Speaker Change: Jet fuel should average about 88 per liter for the full year.

Speaker Change: Which is lower than our prior expectation of 95.

Speaker Change: For the year.

Speaker Change: Our forecast considers the lower than initially planned operated capacity in the first quarter as well as our updated plans for the rest of 2025.

John Deibert: Our unit cost expectations are unchanged. with full year adjusted cash and predicted to land between 14 and a quarter and 14 and a half cents.

Speaker Change: Our unit cost expectations are unchanged.

Speaker Change: With full year, adjusted CASM predicted to land between <unk> in the quarter and $14.05.

John Deibert: Mike Noto, the company-wide cost reduction program we recently launched. This program includes, among other measures, the deferral and reprioritization of certain projects. Third Party Spend Management, and Continued Staff Productivity. We are aiming to reach $150 million in savings for 2025. And as of today, we are well on track to achieve it. For our cost management actions, we expect to mitigate unit cost increases from the lower capacity growth. I remind you that our CASM expectations also include our assumptions around the evolving regulatory environment. higher airport infrastructure fees. Continuous continued maintenance cost inflation full impact of our new pilot agreement.

Speaker Change: Mike noted the companywide cost reduction program, we recently launched.

Speaker Change: This program includes among other measures the deferral and re prioritization of certain projects.

Speaker Change: It's part of the third party spend management.

Speaker Change: And continued staff productivity.

Speaker Change: We are aiming to reach $150 million in savings for 2025.

Speaker Change: As of today, we are well on track to achieve to achieve it.

Speaker Change: So our cost management actions, we expect to mitigate unit cost increases from the lower capacity growth.

Speaker Change: Okay.

Speaker Change: I remind you that our CASM expectations also include our assumptions around the evolving regulatory environment.

Speaker Change: Higher airport infrastructure fees.

Speaker Change: Continuous continued maintenance cost inflation.

Speaker Change: The full impact of our new pilot agreement as.

John Deibert: as well as estimated changes from a future agreement with our flight attendants. On the latter, if you remain engaged, end of the negotiation table. and the negotiations are productive. The entire team at Air Canada is focused on managing controllable factors. including Strict Cost Management and SWIFT Strategic Capacity Adjustments to ensure a strong performance in key financial metrics. Our free cash flow projections remain unchanged for the full year. We expect to achieve break-even free cash flow, plus or minus $200 million, with line of sight to positive free cash flow generation.

Speaker Change: As well as estimated changes from a future agreement with our flight attendants.

Speaker Change: On the latter we remain engaged and at the negotiation table.

Speaker Change: And the negotiation.

Speaker Change: Our productive.

Speaker Change: The entire team at Air Canada is focused on managing controllable factors, including strict cost management and Swift strategic capacity adjustments to ensure our strong performance and key financial metrics.

Speaker Change: Our free cash flow projections remain unchanged for the full year.

Speaker Change: We expect to achieve breakeven free cash flow plus or minus $200 million.

Speaker Change: With line of sight, the positive free cash flow generation.

John Deibert: Finally, our 2025 guidance assumes a marginal GDP increase for the current year, aligned with expectations from the largest banks and the IMF. It does not contemplate a recession scenario. We continue to assume the Canadian dollar will trade at an average of $1.40 per U.S. dollar for the year. This is lower than the high levels seen in the first quarter of 2025. And while the tariff environment continues to evolve, it remains somewhat contained if you consider our plane deliveries for the next year. We are working with suppliers to mitigate any significant impacts to our 2025 expectations.

Speaker Change: Finally, our 2025 guidance assumes a marginal GDP increase for the current year.

Speaker Change: Aligned with expectations from the largest banks and the IMF.

Speaker Change: It does not contemplate a recession scenario.

Speaker Change: We continue to assume that <unk> will trade at an average of $1 40 per U S dollar for the year.

Speaker Change: This was lower than the high levels seen in the first quarter of 2025.

Speaker Change: And while the tariff environment continues to evolve it remains somewhat contained if you consider our planned deliveries for the next year.

Speaker Change: We are working with suppliers to mitigate any significant impacts to our 2025 expectations.

John Deibert: To conclude. We remain firmly committed to our 2028 targets and our 2030 ambitions. With confidence in our strategic long-term plan, we are poised to drive substantial shareholder value and ensure a prosperous future for Air Canada.

Speaker Change: To conclude.

Speaker Change: We remain firmly committed to our 2028 targets in our 2030 ambitions with confidence in our strategic long term plan, we are poised to drive substantial shareholder value and ensure a prosperous future for air Canada.

Speaker Change: Back to you.

Michael Rousseau: Thank you, John. As you can see, we are effectively managing uncertainty through a solid long term plan, the commitment and discipline to carry it through to completion, and the agility to adapt quickly to stay in court. In the first quarter, Air Canada showed it has all these attributes. And we will use them to build value for shareholders by concentrating on those things we can control. Along with revenue generation, we are sharply focused on cost. In a quarter, we acted decisively, putting in place the cost control measures John spoke about. And we will reinforce our cost reduction program through process improvements to increase efficiency, such as our ongoing on time performance and baggage handling programs, which bolster customer satisfaction and loyalty.

Speaker Change: Well thank you John.

Speaker Change: As you can see we are effectively managing uncertainty through a solid long term plan.

Speaker Change: Commitment and discipline to carry it through to completion and the agility to adapt quickly to stay on course.

Speaker Change: In the first quarter Air Canada has shown and has all of these attributes and we will use them to build value for shareholders by concentrating on those things we can't control.

Speaker Change: Along with revenue generation, we are sharply focused on costs.

Speaker Change: In the quarter, we acted decisively putting in place the cost control measures John spoke about.

Speaker Change: And we will reinforce our cost reduction program through process improvements to increase efficiency, such as our ongoing on time performance and baggage handling programs, which bolstered customer satisfaction and loyalty.

Michael Rousseau: At the same time, we will keep developing our business. This includes introducing new routes, such as a recent launch of service to Manila and others Mark spoke of. We continue to be the leading international premium carrier offering the best of Canada at home and around the world. And it includes investments in new aircraft and new customer services, such as the new Air Canada Cafe in Montreal, or our recent launch of fast free Wi Fi onboard. As a new cabinet will be formed next week, we're encouraged by the commitment made during the campaign of a new $5 billion trade diversification corridor fund, which includes investments in airport infrastructure.

Speaker Change: At the same time, we will keep developing our business. This includes introducing new routes such as the recent launch of service to Manila and others Mark spoke up.

Speaker Change: We continue to be the leading international premium carrier offering the best of Canada at home and around the world.

Speaker Change: And it includes investments in new aircraft and new customer services, such as the New Air Canada Cafe in Montreal.

Speaker Change: Our recent launch of fast free Wi Fi onboard.

Speaker Change: As a new cabinet will be formed next week. We are encouraged by the commitment made during the campaign with a new $5 billion trade diversification corridor fund, which includes investments in airport infrastructure.

Michael Rousseau: We look forward to working with the government to modernize the air travel system in Canada and facilitate greater investments in our airport. These necessary investments will keep us in competitive and further increase our net promoters. They will also further deepen loyalty, which is already strongly supported by AeroPlan. We were pleased to win Program of the Year, among other recognitions, at the well-respected Freddie Awards recently. Aeroplane along with our product and schedule forms a core of our customer value proposition, delivered with care and class by our people. And we will continue to execute in a well-timed and disciplined manner, as in the case with our substantial issuer bid announced yesterday.

Speaker Change: We look forward to working with the government to modernize the air travel system in Canada, and facilitate greater investments in our airports.

Speaker Change: These necessary investments will keep us competitive and further increase our net promoter score.

Speaker Change: They will also further deepen loyalty, which is already strongly supported by Aeroplan.

Speaker Change: We were pleased to win program of the year among other recognitions that the well respected Freddie Awards recently.

Speaker Change: Aeroplan, along with our product and schedule forms the core of our customer value proposition delivering with care in class by our people.

And we will continue to execute in a well timed and disciplined manner as isn't the case with our substantial issuer bid announced yesterday.

Michael Rousseau: Over more than a decade, we have developed a strong and resilient foundation that provides multiple competitive advantages. These include our diversified revenue base, robust balance sheet, and liquidity management, a modern and agile fleet, and a deep global network connecting all areas of Canada to the world. All of these are amplified by a widely recognized and powerful brand, Air Canada Cargo, Air Canada Rouge, Air Canada Vacations, and enhanced customer experience with competitive and premium products and services, including our leading loyalty program, AeroPlan. In all of this, we are guided by the strategic plan we laid out at Investor Day late last year.

Speaker Change: Over more than a decade, we have developed a strong and resilient foundation that provides multiple competitive advantages.

