Hello, bonjour, welcome to Air Canada's Q3 2024 Results Conference Call. All participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. 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. 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. Hello, bonjour, et bienvenue à notre troisième revue trimestrielle de 2024. Welcome, and thank you for attending our Q3 2024 earnings call. Joining us this morning are Mike Rousseau, our President and CEO, Mark Galardo, our Executive Vice President of Revenue and Network Planning and President of Cargo, and John Di Bert, our Executive Vice President and CFO. Other executive team members are with us as well. After our prepared remarks, we will take questions from equity analysts. I remind you that today's comments and discussion may contain forward-looking information about Air Canada's outlook, objectives, and strategies that are based on assumptions and subject to risks and uncertainties. Our actual results could differ materially from any stated expectations. Please refer to our forward-looking statement in Air Canada's Q3 news release, available on aircanada.com and on SEDAR+. With that, I'd like to turn the call over to Mike. Great. Thank you, Valerie. Good morning, bonjour. Thank you for joining us. Today, we reported solid results for the Q3. Operating revenues in the quarter were CAD 6.1 billion. Adjusted EBITDA was CAD 1.5 billion, with an adjusted EBITDA margin of 24.9%. And adjusted EPS was $2.57. Both adjusted EBITDA and adjusted EPS were ahead of market expectations. I'm very proud of these results, which were achieved through strong commercial and operational execution and discipline. Allow me to call out three important developments this quarter. First, a very significant achievement was reaching a new four-year collective agreement with our pilot group, represented by ALPA. Proud that we concluded a mutually beneficial agreement without significant disruption to our customers and with a contained revenue impact, which Mark will speak to. This agreement recognizes the contributions of our pilots. We continue to make progress with respect to our Operational Performance Improvement Program. Our OTP for the quarter was eight points better than the same period a year ago. Complementing this was our Cargo year-over-year 18% revenue growth. Again, Mark will provide more details. We are always focused on both the short-term and long-term plans, with the objective of delivering value to all stakeholders, especially our shareholders. I'm pleased that our Board of Directors has approved a new share buyback program, which will enable us to reverse some of the dilutive but necessary measures we took during COVID. We have promised to return value to shareholders. Today, we are pleased to fulfill this commitment. Also, with just one quarter remaining, we have updated our guidance to better reflect our expectations for the full year 2024 results, and before turning it over to Mark, let me close by acknowledging our 40,000 employees. Summer is always a demanding time, and they again showed their dedication and professionalism by safely transporting nearly 13 million customers in the quarter. Our drive for operational excellence was on display when we successfully carried Team Canada athletes and delegation members to Paris for the 2024 Summer Olympic and Paralympic Games, and of course, I thank our customers for the loyalty to Air Canada, and I assure them we are working hard every day to keep providing industry-leading products and services to them. Thank you. Over to Mark. Thanks, merci, Mike, and good morning, bonjour. Pour commencer, j'aimerais remercier tous nos employés pour leur contribution à nos résultats du troisième trimestre. Thanks to all our employees for their contribution to our Q3 results. Our Q3 performance was sustained by strong international performance. Despite tougher comps, some weaker market forces in Europe, and uncertainty about our pilot negotiation, our international network achieved encouraging profitability and drove overall results. Multiple new routes performed above expectations, and our Sixth Freedom revenues continued to progress favorably. We recorded operating revenues of CAD 6.1 billion this quarter, down 4% from Q3 last year. Passenger revenues were CAD 5.6 billion, a decline of 4% from the same quarter last year. With year-over-year decreases in yield and system load factor, PRASM declined 7% from Q3 2023, but was way above Q3 2019 PRASM and Q3 2022 levels as we had anticipated. The proactive goodwill policies we've put in place to mitigate our customers' travel disruptions during the pilot contract negotiations was the right thing to do. During that time, we saw multiple weeks of softer booking volumes, as some customers postponed or canceled their itineraries while others chose to fly with other carriers. This had an impact in Q3, particularly in September, and continued to a lesser extent in the first half of October. Now let's zoom into our markets. Both domestic and U.S. transborder markets did well, and we saw good demand for air travel in a competitive marketplace. Our Sixth Freedom offering continues to prove its value, yielding results that continue to surpass our expectations. I'd like to reiterate that our investment in the U.S. is for the long run, and our 2024 transborder network continues to meet our expectations. Looking at our international markets, our performance in the Atlantic remained stable. We saw good demand, but as we said in the last call, it was impacted by competitive market pressures this summer. While the Paris Olympics had a negative effect on France, we're witnessing a significant rebound in demand in September and onward. We also operated less capacity than originally anticipated. For instance, we extended our suspension on Tel Aviv throughout the quarter. The