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Air Canada Third Quarter 2025 Update November 4, 2025
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Caution Regarding Forward-Looking Information This presentation includes forward -looking statements within the meaning of applicable securities laws. Forward- looking statemen ts relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may involve, but are not limited to, comments relating to gui dance, strategies, expectations, planned operations or future actions. Forward -looking statements are identified using terms and phrases such as "preliminary"; "anticipate"; "believe"; "could"; "estimate"; "expec t"; "intend"; "may"; "plan"; "predict"; "project"; "will"; "would"; and similar terms and phrases, including references to assumptions. Forward- looking statements, by their nature, are based on assumptions including those described herein and are subject to import ant risks and uncertainties, which are amplified in the current environment. Forward- looking statements cannot be relied upon due to, among other things, changing external events and general uncertainties of the b usiness of Air Canada. Actual results may differ materially from results indicated in forward -looking statements due to a number of factors, including those discussed below. Factors that may cause results to differ materially from results indicated in forward -looking statements include economic condit ions, statements or actions by governments and uncertainty relating to the imposition of (or threats to impose) tariffs on Canadian exports or imports and their resulting impacts on the Canadian, North American and global economies and travel demand, geopolitical conditions such as the military conflicts in the Middle East and between Russia and Ukraine, Air Canada’s ability to successfully achieve or sustain positive net profi tability, industry and market conditions and the demand environment, competition, Air Canada’s dependence on technology, cybersecurity risks, interruptions of service, climate change and environmental factors (i ncluding weather systems and other natural phenomena and factors arising from anthropogenic sources), Air Canada’s dependence on key suppliers (including government agencies and other stakeholders suppor ting airport and airline operations), employee and labour relations and costs, Air Canada’s ability to successfully implement appropriate strategic and other important initiatives (including Air Canada’s abil ity to manage operating costs), energy prices, Air Canada’s ability to pay its indebtedness and maintain or increase liquidity, Air Canada’s dependence on regional and other carriers, Air Canada’s ability to attract and r etain required personnel, epidemic diseases, changes in laws, regulatory developments or proceedings, terrorist acts, war, Air Canada’s ability to successfully operate its loyalty program, casualty losses, Air Canada’ s dependence on Star Alliance® and joint ventures, Air Canada’s ability to preserve and grow its brand, pending and future litigation and actions by third parties, currency exchange fluctuations, limitations due t o r estrictive covenants, insurance issues and costs, and pension plan obligations as well as the factors identified in Air Canada’s public disclosure file available at www.sedarplus.ca and, in particular, those identified in section 18 “Risk Factors” of Air Canada’s 2024 MD&A and in section 14 “Risk Factors” of Air Canada’s Third Quarter 2025 MD&A. Air Canada has and continues to establish targets, make commitments and assess the impact regarding climate change, and relat ed initiatives, plans and proposals that Air Canada and other stakeholders (including government, regulatory and other bodies) are pursuing in relation to climate change and carbon emissions. The achievement of our commitments and targets depends on many factors, including the combined actions of governments, industry, suppliers and other stakeholders and actors, as well as the development and implementation of new t echnologies. In particular, our 2030 carbon emission -related targets and our related 2050 aspiration are ambitious and heavily dependent on new technologies, renewable energies and the availability of a sufficient s upply of sustainable aviation fuels (SAF), which continues to present serious challenges. In addition, Air Canada has incurred, and expects to continue to incur, costs to achieve its goal of net -zero carbon emissions and to comply with environmental sustainability legislation and regulation and other standards and accords. The precise nature of future binding or non- binding legislation, regulation, standards and accords, on which local and international stakeholders are increasingly focusing, cannot be predicted with any degree of certainty, nor can their financial, operational or other impact. There can be no assurance of the extent to which any of our climate goals will be achieved or that any future investments that we make in furtherance of achieving our climate goals will produce the expected results or meet increasing stakeholder environmental, socia l and governance expectations. Moreover, future events could lead Air Canada to prioritize other nearer -term interests over progressing toward our current climate goals based on business strategy, economic, r egulatory and social factors, and potential pressure from investors, activist groups or other stakeholders. If we are unable to meet or properly report on our progress toward achieving our climate change goals and commitments, we could face adverse publicity and reactions from investors, customers, advocacy groups or other stakeholders, which could result in reputational harm or other adverse effects to Air Canada. The forward -looking statements contained or incorporated by reference in this presentation represent Air Canada’s expectations as of the date of this presentation (or as of the date they are otherwise stated to be made) and are subject to change after such date. However, Air Canada disclaims any intention or obligation to update or revis e a ny forward -looking statements, whether because of new information, future events or otherwise, except as required under applicable securities regulations.