Speaker Change: These include our diversified revenue base robust balance sheet and liquidity management, a modern and agile fleet and a deep global network connecting all areas of Canada to the world.

Speaker Change: All of these are amplified by our widely recognized and powerful brand Air Canada cargo and Air Canada Rouge Air, Canada, vacations, and enhanced customer experience with competitive and premium products and services, including our leading loyalty program Aeroplan.

Speaker Change: And all of this we are guided by our by the strategic plan, we laid out at Investor day late last year.

Michael Rousseau: This includes targets we set out at the time to create long-term shareholder value. While the route to reach these targets may change somewhat, I can assure you, on behalf of the entire management team and all employees at Air Canada, that our determination and ability to achieve them has not.

Speaker Change: This includes targets, we set out at the time to create long term shareholder value.

Speaker Change: While the route to reach these targets may change somewhat I can assure you on behalf of the entire management team and all employees in our Canada than our determination and ability to achieve them has not.

Michael Rousseau: Thank you.

Speaker Change: Thank you Missy.

Michael Rousseau: Merci.

Speaker Change: Thank you Mike and thank you all for joining us this morning.

Valérie Durand: Thank you, Mike, and thank you all for joining us this morning. We are now ready to take your questions. Should you require further details following this call, our Investor Relations team is available for support.

Speaker Change: Now on to the content that is advancing well.

Speaker Change: Now ready to take your questions should you require further details following this call our Investor Relations team is available for support <unk> Sarah.

Valérie Durand: Back to you, Sarah. Thank you.

Speaker Change: Thank you as a reminder, if you have a question. Please press star one on your telephone keypad.

Unknown Executive: As a reminder, if you have a question, please press star one on your telephone keypad. In the interest of time, we ask you please limit yourself to one question and a brief follow-up. Thank you.

Speaker Change: The interest of time, we ask you. Please limit yourself to one question and a brief follow up thank you.

Kevin Chiang: Your first question comes from Kevin Chiang with CIP. Your line is open. Good morning. Thanks for taking my question here. Maybe just my first one is, it sounds like six freedom traffic is outperforming initial expectations this year, but you're also adjusting your transborder routes, as you mentioned earlier, as well.

Speaker Change: Your first question comes from Kevin Chiang with CIBC. Your line is open.

Kevin Chiang: Good morning, Thanks for thanks for taking my question here.

Kevin Chiang: Just my first one is it sounds like sixth freedom traffic is outperforming initial expectations. This year, but you also.

Kevin Chiang: Adjusting your Transborder routes as you mentioned earlier as well just wondering how if I think of this kind of over a medium term how how adjustments to your transponder capacity might impact that sixth freedom traffic growth. It seems like you might it might limit some of the point to point connections that drive some of that.

Mark Galardo: Just wondering how, if I think of this kind of over a medium term, how adjustments to your transborder capacity might impact that six freedom traffic growth? It seems like it might limit some of the point-to-point connections that drive some of that international opportunity and then maybe how that might impact also how you think about the corporate travel recovery as you reduce frequency into the U.S.

Kevin Chiang: The international opportunity and then maybe how that might impact also how you think about the corporate travel recovery as you reduce frequency into into the U S.

Mark Galardo: Good morning, Kevin. Very, very good question. So firstly, on Six Freedoms, we have not adjusted or touched any of our flights that connect into our international banks at any of our three hub airports. In fact, we've increased capacity at those specific times to make sure that we can promote as much Six Freedoms traffic as possible, and early results show that that was a good move. And in terms of our schedule, we have not, at this point in time, cut any key business flights on key routes like Toronto, New York, Toronto, Chicago, et cetera. We still have a very well diversified schedule that promotes corporate recovery.

Mark Galardo: Good morning, Kevin not a very very good questions. So firstly on sixth freedom, we have not adjusted our touch to any of our flights that connect into our international banks at any of our 300 airports.

Kevin Chiang: In fact, we've increased.

Kevin Chiang: Capacity at those specific times to make sure that we can promote as much extreme traffic as possible and early results show that that that was.

Kevin Chiang: Good move.

Kevin Chiang: And in terms of our are scheduled.

We have not at this point in time cut any key business flight on key routes like Toronto, New York, Toronto, Chicago et cetera, we still have a very well diversified schedule.

Kevin Chiang: That promote corporate recovery.

Mark Galardo: And at this point in time, the corporate demand on the US still remains stable. That's helpful.

Kevin Chiang: And at this point in time, the corporate demand on the U S still remains stable.

Speaker Change: That's helpful and maybe just my follow up question. Maybe this is John you mentioned.

John Deibert: And maybe just my follow-up question, maybe this is to John. You mentioned, you know, working with the OEMs as you kind of contemplate tariff risk. I guess as you think of your longer-term CapEx, is there any color you can shed in terms of how you think which party bears a risk to the extent that tariffs potentially are, you know, could add to that capital budget to the extent that tariffs are applied to some of your fleet plan there? It's a good question. I think that's still an evolution. We will continue to stay close. Every contract has some different features to it.

Speaker Change: Working with the Oems.

Speaker Change: Contemplate tariff risk I guess as you think of your longer term capex is there.

Speaker Change: Any color you can shed in terms of how you think.

Speaker Change: Which party bears the risk to the extent that tariffs Patel.

Speaker Change: Particularly our R. R.

Speaker Change: Could add to that capital budget to the extent that tariffs are applied to some of your fleet plan there.

Speaker Change: Yes, it's a good question I think thats still an evolution. So we will continue to stay close and.

Speaker Change: Yeah.

Speaker Change: Every contract has some different features to it. So there are a lot of this probably through indices inflationary indices that would then be affected but I think it's early to speculate on what that might be longer term.

John Deibert: A lot of this is probably through indices, inflationary indices that would then be affected. I think it's really to speculate on what that might be longer term. We're going to continue to work with both the airframers in the short term, no impact on our perceived year for 2025. Most of the 25 deliveries are Canadian made A220s. There's a few Boeing aircraft coming in, but most of those are almost complete, so on their way to us and shouldn't bear any tariff. For 2025, we have a pretty good line of sight. Then for 26, 27, 28, we'll work with them and have to manage it.

Speaker Change: We're we're going to continue to work with both air Framers and the short term not no impact on our perceived here for 2025.

Speaker Change: Most of the 25 deliveries are made $8 <unk>.

Speaker Change: And so there's.

Speaker Change: There's a few Boeing aircraft coming in but most of those are almost complete so underway through to us and Shouldnt bear any tariff. So for 2025, we have pretty good line of sight and then for 'twenty six 'twenty seven 'twenty April we'll work with them after manage accordingly.

Kevin Chiang: That's perfect.

Unknown Executive: Thank you for taking my questions.

Speaker Change: Perfect. Thank you for taking my questions.

Speaker Change: The next question comes from <unk> <unk> with Raymond James Your line is open.

Savanthi Sith: The next question comes from Savanthi Sith with Raymond James. Your line is open. Hey, good morning.

Speaker Change: Hey, good morning.

Mark Galardo: I wonder if you could put a little bit more color at the geographic entity level on kind of what is reflected in that 1 to 3% capacity guide for 2025, just like how you're planning on kind of allocating capacity or on a year-over-year basis kind of as you go through the rest of the year here at the entity level. Hi, Savi, it's Mark. So on the U.S. right now, as you can see, our capacity is down roughly, depending on the month, anywhere between 8 to 10%. I think we'll see that continue all the way through Q3 and possibly into Q4.

Speaker Change: And a little bit more color.

Speaker Change: The geographic entity level kind of what is reflected in that 1% to 3% capacity guide for 2005.

Speaker Change: Like how you're planning on.

Speaker Change: Kind of allocating capacity on a year over year basis kind of as you go through the rest of the year at that level.

Mark Galardo: Hi, Savi, it's mark so on the U S. Right now as you can see our capacity is down roughly.

Mark Galardo: Depending on the month anywhere between 8% to 10%.

Mark Galardo: I think we'll see that continue all the way through Q3 and possibly into Q4.

Mark Galardo: On the Atlantic, we've got a low single-digit ASM growth. We have high single-digit growth on the Pacific as we return service to China, and in particular, we add a new service to Manila. And on the Sun market, which includes the Caribbean and also South America, we'll be looking at mid-single-digit ASM growth with a particular growth in Q4 as we announce these new Latin American destinations. Is your question, is it really to transborder or overall? All, yeah, all the entities come from either revenue or, you know, revenue basis, just how we should think about the sequential trend.

Mark Galardo: The Atlantic we've got low single digit ASM growth.

Speaker Change: <unk> has high single digit growth on the Pacific as we return.

Speaker Change: Service to China and in particular, we added new service to Manila.

Speaker Change: And on the Sun market, which includes the Caribbean and also South America will be looking at mid single digit ASM growth with a particular.