Pacific outperformed. We continue to bring more services to Asia-Pacific regions like Japan, South Korea, and Hong Kong. With a capacity increase of 31% in the quarter, the revenue expansion was limited by comparatively lower yields and lower load factors year-over-year. This was expected, as we experienced exceptionally high yields and load factors in the region in 2023. This market saw a rapid ramp-up of demand, and the region was significantly underserved at this time last year. Our premium offering remained strong. Revenues from premium cabins reached 28% of total revenues, a one percentage point increase from Q3 2023. We continue to deliver a competitive offering for our premium customers with an unmatched product in Canada. This includes the choice of the most premium seats of any airline in the Canadian market. For Cargo, and as highlighted by Mike, we're very pleased with Cargo's delivery, with sequential improvement in Q3. Revenues grew 18% year-over-year to CAD 253 million quarter. This was mostly due to higher yields and volumes in belly cargo in the Pacific market. We also surpassed expectations on our 767 freighter operation. Our right-sized network and freighter-to-belly commercial model are producing solid financial results that we believe are sustainable in the long run. We're confident that Cargo will continue to perform well. Air Canada Vacations continues to execute in a highly competitive market. Although demand is strong, we'll be watching the effects from rising hotel costs and foreign exchange, which may impact the upcoming winter season. With only one quarter left, we expect full-year capacity to increase by around 5% from 2023. This is slightly less than we'd anticipated due to ongoing supply chain pressures, aircraft availability, and geopolitical conditions. We're not providing any 2025 guidance today. We will do so at the upcoming Investor Day, but at this time, our plans are targeting capacity growth in the mid-single-digit range in 2025. On the demand side, load factors are stable year-over-year going into Q4, and we see demand remaining healthy over the next three quarters. One important barometer of leisure demand sentiment is demand for sun market with Air Canada Vacations. Importantly, we see no slowdown in leisure demand along the booking curve for the coming quarters. We're also encouraged by the early results in our North Atlantic network, which are strengthening yields and demand despite some weakness in our Middle East and India services. On the Pacific, even with a more challenging yield environment year-over-year, we expect yields will continue to be elevated, which will lead to strong performance overall. And just yesterday, we announced that in a few weeks, we'll be resuming our nonstop services between Canada and Beijing and increasing our flights between Canada and Shanghai, both important markets in our global network. On the whole, we observe healthy demand surpassing 2024 levels and expect a sequential percentage yield improvement in Q4, keeping in line with our previously committed full-year PRASM expectations. We see early encouraging signals of a favorable yield environment in Q1. Let me conclude with a few key points. We are executing our plans with diligence. We will continue to bring scale at our hubs, leverage our diverse and competitive international network, and grow into our six freedom potential. These strategic pillars are supporting our results and are the backbone of our future plans. Thank you, merci, and John, over to you. Thanks, Mark. Good morning, everyone. Bonjour à tous. And thanks to all our employees for their passion and drive in helping us deliver our Q3 results. Et grand merci à toute l'équipe. In the quarter, we recorded operating income of CAD 1 billion and adjusted EBITDA of CAD 1.5 billion. Our net income of CAD 2 billion included a CAD 1.2 billion book tax recovery for previously unrecognized tax attributes. Adjusted net income was CAD 969 million, or CAD 2.57 per delivered share. For the Q3, operating expenses increased 3% year-over-year, mainly in support of capacity growth. We also recorded certain contract-related adjustments in the quarter, benefiting our full-year adjusted CASM expectation by one percentage point. This is reflected in our updated 2024 financial guidance. Fuel expense increased 1% versus Q3 2023, with a year-over-year decline in price per liter, inclusive of an CAD 8 million hedging loss, largely offsetting the increase in fuel expense from capacity growth in the quarter. Comparatively, we had recorded a hedging gain of CAD 68 million in Q3 2023. Labor expense increased 3% year-over-year, in line with planned headcount related to capacity growth and the impact of higher salaries and wages compared to Q3 2023. Keep in mind that we began accruing for a new pilot agreement in the Q4 of last year. Maintenance expense decreased 4% from Q3 2023, mainly due to a favorable contract adjustment in the quarter. It more than offset a greater number of scheduled engine and airframe maintenance events from additional flying and higher average prices year-over-year. In sum, Q3 2024 adjusted CASM decreased 0.4% year-over-year. Turning to cash flow, we generated cash flow of CAD 282 million in the quarter, a CAD 147 million year-over-year improvement. Year-to-date, we generated almost CAD 1.8 billion in free cash flow, with CAD 1.5 billion of CapEx spent. We expect slightly higher CapEx across the portfolio for the Q4 due to the timing of certain events. We forecast full-year CapEx close to CAD 2.5 billion, which includes the addition of two A220s to the fleet this year. With the ratification of the ALPA agreement in October and some of its retroactive impact, we forecast a cash payout before year-end. This will be a working capital draw in Q4. Separately, given that the new labor agreement