Speaker Change: Growth in Q4, as we announce these new Latin American destinations.

Speaker Change: That's helpful. Thank you.

Speaker Change: Just following up on that so.

Speaker Change: And from a trend level that you know what we saw in the in one eye.

Speaker Change: Suspect transporter.

Speaker Change: He is a bigger ahead in the second quarter, just because you're seeing a full quarter impact.

Speaker Change: And I just kind of curious if you could talk about <unk> versus <unk>, maybe how at sequentially. Thanks, Mike.

Speaker Change: Looking at the entity level here.

Speaker Change: As your question as it relates to trans border or overall.

Speaker Change: Oh yeah.

Speaker Change: All the entities.

Speaker Change: And from a revenue or unit revenue basis, just how we should think about at the sequential trends.

Mark Galardo: Yeah, I think I think I've outlined the trends in the sense that, you know, if you look at Q1, the US drop was, you know, progressive, and it really kind of accentuated in March, and we start moving capacity into the sun market and domestic market. That continues all the way through Q2 and Q3. Q4, we have a bunch of options on the US, you know, to to moderate capacity or to further add back depending on how market conditions evolve. And the rest is as we've, as we've outlined, you know, domestic will stay with single digit growth.

Speaker Change: Yes, I think I think I've outlined the trends in the sense that if you.

Speaker Change: You look at Q1, the U S drop ways.

Speaker Change: The progressive and it really kind of accentuated in March and we started moving capacity into the sudden market and domestic market that continued all the way through Q2 and Q3.

Speaker Change: Q4, we have a bunch of options on the U S.

Speaker Change: To moderate capacity or to further add back depending on how market conditions evolve.

Speaker Change: And the rest is as we've as we've outlined domestic will stay with the single digit growth.

Mark Galardo: The domestic market for Q2-Q3 looks stable in terms of passenger growth. And we see a rebound on the Atlantic. Sorry, I meant on the revenue side, but it sounds like it's pretty consistent, except for maybe the transborder. Is that fair? Yeah.

Speaker Change: The domestic market for Q2, Q3 look stable in terms of passenger growth and we see a rebound on the Atlantic.

Speaker Change: Yes.

Speaker Change: On the revenue side, but it sounds like it's pretty darn consistent except for maybe the Transborder is that fair.

Speaker Change: Yes.

Savanthi Sith: Thank you.

Speaker Change: Thank you.

Speaker Change: The next question comes from Greg Konrad with Jefferies. Your line is open.

Greg Conrad: next question comes from Greg Conrad with Jeffries. Your line is open. Good morning. Um, maybe just to drill into Pacific a little bit more, I mean, you gave a little bit of color, but you called out normalization of yields in the quarter.

Speaker Change: Alright, good morning.

Speaker Change: Good morning.

Speaker Change: To drill into Pacific a little bit more I mean, you gave a little bit of color, but you called out normalization of yields in the quarter can you, maybe just talk a little bit about what youre seeing into that region into Q2 and Q3.

Mark Galardo: Can you maybe just talk a little bit about what you're seeing into that region into Q2 and Q3, you know, from a yield base? Yeah, thanks. Great question. So it becomes a story of compares. Last year in Q1, what we saw is, you know, a market that where the demand supply and balance was more towards the side of having, you know, not enough supply in the market. We had a very strong yield and rising performance in Q1 of 24. And if you recall, last year, we shifted capacity away from the Atlantic into the Pacific in Q1.

Speaker Change: From a yield basis.

Speaker Change: Yes, Thanks, Great question.

Speaker Change: It becomes a story of compares last year in Q1.

Speaker Change: What we saw is a market that where the demand supply and balance was more towards the side of having not enough supply in the market.

Speaker Change: We had a very strong yield and RASM performance in Q1 of 'twenty four and if you recall last year, we shifted capacity away from the Atlantic into the Pacific in Q1.

Mark Galardo: As we roll over Q2, Q3, that's where we started to see last year some Pacific yields normalizing. And we should see in Q2, Q3 relatively flat yield on the Pacific overall and strong demand load factor, like we had last And then maybe just a follow-up.

Speaker Change: As we roll over Q2, Q3, that's where we started to see last year some specific yields normalizing.

Speaker Change: And we should see in Q2 Q3 relatively flat yield.

Speaker Change: On the Pacific overall, and strong demand load factor like we had last year.

Speaker Change: And then maybe just.

John Deibert: If we look at the disclosures, it looks like expenditures dropped, you know, planned for 2025 by $400 million or so shifted out of the year.

Speaker Change: A follow up if we look at the disclosures it looks like expenditure.

Speaker Change: Drops planned for 2025 by 400 million or so shifted out of the year can you maybe talk about that and was that largely the offset to the lower EBIT just in terms of the ability to keep the free cash flow guidance unchanged year over year.

John Deibert: Can you maybe talk about that? And was that largely the offset to the lower EBITDA, just in terms of the ability to keep the free cash flow guidance, you know, unchanged year over year? Yeah, I'd say that there was a little bit of moving around. I highlighted some delays on deliveries in 26, 27. So those do come with PDPs that would have been paid in 2025. So there's some PDP movement, first of all. And then I think we had a couple of 220s move out of the year as well. So that's really just the delivery schedule.

Speaker Change: Yes, I'd say that there is there was a little bit of moving around.

Speaker Change: I highlighted some delays on deliveries in the $26 seven so those.

Speaker Change: Those do come with PDP that would have been paid in 2025. So there is some PDP movement.

Speaker Change: First of all and then I think we had a couple of hundred Twenty's move move out of the year as well. So that's really just the delivery schedule and there was some some self help and they are probably a couple of hundred million dollars that we just manage the business and I think it's just good prioritization keeping focused on the right things and just making sure that we're.

John Deibert: And there was then some self-help in there, probably a couple hundred million dollars that we just, you know, managed the business. And I think it's just good prioritization, keeping focused on the right things and just making sure that we're, you know, we're not doing too many things at the same time. So a little bit of self-help and then some movement in the schedule.

Speaker Change: We're not doing too many things at the same time, so a little bit of self help and then some movements in the schedule.

John Deibert: Cool. Thank you.

Speaker Change: Okay.

Speaker Change: Yes.

Thomas Fitzgerald: The next question comes from Thomas Fitzgerald of TD Cowan, your line is open. Hi, everyone. Thanks so much for the time. I was wondering, on the cost front, it's great to see your confidence in the progress you're making in your cost initiatives.

Speaker Change: The next question comes from Thomas Fitzgerald of TD Cowen Your line is open.

Thomas Fitzgerald: Hi, everyone. Thanks, so much for the time.

Speaker Change: I was wondering on the cost front, it's great to see your confidence in the progress Youre, making on your cost initiatives are there any would you just mind unpacking, where youre seeing the most outperformance and then what your priorities are.

John Deibert: Are there any, would you mind unpacking where you're seeing the most outperformance and then what your priorities are? Just maybe like specific focus areas for the rest of the year on the cost initiatives? Yeah, we're seeing good traction on productivity. So and we continue to launch technology into the business that I think is helpful and helps us continue to really, I mean, absorb growth, even though it's a little bit more muted than expected. We still do grow and that allows us to grow that the business more efficiently. So I'd say that that's continued through 2025.

Thomas Fitzgerald: Maybe like specific focus areas for the rest of the year.

Speaker Change: On the cost initiatives.

We're seeing good traction on productivity, so and we continue to launch.

Speaker Change: Technology into the business that I think is helpful and helps us continue to really absorb growth, even though it's a little bit more muted than expected.

Speaker Change: I'll do grow in that allows us to grow that.

Speaker Change: The business more efficiently. So I would say that that has continued through 2025 and frankly through the next three years.

John Deibert: And frankly, through the next three years. I think we're also I then just mentioned here, just good prioritization and making sure that we're focused on, on the key, most value creating projects. And so there's, there's, there's, you know, kind of management of priorities there as well.

Speaker Change: I think we're also items just mentioned here just a good participation in making sure that we're focused on on the key.

Speaker Change: The value, creating projects and so there is there.

Speaker Change: There is there is kind of management the priorities there as well and then.

John Deibert: And then, you know, supply chain, we're always active. And I think we always do a good job of finding savings with respect to third party spend. Delayed a little bit on the, on the fleet and, and the cost efficiency from new aircraft given just the longer delivery schedules from OEMs. But, you know, I'd say that's going to be more 26, 27, 28 kind of value.

Speaker Change: Supply chain, we're always active and I think we always do a good job of finding savings with respect to third party.

Speaker Change: Ben.

Speaker Change: The lead a little bit on the on the fleet and.

Speaker Change: And the cost efficiency from new aircraft given.

Speaker Change: The longer.

Speaker Change: Delivery schedules from Oems.

Speaker Change: I'd say, that's going to be more 'twenty, six 'twenty 728 kind of value for us.

John Deibert: Okay, that's great to hear and great color. I appreciate that.

Speaker Change: Okay, that's great to hear and great color I appreciate that.

John Deibert: Just on the other revenue line, you guys had a really nice growth in the first quarter. And I'm just wondering what year, is that you're expecting kind of that elevated growth for the rest of the year, or that was maybe more of a one-off with ACV, or just how we should be thinking about that line item between vacations and AeroPlan? Thanks again for the time. Yeah, thanks. Good question. It was largely Air Canada vacations as we saw a big shift in travel demand, you know, away from US leisure destinations to sun destinations. So I think we saw ACV grow their revenues by 8% in Q1.

Speaker Change: On the other revenue line you guys had a really nice growth in the first quarter and I'm just wondering what your area. If thats like US that you are expecting kind of that elevated growth for the rest of the year or if that was maybe more of a one off with a C V or just how we should be thinking about that item line item between vacations and aeroplan. Thanks again for the time.

Speaker Change: Thanks for the question it was largely air Canada vacations as we saw a big shift in travel demand away from U S leisure destinations to Sun destinations.

Speaker Change: So I think we saw ACD grew their revenues by 8% in Q1.

John Deibert: I think we might see a little bit of that in Q4, but typically in Q2, Q3, sun destinations become a little bit less popular.

Speaker Change: I think we might see a little bit of that in Q4, but typically in Q2 Q3 extended debt sun destinations become a little bit less popular.

Speaker Change: The next question comes from Connor Gupta with Scotiabank. Your line is open.

Konark Gupta: The next question comes from Konark Gupta with Scotiabank. Your line is open. Good morning, and thanks. Just on the yield, I'm just thinking, the forward bookings you're seeing right now, and you mentioned, Mark, down low teens for U.S. transporter, but then you're seeing incremental demand for select markets. How's the yield faring in these advanced bookings right now? Are you seeing any big deceleration? You know, like, do you have stimulate the market a lot to create the demand as an offset to transporter?

Connor Gupta: Good morning, and thanks.

Speaker Change: Just on the yield.

Connor Gupta: Thinking.

Connor Gupta: Forward bookings, you're seeing right now and you mentioned mark down low teens for U S. Transporter, but then we are seeing incremental demand for select markets.

Connor Gupta: Post the yield.

Connor Gupta: Bearing in VSAT months when bookings right now are you seeing any deceleration.

Connor Gupta: Stimulate the market a lot to create the demand as an offset to cleanse quarter.

Mark Galardo: Hi, Konark, at this time, we don't see any yield deceleration. In fact, yields look stable all the way through Q2 in the initial part of This does not vary by the market, I guess, I mean, like even transport. Not right now. We've reduced our exposure to US leisure destinations where you might see a bit more sensitivity on the yield. So we're less exposed there. On the transatlantic, we're rebounding from a year where yields normalized last year. So we might see a bit of yield growth on the transatlantic. And on the Pacific, you know, we're lapping over last year where things started to normalize as well.

Connor Gupta: At this time, we don't see any yield deceleration in fact yields look stable all the way through Q2 and the initial part of Q3.

Connor Gupta: This does not vary by the market I guess I mean, maybe even transfer.

Now right now we reduced our exposure to U S leisure destinations, where you might see a bit more sensitivity on the yield so we're less exposed there.

Connor Gupta: On the Trans Atlantic were rebounding from a year, where yields normalized last year.

Connor Gupta: So we might see a bit of yield growth on the trans Atlantic.

Connor Gupta: And on the Pacific, we're lapping over last year, where things start to normalize as well, we'll see some yield impact in markets like China, Hong Kong, where there's substantially more capacity by Chinese carriers in Hong Kong based carriers, but that gets offset by strength that we see in markets like Japan.

Mark Galardo: We'll see some yield impact in markets like China, Hong Kong, where there's substantially more capacity by Chinese carriers and Hong Kong based carriers. But that gets offset by strength that we see markets like Japan. and Australia.

Connor Gupta: In Australia.

John Deibert: Makes sense, thanks, and if I can follow up on the other side, John perhaps chasm.

John Deibert: Thanks, and if I can follow up on the other side, John, perhaps chasm, you know, it came in like Q1 was pretty much in line with what you're expecting for the full year at the low end, call it, would be cost saving as you realize those numbers, do you see, you know, the chasm improving sequentially from here in terms of year to year growth, or should we see more like a stagnant kind of growth generally? I think that, I mean, sequentially from Q1 to Q4, you should see, obviously, it come down. I think we peak here in Q1 at 15.3.

John Deibert: It came in like Q1 was pretty much in line with what you're expecting for full year at the low end call. It.

John Deibert: <unk> cost savings as you would realize those numbers.

John Deibert: See.

John Deibert: The chasm improving sequentially from <unk>.

John Deibert: We have growth or should we see more like a stagnant kind of growth guidance.

John Deibert: I think that.

John Deibert: Sequentially from Q1 to Q4, you should see obviously come to I think we beat here in Q1 at 53.

John Deibert: Probably.

John Deibert: Probably, you know, Q3 last year was a very good quarter, if you recall. So we're going to have probably it's going to gap out in Q3 2024 versus 2025, probably going to show the biggest gap. But I would say that overall, you know, kind of the mid-14, what a good summer number. That's kind of where we're going to be. And on the full year, we're holding pretty much bang on to where we started our expectations. And, you know, it was mentioned before about $400 million. If you think about that, it was the first thing that we did right is we really got on to adjusting capacity and taking out variable costs quickly.

John Deibert: Q3 last year was a very good quarter. If you recall, so we're going to have probably is going to gap out.

John Deibert: In Q3.

John Deibert: 2024 versus 2025, probably going to show the biggest gap.

John Deibert: But I would say that overall.

John Deibert: Kind of in the mid 14.

John Deibert: What a good summer number.

John Deibert: That's kind of where we're going to be in on the full year, we're holding pretty much bang on to where we started.

John Deibert: R.

John Deibert: Our expectations.

John Deibert: It was mentioned before about $400 million, if you think about that.

John Deibert: First thing that we did right is we really got got onto adjusting capacity and taking out variable costs quickly and then it allows us to also then pursue some of the additional cost reduction that holds the.

John Deibert: And then it allows us to also then pursue some of the additional cost reduction that holds the chasm in place for the full year. So, on a downward trend for the remainder of the year, we're gapping out in Q3 against a very favorable Q3 last year. Okay, that's helpful. Thank you.

John Deibert: On the CASM in place for a full year, so on a downward trend for the remainder of the year of gapping out in Q3 against the very favorable Q3 last year.

Speaker Change: Okay. That's helpful. Thank you.

Steve Trent: The next question comes from Steve Trent with Citi. Your line is open.

Steve Trent: The next question comes from Steve Trent with Citi. Your line is open. Good morning, everybody. And thanks very much for taking my questions.

Steve Trent: Good morning, everybody and thanks very much for taking my questions.

Steve Trent: You know, the first is just regarding, actually, on a high level, thinking about the 2026 World Cup, I believe Toronto and Vancouver are host cities, you know, how are you thinking about that as, you know, potentially moving the needle on yields, or volumes, you know, I believe, for example, last year's Olympics were at least a short term damper on RASM on the North Atlantic would just love your, your high level view on that. Thank you. Hi, Steve, it's a bit it's a bit early to tell. Interestingly, we put a task force internally for the World Cup thinking that, you know, how could demand evolve and what opportunities, you know, could that have, but way too early right now to speculate on what that will do to demand and overall .

Steve Trent: First is just regarding.

Steve Trent: Actually on a on a high level.

Speaker Change: What about the 2026 World Cup, I believe Toronto, and Vancouver, our host cities.

Speaker Change: How are you thinking about that.

Speaker Change: Moving the needle.

Speaker Change: On yields.

Speaker Change: Or or volumes.

Speaker Change: I believe for example.

Speaker Change: Last year's Olympics.

Speaker Change: The short term.

Speaker Change: Damper on RASM.

Speaker Change: On the North Atlantic, but just Lumpier your high level view at that thank you.

Speaker Change: Hi, Steve its a bit early to tell and interestingly, we put a task force internally for the World Cup thinking that how.

Speaker Change: Good demand evolve and what opportunities could that has the way too early right now to speculate on what that will do to demand and overall yields.

Steve Trent: Okay, I understand. I appreciate it.

Okay, I understand and appreciate it.

Mark Galardo: And just as a quick follow up, I was also keen on your comments into Latin America, any high level view in Mexico, specifically how you're thinking about servicing or potentially servicing the relatively new government controlled airports, such as Felipe Angeles and Mexico City and Tulum. Well, as it relates to Tulum, I think it's no secret that the industry in general put a lot of incremental capacity into Tulum. some carriers rationalize a bit. There was a lot, you know, fast in that market. We ourselves on Tulum are going to pare back a little bit of our service there and really kind of double down on Cancun, which performs quite well for us.