includes significant pension benefit improvements, we are highlighting that we will be recording a one-time pension past service cost charge of about CAD 500 million in the Q4. The cash impact of these planned benefit enhancements will be funded out of the planned surplus and are not expected to impact Air Canada's liquidity or shareholders' equity positions. This morning, we updated our full-year guidance for 2024. For full-year 2024, we now expect operated capacity to increase around 5% year-over-year, our full-year adjusted EBITDA to be approximately $3.5 billion, and our adjusted CASM to increase by approximately 2% year-over-year. This is inclusive of our underlying assumption for fuel and foreign exchange. It also reflects the net impact of the contract-related adjustments I referred to earlier and the revenue impact of the pilot negotiation uncertainty that Mark has noted, both of which, in the aggregate, produce a $100 million benefit in 2024 earnings. As Mark noted, we are targeting mid-single-digit capacity growth in 2025 and continued stability, loads, and yields. We do see more intense unit cost pressure in 2025, driven by an evolving regulatory environment, higher airport infrastructure fees, continued maintenance cost inflation, and the full year of our new pilot labor agreement. We will remain focused on driving cost discipline and productivity to alleviate these pressures. We continue to build up the fleet, and in 2025, we expect to add another nine A220s and take the first two deliveries of the game-changing Airbus 321XLR. We are, of course, keeping an eye on the situation at Boeing and monitoring how this may affect the delivery timeline of our remaining 12 MAX aircraft, with planned deliveries in 2025. I'd like to note that we recently finalized a loan commitment from EDC of up to CAD 1.35 billion to support the purchase of each of the 27 A220s to be delivered over the next three years. Now, notwithstanding the beginning of a higher CapEx cycle, we are targeting break-even, positive free cash flow in 2025, with progressive improvements in free cash flow margin over the coming years. We have successfully navigated a tricky environment in 2024. We now see a more normalized and stable environment emerging. We are confident in our future, and we are committed to delivering shareholder value while creating a world-class global airline for our customers, community, and all stakeholders. We remain focused on responsible risk management and the preservation of our strong balance sheet. After restoring our pre-pandemic debt and leverage metrics, we are pleased to announce a new share buyback program, allowing us to purchase up to 10% of the public float. This would remove some of the dilution experienced from financing decisions that were necessary during the pandemic. Our buyback program is consistent with our capital allocation roadmap and our strategic plan. It can be executed concurrently with our fleet strategy investments and our credit quality objectives. We will initiate the program on November 5th, and are committed to aggressively pursuing opportunities to buy back shares under our reinstated program. We look forward to a more fulsome dialogue on our business plan, underlying strategies, and resulting investment thesis at our December 17th Investor Day in Toronto. Our entire senior leadership team is looking forward to sharing our targets and learning long-term ambition with you. Thank you, and now over to you, Mike. Thank you, John. We have a very strong foundation, what I consider to be an investment-grade balance sheet, and a very experienced leadership team, all of which provide many opportunities to enhance value. We are very confident about achieving our strategic priorities, and let me highlight a few points that give me confidence about our positive future for this company. Our strong balance sheet gives us both the resources to reinvest in our business and seize opportunities as they come up and play defense if necessary. Mark spoke to our healthy demand. This presents opportunities that our experienced management team is capitalizing on, using the wide range of tools at their disposal. We have a diverse, efficient fleet that will be enhanced with the addition of 88 state-of-the-art new aircraft over the next five years. Our extensive global network, anchored by three ideally located hubs, allows us to allocate resources to the most promising markets. For example, we have been carefully rebalancing our Asian and European operations in response to evolving demand. We've also been building our transborder international network. In addition to Star Alliance and the strategic partnership we formed, we now have three joint ventures and 122 interline partners. And last week, we added our 40th codeshare partner, airBaltic, to increase our presence in Northern Europe. Our Aeroplan Loyalty Program is a powerful tool, and it truly stands out as Canada's best travel rewards program. We view Aeroplan as a key competitive advantage, a contributor to margin expansion, and a loyalty driver. And we continue to build out the program, finding new ways to offer added value for members, such as our recently announced expanded strategic partnership with Marriott Bonvoy. We also launched our new loyalty partnership with Canada's leading benefits provider, Manulife, during the quarter. In the same vein, our other business units, Air Canada Cargo, Air Canada Rouge, and Air Canada Vacations, also help us reach into specialized markets and serve a much wider range of travel and air transport needs. All of these powerful strategic assets allow us to compete effectively in more markets and add resiliency through diversification. Customer service remains the core of our business, simplified by the achievement of winning more awards than any other Canadian carrier at the 2024 