Speaker Change: Just a quick follow up is also keen.

Speaker Change: And your comments into.

Speaker Change: Latin America.

Speaker Change: Any high level view and Mexico, specifically, how you are thinking about.

Speaker Change: Servicing or potentially servicing and then relatively need government controlled airports.

Speaker Change: Such as for lead to Angeles, certainly Mexico City in Antelope.

Speaker Change: Well as it as it relates to <unk> I think it's no secret that the industry in general, but a lot of incremental capacity into to Illumina has seen some carriers rationalize a bit there is a lot faster in that market.

Speaker Change: We ourselves onto lumia going to pare back a little bit of our service there.

Speaker Change: And really kind of double down on Cancun, which performs quite well for us we're.

Mark Galardo: We're adding Guadalajara, which we're very excited about, not only for the local traffic, but also timed extremely well for international network connectivity. And we think we can have a decent proposition in the six freedom play between Europe and Mexico. We're going to restore Monterey from Toronto. And the reason why we had to suspend that in the winter was due to some 1820 fleet challenges. So overall, we liked the Mexico market, but we also liked the counter seasonality of that market and the potential six freedom contribution that it can make to international. Okay, very helpful. Appreciate the time.

Speaker Change: We're adding Guadalajara, which we're very excited about <unk>.

Speaker Change: Not only for the local traffic, but also timed extremely well for our international network connectivity and we think we can have a decent proposition in the sixth freedom, playing between Europe and Mexico.

Speaker Change: We're going to restore Monterey from Toronto.

Speaker Change: The reason why we had to suspend that.

Speaker Change: And the winter was due to some 18 23 challenges so overall.

Speaker Change: We'd like to Mexico market, but we also like the counter seasonality of that market and the potential sixth freedom contribution that it can make the international network.

Speaker Change: Okay very helpful. I appreciate the time.

Saudi Salmon: The next question comes from Saudi Salmon with BMO capital markets. Your line is open.

Fadi Chamoun: The next question comes from Fadi Chamoun with BMO Capital Markets. Your line is open. Hey, good morning. Just a couple of quick things. So, Mark, you know, there's a lot of kind of yield normalization, I guess, as we go into Q2, Q3 in both Atlantic and Pacific. You gave us some indication about the Pacific yield. Can you talk to the Atlantic yield and maybe overall yield as we go into Q2 and Q3? Should we think something more in line with seasonality? I think you typically get a 2% sequential bump in yield in Q2 versus Q1, and I think this Q1 was particularly impacted by Easter and a few of these issues at Pearson.

Saudi Salmon: Hey, good morning.

Saudi Salmon: Just a couple of quick things so.

Saudi Salmon: Mark.

Saudi Salmon: There is a lot of kind of.

Speaker Change: Yield normalization I guess as we go into Q2 Q3 in both the Atlantic and Pacific You gave us some indication about.

Saudi Salmon: The Pacific yield.

Saudi Salmon: Can you talk to the atlantica yield and maybe overall yields as we go into Q2 and Q3.

Saudi Salmon: Should we think something more in line with seasonality I think you typically get a 2% sequential bump in yields.

Saudi Salmon: In Q2 versus Q1, I think this Q1 was particularly impacted by Easter and few of these issues at Pearson.

Mark Galardo: But just kind of indication how we should think about.

Saudi Salmon: But just kind of indication how we should think about.

Michael Rousseau: Rasm progression or yield progression overall and specifically for the Atlantic as we go into Q2 and Q3 and maybe another quick one on Any initial reaction to Onyx's or the WestJet equity stake sale to Delta and Korean Air? Hi, Fadi. It's Mike. I get to answer a question. That's great. I'll deal with the Onyx and then Mark will deal with the your first question. It shouldn't be surprising to anybody. I mean, Delta does have a relationship with with WestJet and has had one for quite some time. And we all know Delta has a strategy of putting minority interest in airlines around the world.

Saudi Salmon: Rosin progression or yield progression overall, and specifically for the Atlantic as we go into Q2 and Q3.

Saudi Salmon: And maybe another quick one on <unk>.

Saudi Salmon: Any initial reaction to Onyx is.

Speaker Change: Or is the west jet equity stake sale to Delta in Korea in there.

Speaker Change: Hi, Mike Good to answer a question must go ahead.

Speaker Change: I'll deal with the Onyx and the market will deal with your first question yes.

Speaker Change: Yes, it shouldnt be surprising to anybody I mean delta.

Speaker Change: Delta does have a relationship with west jet and has had one for quite some time.

Speaker Change: And we all know Delta has the strategy.

Speaker Change: Putting minority interest in airlines around the world. So it doesn't really surprises.

Michael Rousseau: So it doesn't really surprise us.

Mark Galardo: And, you know, we'll monitor it and we'll see what if anything changes over the next little while, but we don't expect And Fadi, this is Mark on your question on yield and RASM and normalization. Important to note that it was last year in Q2-24 that we start to see the Atlantic yield and RASM normalization. So the compares become a bit easier this year, which you should anticipate for Q2 and Q3. is overall favorable yield and RAS and progression on the Atlantic, especially in Q2. And on the Pacific, you'll see stable in both those metrics is Q1 last year was exceptionally strong on the Pacific that causes a bit of the of the compares being a little bit unfavorable in Q1.

Speaker Change: We will monitor it and we'll see what if anything changes over the next little while but we don't expect anything.

Mark Galardo: And finally this is mark on your question on yield and RASM and normalization.

Mark Galardo: Important to note that it was last year in Q2, 24 that we start to see the Atlantic yield and RASM normalization.

Mark Galardo: So the compares become a bit easier. This year, what you should anticipate for Q2 and Q3 is overall favorable yield and RASM progression on the Atlantic.

Mark Galardo: Especially in Q2 and on the Pacific Youll see.

Mark Galardo: Stable in both of those metrics as Q1 last year was exceptionally strong in assessing that causes a bit of the compares being a little bit unfavorable in Q1 this year.

Mark Galardo: Okay, and, and, and kind of overall yield, are you kind of thinking with the 80% visibility you have into this quarter, that we'll see more kind of a typical seasonal progression? Yeah, typical seasonal progression, but you'll see stability in the yield. I don't expect to see any negative declines in yield year over year for Q2.

Mark Galardo: Okay and.

Mark Galardo: And kind of overall yield that you're kind of thinking.

Mark Galardo: The 80% visibility you have into this quarter.

Mark Galardo: That youll see more kind of a typical seasonal progression.

Mark Galardo: Yes, typical seasonal progression that youll see stability in the yield I don't expect to see any negative declines in yield year over year for Q2.

Fadi Chamoun: Okay, that's all for now.

Mark Galardo: Okay. That's helpful. Thanks.

Speaker Change: The next question comes from James Mcgarrigle with RBC capital markets. Your line is open.

James McGarragle: The next question comes from James McGarragle with RBC Capital Markets. Your line is open. Hey, thanks for having me on and good morning, everyone. So I just had a question on CASM, it came in really strong in Q1, especially impressive given how quickly the demand backdrop shifted in the quarter. But my question is, what can you do to ratchet down costs if tariff uncertainties persist and demand continues to be weak? But then on the other side, if tariffs go away tomorrow and we have this huge ramp in transport of demand, how quickly and what can you do to respond to capture that demand?

James Mcgarrigle: Thanks, Rob and good morning, everyone.

Speaker Change: Good morning, Good morning, Brian.

Speaker Change: Question on CASM came in really strong in Q1.

Speaker Change: Especially impressive given how quickly the demand backdrop shifted in the quarter.

Speaker Change: My question is what can you do to ratchet down cost kind of tariff uncertainties persist and demand continues to be weak, but then on the other side of tariffs go away Tomorrow, and we have this huge ramp and transport of demand.

Speaker Change: Quickly and what can you do to respond to capture that demand.

Speaker Change: Maybe you went through the second half.

John Deibert: James, we have a lot of flexibility to reallocate capacity. We could, you know, look at domestic gauge moving back to the US. We could look at Some sun market reallocation, there's all kinds of options. And as always, we've got multiple scenarios. you know for demand postures going into the U.S. for Q3 and Q4 so we're ready for any scenario.

Speaker Change: James we have a lot of flexibility to reallocate capacity.

Speaker Change: We could look at domestic gauge moving back to the U S. We could look at.

Speaker Change: Sun marketed reallocation theres, all kinds of options and as always we've got multiple scenarios.

Speaker Change: Demand postures going into the U S for Q3 and Q4 so.

Speaker Change: We're ready for any scenario.

John Deibert: And on the chasm, I think, you know, we've given a lot of commentary on what what we're driving here in terms of a cost reduction program. It's, it's well, well detailed, the organization across the management team is driving different initiatives and we'll continue to look and explore for more opportunities and, you know, we'll adjust to the market as it evolves. So, I would say that, you know, by and large, we feel good about the, the cost reduction program we've already put in place. We're executing well. And I think that, given the, the shift and kind of the environment that we've reacted well, as well on the variable side and making sure we take out that cost, we'll stay agile.

Speaker Change: And on the CASM I think we've given a lot of commentary on what.

Speaker Change: Driving here in terms of our cost reduction program.

Speaker Change: Well.

Speaker Change: Detailed the organization across the management team is driving different initiatives.

We'll continue to look and explore for more opportunities and we will adjust to the market as it evolves. So I would say that by and large we feel good about the cost reduction program that we've already put in place.

We're executing well and.

Speaker Change: I think that given the shift in kind of the environment. So we've reacted well as well on the variable side and making sure we take out that cost.

John Deibert: So I'll just leave it at that. Thanks for that. And then on the weakness in Transborder, you know, I guess, given how quickly things change, I'm sure, you know, trying to allocate that capacity away from Transborder, you know, in a totally optimal way, was probably, you know, pretty hard. But, you know, to the extent Transborder remains weak, you know, how much would you expect to be able to improve on some of these challenges as we look into 2026? And, you know, what specifically might you look at, you know, given you'll have an extra year to potentially adjust your network?

Speaker Change: We will stay agile so I'll just leave it at that.

Speaker Change: Okay. Thanks for that and then on the weakness in transporter.

Speaker Change: Given how quickly things change I'm sure trying to allocate that capacity away from trans border.

Speaker Change: Totally optimal way was probably pretty hard.

Speaker Change: To the extent transporter remains weak how much would you expect to be able to improve on some of these challenges as we look into.

Speaker Change: 2026.

Speaker Change: What specifically might you look at giving.

Speaker Change: Given youll have an extra year to potentially.

Speaker Change: Yes.

Speaker Change: Just your network.

Michael Rousseau: Yeah, so James, it's exactly what we said, we've got a very diversified network, we've got multiple options to redeploy capacity. That's why we made that announcement about Latin America in Q4. You know, that's why we made that decision to start Montreal Edinburgh, which was otherwise allocated to the US. And you're right, you're commenting Q1, you know, it was the demand drop on the US was a bit sudden, hard for us to recoup with such small lead times in months like March and April. But as we go forward, you know, we'll mature into the capacity that we've reallocated elsewhere.

Speaker Change: So JJ, it's exactly what we have is we've got a very diversified network and we've got multiple options to redeploy capacity.

Speaker Change: That's why we made that announcement about Latin America.

Speaker Change: In Q4.

Speaker Change: That's why we made that decision to start nutshell, Edinburgh, which was otherwise allocated to the U S.

Speaker Change: And you're right to your comment in Q1. It was the demand drop on U S was a bit sudden hard for us to recoup with such small lead times in months like March and April but as we go forward.

Speaker Change: It will mature into the capacity that we've reallocated elsewhere and for 26 right now it's a bit too early to speculate exactly what the market will look like.

James McGarragle: And for 26 right now, it's a bit too early to speculate exactly what the market will Thanks for the call. I'll turn it over.

Speaker Change: Thanks for the color I'll turn it over.

Speaker Change: The next question comes from Matthew Lee with Canaccord. Your line is open.

Matthew Lee: Your next question comes from Matthew Lee with Canaccord. Your line is open. Hi, morning, guys. Most of my questions have been answered, but maybe one on share count, you know, I know you've talked about targeting below 300 million shares, but my math suggests that the 500 million SIB sort of gets you there already. Is that a signal that share buybacks won't really be a priority over the medium-term or do we still be accepting an NCIB every year just given the cash flow? You're just too fast for us. But I think that your math is good.

Matthew Lee: Hi, Good morning, guys. Most of my questions have been answered, but maybe one on share count I know you've talked about targeting below 300 million shares, but my math suggest that the $500 million soybeans that it gets you there already.

Matthew Lee: Is that a signal that share buybacks will really be a priority over the medium term or maybe still be exiting in <unk>, just given the cash flow profile.

Matthew Lee: Youre just too fast for us in itself, but I think that your math is good I think.

John Deibert: I think, by and large, if you take out the convertible that we signaled already, we're going to pay down, you get to about 335 million shares and the 500 million SIB will do what it does. But to your point, probably gets you in a range somewhere between 3 and 3.10, depending on size and subscription and pricing and all those things.

Matthew Lee: By and large if you take out the convertible that we signaled already we're going to pay down to get to about $3 35 million shares in the $500 million will do what it does but to your point probably gets you in a range somewhere between three and 310, depending on size and subscription and pricing and all of those things.

John Deibert: We put aside in our three-year plan, we put aside about $2 billion of share buybacks. If you take the 800 million that we deployed between Q4 and Q1, you add the 500 here, that's 1.3, there's still room. And we still intend on generating cash flow at the rate that we had expected. We still intend on managing liquidity and debt and the balance sheet with good strength. So this is an opportunity here for us to do something that we think supports the stock. And frankly, we think it's undervalued. And as a result, it's an opportunistic deployment.

Matthew Lee: We put aside in our five year, sorry on a three year plan, we put it that will put us at about $2 billion of share buybacks.

Matthew Lee: If you take the $800 million deployed between Q4 and Q1 you add the 500 year. That's one three there is still room right and we still intend on generating cash flow at the rate that we had expected we still intent on managing liquidity and debt and the balance sheet with the good strength.

This is this is an opportunity here for us to do something that we think of.

Matthew Lee: Support the stock and frankly, we think it's undervalued and as a result.

Matthew Lee: It's an opportunistic deployment.

John Deibert: It doesn't change the strategic plan. And as a result, we will stay focused on doing exactly what we said we would do.

Matthew Lee: It doesn't change the strategic plan and as a result, we will stay focused on doing exactly what we said we would do keep a strong balance sheet invest in the airline.

John Deibert: Keep a strong balance sheet, invest in the airline, grow it appropriately, grow earnings, and then make sure that we can distribute the cash. That's helpful.

Matthew Lee: Grow it appropriately grow earnings and then make sure that we can distribute cash to shareholders.

Speaker Change: No. That's helpful. And then maybe on fuel lots of volatility in prices right now just given some of the uncertainty around economic strength is.

John Deibert: And then maybe on fuel, you know, lots of volatility in prices right now, just given some of the uncertainty around economic strength, does it really make sense to hedge a greater proportion of fuel costs, particularly given the fact that, you know, fuel costs are quite a bit below your annual expectations and guidance .

Speaker Change: Is it really makes sense to hedge a creative a portion of fuel costs, particularly given the fact that steel costs are quite a bit below your annual expectations in guidance right now.

John Deibert: It is. I mean, we did. We took some positions for Q2, Q3. Our tendency here would be to, you know, it's a natural hedge within the yield and fuel trade-off. So that's our base plan strategy. We do opportunistically take some positions when we do see volatility and attractive pricing. We came into the market, I think WTI was somewhere on 57 or 56. In fact, it was on the day that there was a pause on tariff.

Speaker Change: It is I mean, we did we took we took we took some positions for Q2 Q3, our tendency here would be to.

Speaker Change: It's a natural hedge within.

Speaker Change: The yield in fuel tradeoff, so that's our base.

Speaker Change: The planned strategy, we do Opportunistically take some positions when we do see volatility in the attractive pricing we came into the market I think WJ was somewhere around 57% or 56.

Speaker Change: In fact, there was on the day that there was a pause on tariff sold by one o'clock you are buying stock.

John Deibert: So by 1 o'clock, our buying stopped and that gives you a little bit of indication of why we have a little bit of a smaller coverage of 20%. We're probably looking for more. If opportunities come again, we will look at them. On the other hand, you know, you don't want to go too far out or go beyond your booking coverage, simply just not to be overexposed should there be a further deterioration in pricing. You know, there's a lot better experts out there, but we do think that, you know, fuel or oil is kind of range bound, probably somewhere in the low to mid 60s or less.

Speaker Change: It gives you a little bit of indication of.

Speaker Change: While we are a little bit of a smaller coverage is 20%, we're probably looking for more.

Speaker Change: If opportunities come again, we will look at them.

Speaker Change: On the other hand.

Speaker Change: You don't want to you don't want to go too far out.

Speaker Change: Or go beyond Youre booking coverage simply just not to be overexposed, there should there be.

Speaker Change: Further deterioration in pricing.

Speaker Change: There is a lot better experts out there, but we do think.