Skytrax World Airline Awards and ranking 29th in the world, continuing our multi-year improvement trend from our 50th place rating in 2022. We were by far the highest-rated Canadian airline. Earlier this week, our commitment to delivering a superior passenger experience earned us the prestigious 2025 APEX five-star recognition, which is based on customer feedback. And we will be further upgrading our service through digital technologies and recently welcomed Firas Al Osman as our first Chief Digital Officer. His team will enhance and accelerate our digital transformation strategy to further elevate the customer experience and drive operational efficiency and corporate productivity. And more conventionally, we're also introducing added supports and new training for our customer service and frontline people. This includes redesigning processes and simplifying policies. We are picking up momentum each and every day, and we anticipate our strategy will drive long-term value creation to the benefit of all stakeholders. I'm confident and excited about the prospects of tour Air Canada, and I'm looking forward to hosting you in Toronto on December 17th, where you will have the opportunity to hear directly from our leadership team and better understand the unique strengths and opportunities of our business. Hope to see you all there. Finally, I would like to extend my gratitude to all employees for their dedication and hard work. All are critical players of our team. Each member's unique contributions and passion have been integral to our success, showcasing the power of teamwork and perseverance. Thank you. Merci. We will now be pleased to answer your questions. Over to you, Valerie. Thank you, Mike, and thank you all for joining us this morning. Nous vous remercions de votre grand intérêt ce matin. We're now ready to take your questions. Should you require further details following this call, our investor relations team is available for support. Back to you, Sarah. Thank you. 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. Your first question comes from Kevin Chiang with CIBC. Your line is open. Hi. Thanks for taking my questions here. Thanks for the color in terms of something. Kevin, I interrupt you. Could you speak up a little bit? Oh, can you hear me better here? Yes, much better. Thank you. Oh, perfect. Thanks, Val. So thanks for the caller on some of the moving parts in Q4 related to the new pilot agreement. You called it the $500 million pension item. But just wondering if there's any other accruals we should be thinking about in terms of the retroactive payment in the Q4. And I guess, how should we think about run rate, the run rate wage line, I guess, in 2025 on the back of this new agreement? You've been kind of tracking around $1.1 billion a quarter. Just what does that look like in 2025? Yeah, so I think a couple of things. One, we mentioned and you highlighted the pension charge. So, as I said, it shouldn't have any implication for either cash or equity as we will be using the planned surplus. With respect to the retroactivity, we do intend to make a payment for retroactivity, so the accrual and the cash impact of that accrual in the Q4, and so that'll be a draw on working capital, probably an outsized draw relative to what you would have expected, and then finally, as far as the run rate, I would say, generally speaking, as we've been tracking here, you'll see a little bit more maybe cost for the pilot agreement in 2025 as you have certain work and work style benefits that will accrue that are not retroactive, so to speak, so the agreement takes place. Those will be costs, some pressure next year, but overall, in the whole, more or less what we expected. Okay. That's helpful. And maybe just my second question. As you look at your capital plan over the next few years here, and you called it kind of neutral free cash flow in 2025, just wondering how you're thinking about sale-leaseback as a lever to maybe reduce the capital outflow or the CapEx outflow over the next three years. Have you decided what percentage of that CapEx you'd want to fund through a sale-leaseback? Yes, Kevin. And this will also be something that we'll be able to cover a little bit more detail on Investor Day. So clearly, we'll be talking about fleet strategy and overall how we manage that, the quality balance sheet, as well as generating free cash flow. So with respect to just some early color on that, we have a fleet ownership highly equitized, in fact, probably around 80%. And we do believe that there's lots of room there. It'd probably be more historical, kind of 60% to 65% owned fleet. So some of that will be achieved through various mechanisms, including sale- lease backs. As you know, a lot of the aircraft in our order book are under our order. So there's opportunities to do some sale- lease backs as we go through that cycle. And so I think overall, our balance sheet's in very good shape. So it kind of triangulates that highly equitized fleet leverage around one. And going into a more elevated CapEx cycle, there's opportunity for us to be able to manage cash liquidity and free cash flow using some of those tools. Perfect. Thank you very much. The next question is from Savi Syth with Raymond James. Your line is open. Hey, good morning. I appreciated the color on what you're seeing in the various geographies, but I wonder if you could kind of take a little bit more of a deeper look, and where are you seeing demand weakness versus kind of oversupply? I'm just trying to get a sense of, you hear pressure on the consumer, but given your results, it seems like things are holding up, so I'm just kind of curious, just by entity, what you're seeing in terms of supply and demand. Hi. Good morning, Savi. In the quarter, I mean, the one area where we saw a little bit of pressure was on the Atlantic. We don't think it was a demand issue. We think it was more a rapid capacity increase issue that caused a little bit of weakness. We'll see a little bit of that on the Pacific in 2025. But other geographies that we fly, Canada, U.S., the sun market, we see stable demand and no sign of weakness anywhere. If I might follow up on that, just what are you seeing on the kind of the corporate travel side? Is that improving? Is it stabilizing? And just any differences between kind of domestic transborder? Yeah. It was improving. Unfortunately, we ran into a bit of a situation about some labor uncertainty that kind of slowed us down in the fall. But it's definitely encouraging signals going forward, and in particular, more strength on the U.S. network than on Canada. Helpful. Thank you. The next question is from Chris Murray with ATB Capital. Your line is open. Yeah. Thanks, folks. Good morning. John, maybe just talking about the NCIB for a half a sec. One of the questions I've already got this morning is just about how to fund this thing, particularly when you think about flat free cash flow next year. Can you just talk a little bit about your thoughts around capital allocation and the puts and takes with the NCIB in the mix and how you fund that over the next little while? Sure. So a couple of things. One is, again, there'll be some additional longer-term color as we kind of go into investing in. I think it'll give some clarity to all this. But I mean, and I would say that we have been pretty methodical about how we've come to this, right? So we did come out of 2023. We've paid down a lot of debt. Our leverage metrics are in a very good place at around one time. And we do hold quite a bit of liquidity. We've got a pretty good idea about our fleet strategy, our CapEx cycle. So with all of those things put together, we do see the opportunity here to restore some of the share count. This is something that was necessary during the pandemic and can now be yield. The liquidity exists on hand. As we look forward, I think even as we get to elevated levels of CapEx, and as I had mentioned on the prior comment with Kevin, we do have some tools here to be able to manage through all of that. And frankly, over time, we do see margins kind of accruing again and growing back to higher teen levels. So the combination of all those things is really that we believe we have free long-term structural free cash flow generation. And as we kind of gravitate towards that, we have a very strong balance sheet and the ability to actually do both invest in the business, but also restore the share count. Okay. That's helpful. And then one quick question just on the fleet. I did notice there's a couple of 767s that seem to be coming back into passenger service. Any color around? Are Are those kind of either cargo aircraft that are being reconfigured or those new 767s or leased? Or any sort of color on what's going on there would be helpful. Thank you. Hi. Hi, Hi, it's Mark Galardo. I'm going to have a bit of a chuckle here. These are two older 767s that used to be part of our passenger mainline fleet. There's still some life on them, and we can restore those aircraft on an interim basis to give us some insurance on our fleet for the next two years. There's no plan to have that as part of our long-term fleet. It's more of a temporary insurance, if you will. O kay. So think of it as a bridging exercise as opposed to kind of we're back in 767 operations again. Exactly. Okay. Awesome. All right. Thanks, folks. Next question is from Konark Gupta with Scotiabank. Your line is open. Thanks, Operator. Good morning, everyone. Just maybe on CASM, John, if I look back at your guidance for the year and back out the first three quarters, so it sounds like the Q4 CASM is, on a unit basis, tracking 5% up and on flattish capacity. You guys are saying mid-single digit kind of capacity growth next year. Is it reasonable to expect that there will be some CASM inflation next year, but not to the tune of 5%? Yeah. I think we'll get into 2025 guides. We'll probably be able to give color on that at Investor Day as well. But I think that I mentioned in my comments, we do have some headwinds, and I think that does put a little bit of pressure on year-over-year CASM. Mark mentioned that. We're probably looking at something in the mid-single digits for capacity growth. We're going to stay disciplined, but we do have some opportunities for growth and obviously still in somewhat of a recovery overall system levels and bringing on some aircraft as well, but not to the tune that we will in 2026, 2027. So I think you'll see scale and capacity and modernized aircraft give us some lift in terms of just momentum and CASM in 2026, 2027. 2025 will have some pressure. 5%, I mean, I think we probably can get some clawback, some of that cost growth with productivity and just efficiency as we continue to get better here post-pandemic and as the systems getting and our people are getting trained and restoring a higher level of traffic. So all in, I'd say that there's going to be some pressure next year, maybe a bit better than 5%. I'd say we'll give you some color on that at Investor Day, but probably in the neighborhood of 3% to 4% probably sounds a little bit down the fairway for overseas. That's great though. Thanks. And on the CapEx side, so it sounds like big CapEx projections have increased for the next four, five years or so. And it seems like it's coming not from committed CapEx, but non-committed CapEx. And color on what's driving this CapEx projection outlook for the next few years? Well, actually, I think it reflects the order book. We do have a higher percentage of non-conforming aircraft than we'd like. So we're moving some dollars to configuration upgrades across our cabins and our fleet. We continue to be very focused on customer experience