Speaker Change: That fuel oil is kind of range bound probably somewhere in the <unk>.

Speaker Change: Low to mid <unk> or less.

John Deibert: And we'll see, you know, as the year progresses. But really right now, if there's opportunities, we may take a little bit more positioning for the summer. If not, we'll let the natural offset between fares and fuel take its course. Yep, that's fair.

Speaker Change: And we will see as the year progresses, but really right now if theres opportunities, we may take a little bit for our positioning for the summer if not to a level that natural the natural offset between fares and fuel take its course.

Speaker Change: Yes that said thanks for taking my questions. Thank you.

John Deibert: Thanks, Jamie.

Speaker Change: The next question comes from Chris Murray with ATB. Your line is open.

Chris Murray: next question comes from Chris Murray with ATB. Your line is open. Yeah, thanks, folks.

Speaker Change: Yes, thanks folks good morning.

Chris Murray: Good morning. Just turning back to advanced ticket sales, and, you know, maybe framing this around the, you know, the commentary that, you know, the, the quarter was probably a little challenging to try to manage. But if we look forward, you know, you've talked about yields being relatively flat in a number of places. And if we think about, you know, advanced ticket sales, and what you're seeing, I guess the first question is, you know, you know, with with capacity coming down, you know, how should we be expecting load factors to trend? And is this really going to be a kind of a capacity, you know, load factor management story for the balance of the year?

Speaker Change: Just turning back to advanced ticket sales and <unk>.

Speaker Change: Maybe framing this around the commentary that.

Speaker Change: The quarter was probably a little challenging to try to manage.

Speaker Change: But if we look forward.

Speaker Change: You've talked about yields being.

Speaker Change: Relatively flat in a number of places and if we think about advanced ticket sales and what Youre seeing I guess the first question is.

Speaker Change:

Speaker Change: With capacity coming down.

Speaker Change: Should we be expecting load factors to trend.

Speaker Change: And then is this really going to be a.

Speaker Change: Kind of a capacity load factor management story for the balance of the year.

Chris Murray: And I'm just wondering, on the capacity side as well, if you can just maybe give us any colour on how much of the capacity removal that you're taking out is due to either maintenance or fleet issues, like either delivery delays, or some of the AT20 issues would be helpful. Thank you.

Speaker Change: And I'm just wondering.

Speaker Change: On the capacity side as well if you can just maybe give us any color on how much of the capacity removal that youre, taking out his degree their maintenance or fleet issues.

Speaker Change: Either delivery delays or some of the 820 inches would be helpful. Thanks.

Mark Galardo: Okay, so a lot of questions here. So firstly, on load factors, certainly, we're trying to manage load factors to be within the range that we had last year. That's our expectation for Q2. We're also trying to manage the load factor a little bit on the trans board given the state of demand.

Speaker Change: Okay. So a lot of questions here. So firstly on load factors certainly we're trying to manage those factors to be within the range that we had last year.

Speaker Change: That's our expectation for <unk> in Q3.

Speaker Change: We're also trying to manage the load factor a little bit on the transporter given the given the status of demand.

Speaker Change: Now you had another question on advanced ticket sales.

Mark Galardo: Now, Tierre, you had another question on advanced ticket sales? Yeah, and just and just thinking about how it all sort of ties together and You know, it feels like demand is reasonably okay if it's still trending similar to what last year was. Yeah, so we're looking at you know, ASM growth in Q2 around two, two and a half percent. And similar for for Q3. But in terms of load factor and capacity management, I think we're going to be looking at load factors that are relatively stable year over year. And again, in a yield environment, that's that's Okay, no, that's helpful.

Speaker Change: And just and just thinking about how it all sort of tied together in terms of.

Speaker Change: It feels like demand is reasonably okay. If it's still trending similar to what last year was.

Speaker Change: Yes, so we're looking at ASM growth in Q2 around 225%.

Speaker Change: And similar for Q3.

Speaker Change: But in terms of.

Load factor in capacity management, I think we're going to be the can't load factors that are relatively stable year over year.

Speaker Change: And again in the yield environment Thats pretty flat.

Okay No that's helpful.

Mark Nasr: Just one other question is just on AeroPlan. I think you made the comment that, you know, growth in AeroPlan has continued to outperform. Can you talk a little bit about some of the levers and what's maybe driving that and the impact on other revenue For sure.

Speaker Change: And just one other question is just on Aeroplan I think you made the comment.

Speaker Change: That.

Speaker Change: Growth in Aeroplan has continued to.

Speaker Change: <unk> performed could you talk a little bit about some of the levers and what's maybe driving that and.

Speaker Change: The impact on other revenues.

Mark Massar: Sure Hi, Good morning. This is mark massar with three key levers come to mind.

Mark Nasr: Hi, good morning. This is Mark Nasr.

Mark Nasr: So three key levers come to mind. The ever-expanding base of partnerships that's both with existing partners where we develop new products together and new promotions, for example, in the quarter we launched the ability to redeem your points in real time at all LCBO locations. So that drives engagement, it drives revenue, it drives profitability, number one. Number two, it's the ever-expanding base of members. So we continue to acquire new members and we expect that to grow. We still think we have opportunities in penetration as it relates to our flyers when compared to our competitive set. You know, for example, we launched a free, fast, free Wi-Fi recently.

Speaker Change: The ever expanding base of partnerships.

Speaker Change: With existing partners, where we develop new products together new promotions for example in the quarter, we launched of the ability to redeem your points in real time at ball LCBO locations. So that drives engagement drives revenue drives profitability number one number two.

Speaker Change: The ever expanding base of members. So we continue to acquire new members.

Speaker Change: And we expect that to grow we still think we have opportunities in penetration as it relates to our flyers when compared to our competitive set for example, we launched a free cash free Wi Fi recently in order to get that free Wi Fi you have to be an aeroplan members. So that's just an example of an opportunity to drive additional growth and then finally our <unk>.

Mark Nasr: And in order to get that free Wi-Fi, you have to be an Aeroplane member. So that's just an example of an opportunity to drive additional growth. And then finally, our analytics and marketing practice and the ability to provide more targeted and customized offers. We keep growing our capabilities in that space. We launched a new digital marketing stack and it allows us to effectively, much more effectively match our ever-growing membership base with the ever-expanding product portfolio to find the right product and the right offer for customers. So through all that, we see additional opportunity to continue to grow the program as well as margin expansion within what the program delivers internally.

Speaker Change: Analytics and marketing practice.

Speaker Change: The ability to provide more targeted and customized offers and we keep growing our capabilities in that space, We launched a new digital marketing stock.

Speaker Change: And it allows us to effectively much more effectively match our ever growing membership base will be ever expanding product portfolio to find the right product in the right offer for customers.

Speaker Change: So fuel that we see additional opportunity to continue to grow the program as well as margin expansion within what the program delivers internally.

Speaker Change: Okay. That's helpful. Thank you.

Mark Nasr: That's helpful.

Mark Nasr: Thank you, folks.

Speaker Change: Thanks.

Cameron Doerksen: Next question comes from Cameron Doerksen with National Bank Financial. Your line is open. Yeah, good morning. Just a question on the on the fleet. And obviously, there's been a number of aircraft that have been kind of pushed to the right here. But if I look at 2026, you know, 35 aircraft coming in is a pretty big chunk of plane. So I'm just, you know, wondering how you manage that kind of high level of deliveries coming in.

Speaker Change: The next question comes from Cameron <unk> with National Bank Financial Your line is open.

Speaker Change: Yes. Good morning, just a question on the fleet, obviously, there's been a number of aircraft that have been kind of pushed to the right here, but if I look at 2026.

Speaker Change: <unk> 35 aircrafts coming in is a pretty big chunk of planes. So I'm just wondering how you manage that kind of high level of deliveries coming in.

John Deibert: And, you know, are you thinking about any, you know, potential opportunities to maybe defer some of those to later years, just to kind of smooth out the delivery profile? Yeah, with 2026, I mean, from a wide body point of view, we'll see maybe a couple of 787-10s and we'll start seeing the first 321s, the XLRs, and we've been waiting for those for a long time, right? So, I think that, you know, we'll see the cadence of them, but our expectation now is probably starting in Q126, we start taking those aircraft in. There's a lot of 220s.

Speaker Change: Are you thinking about any potential opportunities to maybe defer some of those to later years, just to kind of smooth out the delivery profile.

Speaker Change: Yes. It was 2026 I mean from a wide wide body point of view.

Speaker Change: We will see we will see maybe a couple of <unk>.

Speaker Change: 707 dash tens and.

Speaker Change: We will start seeing the.

Speaker Change: First.

Speaker Change: For the first 320 ones the <unk> and we've been waiting for those for a long time right. So I think that.

Speaker Change: Well, we'll see.