with things like lounges. So overall, I would say that the maintenance part of the business continues to be a little bit inflationary. So there's always a little bit of pressure from that. But ultimately, it's bringing on the new aircraft. I'd say that's the lion's share of what you're looking at. Probably PDPs play a role in how that's kind of flowing through the next couple of years. But ultimately, really, it's about 70 aircraft coming into the fleet over the next several years and then some reconfiguration and some investments in lounges. That's great. And if I can quickly squeeze one more on the leverage ratio. So I said 1x right now with the CapEx plans for the next few years, right? And the break-even free cash flow, buybacks as well. Do you see 1x being super low, meaning you'd like to optimize the balance sheet to closer to 1.5? Yes. Yes. And that was, I think, inherent in my comments on previous questions here this morning, is that it's beyond the fact that our leverage is 1.0, which is very positive. Obviously, we like that, and we like a strong balance sheet. So there's no take back on wanting a strong balance sheet. But we also have a lot of unencumbered asset strength. We have an Aeroplan franchise, no leverage against that. We have a highly equitized fleet. So all these things, we have an increased revolver that we put in place earlier this year. And again, we do want to preserve cash generation. So when you combine all these things, it does give us, we believe, some room to be both very responsible on credit quality and at the same time leverage the balance so we can generate returns and concurrently invest in our business as well as return capital to investors and shareholders. Appreciate the time. Thank you. Konark, maybe just one quick. I just want to catch myself on your first question. One thing I would just put out there for all the benefit of all of you on the call here is in 2020 we talked about a year-over-year growth on ASM. Just make a note of the fact that in 2024, we get a little bit of tailwind there. And I mentioned it in my comments, right? About one percentage point of tailwind. I don't see that as kind of being a recurring. So that's going to give you a little bit of a bump. So in real kind of substance, you probably see 3% to 4%, but you do get a little bit of a bump if you kind of normalize 2024 ASM. Yeah. That makes sense. Thank you. Thank you. Next is Jamie Baker with JPMorgan. Your line is open. Oh, hey. Good morning, everybody. So I just wanted to follow up on the CapEx. So the CAD 1.4 billion increase over 2025 through 2028, the increase isn't directly fleet-related. You said lounges are in there, PDP noise. I don't want to ask the same question a second time, but I'm still having trouble reconciling the CAD 1.4 billion increase versus what you had guided to 90 days ago. Across the year to three years, right? Yes. Yeah. So I would tell you that it's really timing, I guess. Ultimately, we've got the aircraft orders that we expect to fall in. Pretty much, I think the 787s are the biggest piece of that, 321 XLRs. Yeah. No, there's not a lot more color to add to that, I would say. Yeah. I'd say that it's probably just trueing up our numbers, reschedules, and some of that might be a little bit of the lounges and the configuration, but it wouldn't be to the tune of CAD 1 billion. Right. And then on transatlantic, several of the U.S. airlines are speaking enthusiastically about RASM trends going forward. I believe in the prepared remarks, you referred to it as stable in the Q3. When we think about your 2025 forecast, and admittedly, you're not sharing that with us yet, but would you be able to rank order your geographies next year best to worst in terms of your RASM expectations? Hi, Jamie. We share a little bit of the enthusiasm on what we're seeing on the transatlantic for Q4 and beyond. I think it's very, very early signals for 2025, so it's kind of hard to give you a real definitive statement on what's going to perform in 2025, but early indicators suggest the Atlantic is going to bounce back. We're going to have a fairly decent transborder performance next year. We think the watch-out, if there's any watch-out, is obviously on the Pacific where the yields remain still elevated and there's a bit of downward pressure. Domestic would fit in where? Yeah. Domestic would be relatively stable. It's a very environment, so I don't really see much. I think stability is the appropriate term. Okay. That's helpful. Thank you very much, everybody. Next question is from Stephen Trent with Citi. Your line is open. Yes. Good morning, everyone. And thanks very much for taking my questions. First, I was just curious if you could remind me, now that you guys have launched this share purchase, are there any pandemic-era government strictures on which you guys still have to abide, other corporate actions or servicing low-density routes or this kind of thing, or is that era now water under the bridge? Yeah. It is. is. The chapter is closed on all of that. Great. Appreciate that, John. And just the other thing, I was wondering if you could just give us a little color on what you're seeing on air cargo, maybe demand-wise, if any one or two regions look exceptionally good or somewhat worrisome under the current environment? Thank you. Hi, Steve. It's Mark. The overall cargo environment is quite favorable. I would say it's quite favorable in Asia-Pacific. We see similar trends in India, and those really kind of stand out in terms of weakness or any areas of concern, none at this time, and we think this cargo tailwind continues into Q4 and the early part of next year. Okay. Super. Thank you very much. Next question comes from the line of Cameron Doerksen with National Bank Financial. Your line is open. Yeah. Thanks. Good morning. Just wanted to clarify something