Speaker Change: We will see the cadence of them, but our expectation now is probably started in Q1 'twenty six we start taking those aircrafts then.

John Deibert: I'd say that, you know, overall, we've been waiting for these aircraft, we're ready to deploy them, and we'll be bringing them in 2026, and we plan for the CAPEX. So, we're managing the business around those parameters, and we have been for now, probably a couple of years in anticipation. So, I don't see anything else needing to be done, really, to enable the effective deployment of the aircraft.

Speaker Change: There's a lot of too Twenty's I'd say that.

Speaker Change: Overall.

Speaker Change: We've been waiting for these aircraft, we are ready to deploy them and we'll be bringing them in 2026, and we plan for the Capex. So.

Speaker Change: We're managing the business around those parameters and we have been for now probably a couple of years.

Speaker Change: Dissipation, so I don't see anything else needs to be done really to enable the effective deployment of the aircraft.

John Deibert: You know, and we have opportunities here to retire some older aircraft as well.

Speaker Change: And we have opportunities here to retire some older aircraft as well.

John Deibert: Yeah, and Cameron's mic, just to pile on, I mean, we've built the resources around to take these planes, and these planes are important to our New Frontiers plan, to our Long Range plan, and so we're excited, and the entire company's excited about taking these four fleet types in next year. And so we're ready to take them in and leverage them as we go forward. Okay, no, that that makes sense.

Speaker Change: Yes and cameras Mike.

Speaker Change: While on.

Speaker Change: We built the resources around to take these planes into these plants are important to our new frontiers plant to our long range plan and so we're excited and the entire company is excited about taking this.

Speaker Change: These four type fleet types in next year, and so we're ready to take them in and and leverage them as we go forward.

Speaker Change: Okay that makes sense just a quick.

Arielle Meloul: I just just a quick, I guess, a follow up just on the flight attendant negotiations.

Speaker Change: Follow up just on the flight attendant negotiations I mean, obviously, you've you've indicated that productive negotiations just wondering if theres any risk in your mind just from a timeline perspective.

Arielle Meloul: I mean, obviously, you've indicated that the productive negotiations, just wondering if there's any, I guess, risk in your mind, just from a timeline perspective of, you know, potential disruption or risk of disruption impacting anything in the in the peak summer Hi, good morning. It's Arielle. No, we've managed it. As you see, we obviously got through our pilot negotiations with no disruption and we continue to be to have productive talks at the table and are anticipating the same sort of outcome.

Speaker Change: Potential disruption or risk of disruption impacting anything in the peak summer period.

Speaker Change: Hi, good morning, it's a reality.

Speaker Change: We've managed it as you see we obviously got some of our pilot negotiations with no disruption and we continue to be productive talks at the table and are anticipating the same sort of outcome.

Arielle Meloul: Okay, that's great, thanks very much.

Speaker Change: Okay, that's great thanks very much.

Speaker Change: Sure.

Andrew Didora: The next question comes from Andrew Didora with Bank of America. Your line is open. Hey, good morning, and nice results, everybody. It's Mark, thank you for all the color that you've provided on the international stuff on the call today. I'm going to ask one more on it, though, just curious what your percent, you know, in your international business, what percentage comes from maybe non Canada point of sale? And if maybe you could speak to the trends that you're seeing in, in the booking behaviors of, you know, Canadians going abroad and non Canadians in your network.

Speaker Change: The next question comes from Andrew <unk> with Bank of America. Your line is open.

Speaker Change: Hey, good morning, and nice results everybody.

Speaker Change: Thanks, Mark. Thank you for all the color that you provided on the international stuff on the call today I'm going to ask one more on it though just curious what your percent.

Speaker Change: On your international business, what percentage comes from maybe not Canada point of sale and <unk>, maybe you could speak to the trends that youre seeing in and not booking behaviors of Canadians going abroad, and non Canadians in your network.

Mark Galardo: Yeah, great question. So typically Canadian point of sale on at a macro level on international routes is typically about 60 to 65% of what we have. Then we have other points of sale like Europe, Asia, etc. Then we've got a layer of six freedom traffic. What we see so far is point of sale, Canada is very resilient. especially to Europe and Asia. We've highlighted and give color on markets like Japan, for example. The Mediterranean markets, leisure Europe continues to remain very favorable. Last year, point of sale Europe was a bit depressed given the Olympics, given, you know, the Euro soccer tournament, we're seeing a favorable rebound in Europeans coming back to Canada.

Speaker Change: Yeah, Great question, So typically Canadian point of sale.

Speaker Change: At a macro level on international routes is typically about 60% to 65% of what we have then we have other points of sale like Europe Asia et cetera, and then we've got a layer of sixth freedom traffic.

Speaker Change: What we see so far is is point of sale, Canada is very resilient, especially.

Speaker Change: Especially to Europe, and Asia, we highlighted and give color on markets like Japan for example, the.

Speaker Change: The Mediterranean markets Leisure Europe continues to remain very favorable last year point of sale Europe was a bit depressed given the Olympics given the Euro soccer tournament, we're seeing a favorable rebound in Europeans coming back to Canada and of course, we mentioned that U S. Sixth freedom traffic remains very very robust.

Mark Galardo: And of course, we mentioned that US 6 freedom traffic remains very, very robust and looks very favorable going into Europe. Got it.

Speaker Change: It looks very favorable going into Q2 Q3.

Speaker Change: Got it and then just in terms of the transporter.

Mark Galardo: And then just in terms of the transborder, do you have a breakdown of what that would be on a leisure versus corporate basis? Thanks for taking the question. Yeah, absolutely. I mean, there's really three types of customers that we carry on the transport. You have Point of Commencement Canada, Point of Commencement U.S. and obviously we've got, you know, corporate traffic. So corporate traffic has remained stable. Point of Commencement U.S. traffic to Canada has slight declines, but it's really Point of Commencement Canada to the U.S. where we see, you know, a decline in the low teens.

Speaker Change: Do you have a breakdown of what that would be on leisure versus corporate basis. Thanks for taking my questions.

Speaker Change: Yes, absolutely.

Speaker Change: There's really three types of customers that we carry on the transfer we appointed commencement Canada.

Speaker Change: Point of commencement you asked and obviously you've got corporate traffic.

Speaker Change: So corporate traffic has remained stable.

Speaker Change: Point of commencement U S traffic to Canada.

Speaker Change: Slight decline, but its really point of commencement Canada.

Speaker Change: The U S, where we see a decline in the low teens.

Speaker Change: Okay.

Speaker Change: Okay. Thank you.

Daryl Young: Okay, thank you.

Speaker Change: The next question comes from Daryl Young with Stifel. Your line is open.

Daryl Young: The next question comes from Daryl Young with Stiefel. Your line is open. Hey, good morning, everyone. Just one quick one for me.

Daryl Young: Hey, good morning, everyone. Just one quick one from me you've been giving increasing information around your sixth freedom growth, but are you able to just quantify where you are at in terms of a percentage of revenue for <unk> overall, including international and U S. Transborder.

Daryl Young: You've been giving increasing information around your six freedom growth, but are you able to just quantify where you're at in terms of a percentage of revenue for six freedom overall, including international and US transborder? I don't think we disclosed that, that number, but... We're increasing. We had a 12% increase in Q1, but we're looking at similar increases proportional into Q2 and Q3 and too early right now for Q4. But I think we're looking at overall high single digits in terms of revenue. Okay, thanks very much.

Speaker Change: I don't think we disclose that.

Daryl Young: Number but.

Daryl Young: We are increasing.

Daryl Young: We had a 12% increasing in Q1, but we're looking at.

Daryl Young: Similar increases proportional into Q2 and Q3.

Daryl Young: And too early right now for Q4, but I think we're looking overall high single digits in terms of revenue.

Daryl Young: Okay. Thanks very much.

Daryl Young: Okay.

Daryl Young: Yes.

Valérie Durand: This concludes the question and answer session.

Speaker Change: This concludes the question and answer session I'll turn the call to <unk> for closing remarks.

Valérie Durand: I'll turn the call to Valerie for closing remarks. Once again, thank you very much for joining us this morning. Should you have any follow-up questions, please don't hesitate to contact us at Investor Relations.

Speaker Change: Once again, thank you very much for joining us. This morning. Since you have any follow up questions. Please don't hesitate to contact us at Investor Relations.

Valérie Durand: Merci beaucoup pour votre intérêt ce matin. Pour d'autres questions sur le TNN, n'hésitez pas à nous contacter au Relations Investisseurs. Merci, bonne journée. Have a nice day.

Speaker Change: I think at SMIC.

Speaker Change: Thank you Vanessa.

Speaker Change: Mezzanine benjani have in AC.

Unknown Executive: This concludes today's conference call. Thank you for joining. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for joining you may now disconnect.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Sure.