that you said in the prepared remarks around the yield into Q4. I think you said you expected overall yields to be sequentially higher in Q4 versus Q3. Do I have that correct, or did I mishear that? Hi, Cameron. That's correct. Okay. Perfect. So I guess my main question is just around, I guess, labor negotiations. Obviously, good to have the pilot deal in the rearview mirror here. But you do have some additional negotiations coming up in 2025, I guess, specifically the flight attendants in March. I'm just wondering if you can talk about anything that you might do differently, I guess, with this negotiation process because we did have kind of a year of uncertainty, I guess, while the pilot negotiations were ongoing. And I'm just wondering if there's maybe more urgency to get something done earlier so you can avoid, I guess, the impact on bookings and things that we saw in the past 12 months. Yeah. Good morning, Cameron. It's Michael. I'll take that one. Yeah. We think it'll probably be a shorter process than the pilot negotiation, which went on for approximately 15 months, and as you can appreciate, it's too early to speak about any expectation at this point in time. Okay. All right. No, that's great. I'll leave it there. Thanks very much. Next question comes from James McGarragle with RBC Capital Markets. Your line is open. Hey. Thanks for having me on, and good morning, everyone. Hi. Just wanted to ask a question. Given some of the favorable yield trends you flagged into Q1, are you seeing any changes in the Canadian industry with regard to adopting kind of a more measured approach to capacity, kind of in line with what we're seeing in the U.S. market? Hi, James. There are no major changes. I think there's a more rational capacity situation going into Q1. I mean, some geographies are up. Some are pretty flat. I think what we're starting to see is at this time last year, we started to see some normalization in our yield, and we start to lap over that in the base period. So that's why, in part, we're expecting Q1 to be or look more favorable from a yield perspective. Okay. I appreciate that. And just a longer-term question here on some of the recent changes to the Canadian immigration targets. Does that impact your long-term strategy at all? Any updates into how you're thinking about the future, which looks like some potential near-term headwinds to population growth in the upcoming few years? James, not materially. I mean, there's still going to be a decent run rate in terms of number of immigrants, even if it's a reduced amount. And we've had multiple decades of significant immigration into the country that's led to the demand situation that we fly today. So I don't think it really changes all that much. I still think we're going to have a favorable international demand environment to and from Canada for the years to come. Appreciate it. And I'll turn the line over. Thank you. Next question is from Andrew Didora with Bank of America. Your line is open. Hey. Good morning, everyone. John, just to clarify, I think I heard you say neutral free cash flow in 2025. Is that on your committed CapEx figure of $3.6 billion? And then kind of as a follow-up to that, I guess maybe to ask the CapEx question another way, we've seen many US airlines with a Boeing order book bring down their spend plans in the out years. Why have you not seen that? Or is there any framework that maybe you can give us about kind of what that could look like going forward? Thank you. Sure. Yeah. So yeah, we have a pretty good idea for 2025 capital and CapEx, I should say, and we'll be in that range, as you mentioned. I think with that inclusive, our expectation here is to drive our expectation. I'll correct that. I'll say our target is to drive, and we'll give you expectations when we meet at Investor Day, but we're targeting free cash flow, break-even deposit for next year. With respect to kind of Boeing and aircraft delivery, we did make some adjustments a couple of quarters back. You'll recall we had a lot of aircraft coming in in 2026. We did spread that over a couple of years. We did that for a couple of reasons. One, working with them. Two, just our own ability to kind of take them and bring them in effectively. With respect to future look and how that might evolve, frankly, as I mentioned in my comments, we're staying very close. We have very good relationships there, and they are going through their own issues right now, and we'll let them settle through all that, and then we'll make any adjustments as necessary, and we'll balance that so that, number one, they can manage the delivery schedule as appropriate, number two, that we can take the aircraft effectively when they're ready, so that's a conversation that will evolve. There's no, I don't have a perfect answer for what may come out of it, but certainly over the next, whatever, three to six months, we'll get a little bit more clarity, and with that, we'll make the appropriate adjustments. I think we try to manage our mid- and long-term planning, so we take into consideration some of the potential volatility. I think, by and large, we have some clarity as to the roadmap we're trying to execute for the network. Got it. Makes sense. And then I know, John, you hedged some fuel in 3Q. And I don't think it was talked about. I didn't see it in the filings. But with the recent decline in jet fuel prices, do you have any hedges in place today? And just how do you think about that going forward if you'll continue to be opportunistic? Thanks for taking the time. Yeah. Thanks for bringing that up. So no, but look, I guess no regrets, to be honest with you. I mean, it's a very volatile environment, right? And what we do is we run an airline, and we run an airline, and we try to manage the different volatility that's in the system by just focusing on the things that we can control. And in the sense of fuel and fuel hedging, we did take some positions in September that also covered Q4. So we're about 50% hedged in Q4. And as you well noted, fuel price has been soft there. So there's some negative impact there. And well, it's included in our guide, obviously, here today. And so Q4 will take some a little bit of pressure relative to what you pay at the pump. But then again, who knows? We're in November here, and you don't know what the next 60 days may bring as well. So we feel comfortable that at least we have an environment we can operate in for 2025. I mean, we typically, as you've seen, we've looked at things in the shorter term and tried to protect the volatility there relative to our booking situation. And no real changes. I think we just try to manage responsibly and at the same time not get too, too far ahead with the hedging program either. That's great. Thank you. Next question is Sheila Kahyaoglu with Jefferies. Your line is open. Thank you so much, and good morning, everyone. Maybe if I could ask about the mid-single-digit capacity guidance for 2025, just very different than your U.S. peers. What gives you confidence in that, and how should we see the capacity geographically? You should have confidence in terms of our ability to grow, our ability to execute? Yeah. Just the mid-single ability to grow more so, mid-single digit versus what we've seen. Commentary out of the U.S. carriers has been much more subdued in the 1% to 3% range, let's say, and the capacity cuts we've seen in the U.S., at least domestically. How do you think about that mid-single digit? Why come out with such a robust target? And how do you think about that geographically? Yeah. Okay. Great question. So first comment, we're still not at 2019 level of capacity. We're still somewhere in the 90% range or close to. So there's still catch-up for us to get back to 2019. In the next year, the majority of the fleet that we're getting is narrow bodies. And you'll see us restore certain domestic links that we've either had to reduce or pull out of. And we're also going to be increasing the size and scope of our sixth freedom network to really fortify our international route network long-term. Those are the big themes for 2025. We don't have much widebody or international-capable capacity coming in in 2025. We'll get that as the 321 XLR arrives later in the year. Okay. Got it. Thank you so much. And then maybe if we could just. I know a few questions were asked on capacity. If you could just put a finer point on that capacity up 1% year-to-date with the full-year guide up to 2%. Seems like there's some contract-related adjustments that are tied to the maintenance fund, which stepped up CAD 100 million sequentially. I guess maybe that's GTF implications there. How do we think about that and the implied exit rate for the year is up to mid-single digit? So what's the right way to think about capacity in 2025, knowing it's somewhat been touched upon? Yeah. I think, I mean, I was actually very clear on what I said, maybe more than I wanted to be before this call, to be frank. But I think that what you should expect is that the 2% in 2024 probably feels a little bit or looks a little bit better than it is. Probably we had a guide previously, 2.5% to 3.5%. So we did clean up some of the contracts, maintenance, and other things. And so as a result, we get a little bit of a kick there. So down to 2%. But if you normalize that, kind of think 3%. And then that's, frankly, before I even talk 2025, for what it's worth, I think it shows a lot of ability to lower ASMs than we started the year. I think it shows a lot of agility on the airline to be able to actually manage costs and then bring the airline into what is a better guide than originally had anticipated on higher ASM. So for one, I think we feel good about just the ability to execute some efficiency as we go through things. For 2025, I think that you probably have to give back that one point that we get this year so that kind of normalizes out. And so your base will be a little bit depressed where we land in CASM, absolute CASM ex in 2024. So move up probably in the neighborhood of 3% to 4%. We'll refine that number. And I'll reserve the right to make an adjustment when we guide in December. But I think that's the kind of level we're looking at. So you get a little bit. You got normal inflation. You get some pressure that I mentioned earlier. Airport fees will go higher. We do go through another labor agreement next year. So that'll probably have an impact. I think you'll feel the full implication of the pilot agreement a little bit more than you do in 2024. You'll feel it full in 2025. And so those elements will have some upward pressure. And then I think we'll be able to claw some things back here with productivity and just a little bit of scale on the airline. So that's kind of the math. And I would say that overall, as we go into 2026, 2027, as Mark said earlier, in 2025, we're getting a lot of short-haul aircraft. It's not the ideal in terms of managing down CASM ex. So as we get longer-haul new aircraft and had some ASMs on longer routes with modern aircraft, I think you'll see a little bit of tailwind there. But that's probably a year out from next year. Got it. Thank you so much. This concludes the question and answer session. I'll turn the call to Valérie for closing remarks. Thank you, Sarah. Once again, thank you for joining us this morning. Should you have any additional questions, don't hesitate to reach out to us at Investor Relations. Encore une fois, merci beaucoup de votre attention ce matin. Pour toute question additionnelle, n'hésitez pas à nous contacter aux relations investisseurs. Bonne journée. Have a great day. This concludes today's conference call. Thank you for joining. You may now disconnect.