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Maintaining a strong and resilient balance sheet $8.3B at Sep. 30, 2025 TOTAL LIQUIDITY $813M in Q3 2025 +$76M YoY CASH FROM OPERATIONS * Net debt is a capital management measure and a key component of the capital managed by Air Canada and provides management with a measure of its net indebtedness. Free cash flow (FCF) is a non-GAAP financial measure used by Air Canada as an indicator of the financial strength and performance of its business, indicating how much cash it can generate from operations after capital expenditures. These measures are not recognized for financial statement presentation under GAAP, do not have a standardized meaning, may not be comparable to similar measures presented by other entities and should not be considered a substitute for, or superior to, GAAP results. Please refer the Non-GAAP Financial Measures section of this presentation for further information and for a reconciliation to the most comparable GAAP measure. $3.4 $4.9 $4.8 $0 $2 $4 $6 0.0 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Net Debt Leverage ratio 1.0 Sep 30, 2024 1.4 Dec 31, 2024 1.6 Sep 30, 2025 Leverage ratio Net Debt* ($B) $211M in Q3 2025 -$71M YoY FCF *
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Q3 2025 Performance & Key Developments 12.2M customers carried in Q3, declined 4% YoY . $375M net impact of the disruption to Q3 2025 operating income and adjusted EBITDA.Labour disruption Flexible goodwill policies for customers to reimburse out-of-pocket expenses. Quick rebound in booking patterns post labour disruption, continuing into Q4.Brand strength Acted quickly on improving trends in the Atlantic and Domestic. Solid performance in premium, corporate revenues and other revenues. Diverse network and offering Continued momentum in operational performance.Operational excellence Repaid convertible senior notes in full, retired 18 million potentially issuable shares.Disciplined capital allocation In November 2025, the total number of firm Boeing 787-10s was reduced to 14, 10 are scheduled for delivery by 2028 and the remaining four by 2030. Fleet
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Key Management Actions Managed capacity to capture Atlantic and Domestic growth, reduced Transborder risk. Announced 2026 network expansion, international growth and improved downtown Toronto connectivity. Diverse network and offering Advanced $150M cost reduction plan, aiming for full completion in 2025. Gain of $48M from jet fuel hedging in the first nine months. Cost management Improved operational metrics and customer satisfaction year-over-year. Successfully handled shutdown and restart plan for August labour disruption. Operational excellence Maintained strong balance sheet. Leverage ratio at 1.6x as of September 30, 2025, affected by lower adjusted EBITDA. Repurchased 62 million shares, deployed ~$1.7B on anti-dilutive actions. Balance sheet & capital allocation
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Updated 2025 guidance* *As communicated in Air Canada’s news release dated November 4, 2025. Air Canada made assumptions in providing its guidance—including a marginal Canadian GDP growth for 2025. Air Canada now assumes that the Canadian dollar will trade, on average, at C$1.40 per U.S. dollar for the full year 2025 (previously $1.39) and that the price of jet fuel will average C$0.91 (previously C$0.92) per litre for the full year 2025. Air Canada’s guidance constitutes forward-looking information within the meaning of applicable securities laws and is subject to important risks and uncertainties, including in relation to the potential impact of statements or actions by governments relating to the imposition of (or threats to impose) tariffs on exports or imports, and related consequences. Please see the discussion above under Caution Regarding Forward-looking Information. Adjusted EBITDA Between $2.95B and $3.05B Prior: $2.9B to $3.1B Between 14.60¢ and 14.70¢ Unchanged Adjusted CASM ~0.75% increase versus 2024 Prior: 0.5%-1.5% increase versus 2024 Capacity $0 to $200M Prior: -$50M to $150M Free Cash Flow
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2025 Skytrax World Airline Awards Awarded in 9 categories, most among North American airlines Including: Best Airline in North America Best Cabin Crew in North America Best Cabin Crew in Canada Best Low-Cost Airline - Rouge Only North American airline in the world’s Top 20 in Skytrax’s global rankings in 2025 APEX 2026 Awards Earned Passenger-Rated Five Star Global Airline Award for Sixth Consecutive Year 2025 Freddie Awards (Aeroplan loyalty program) Awarded in 3 categories including Best Program of the Year (Airline) Key industry awards
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Air Canada’s Leadership Experienced and dedicated to drive long-term value Michael Rousseau President and Chief Executive Officer Marc Barbeau EVP, Chief Legal Officer and Corporate Secretary John Di Bert EVP and Chief Financial Officer Mark Galardo EVP, Chief Commercial Officer and President, Cargo Mark Nasr EVP & Chief Operations Officer Craig Landry EVP & Chief Innovation Officer and President of Aeroplan Arielle Meloul-Wechsler EVP, Chief Human Resources Officer and Public Affairs Kevin O’Connor SVP, Global Airports & Operations Control Murray Strom SVP, Flight Operations and Maintenance
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Balance sheet and liquidity management Fleet Global network Brand Leading products and services Air Canada Rouge and Air Canada Vacations Air Canada Cargo Technology People Aeroplan Our strong foundation
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Strong value creation* Performance culture, disciplined management and superior balance sheet enhance risk / reward proposition >$30B revenues by 2030, Accelerated revenue growth 7-8% p.a. 18-20% adj. EBITDA margin. Margin expansion of 300bps+ returning to pre-pandemic highs. ~5% FCF margin. <12% CAPEX investment levels. Structural FCF margin of ~5% Shareholder returns. ˂300M fully diluted shares outstanding. Deploying >$2B to shareholder returns. A unique value creation opportunity – 2030 aspiration *As communicated in Air Canada’s December 17, 2024 news release. Please see the discussion above under Caution Regarding For ward-looking Information.
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aircanada.com Thank you
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aircanada.com Appendix
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Glossary Aeroplan – Refers to Aeroplan Inc. or the Aeroplan program . Available seat miles or ASMs – Refers to a measure of passenger capacity calculated by multiplying the total number of seats available for passengers by the miles flown . CASM – Refers to operating expense per ASM. Passenger load factor – Refers to a measure of passenger capacity utilization derived by expressing Revenue Passenger Miles as a percentage of ASMs. Passenger revenue per available seat mile or PRASM – Refers to average passenger revenue per ASM. Revenue passenger carried – Refers to the International Air Transport Association’s definition of passenger carried whereby passengers are counted on a flight number basis rather than by journey/itinerary or by leg. Revenue passenger miles or RPMs – Refers to a measure of passenger traffic calculated by multiplying the total number of revenue passengers carried by the miles they are carried . Total operating revenues per available seat mile or TRASM – Refers to average total operating revenues per ASM. Yield – Refers to average passenger revenue per RPM.
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Non-GAAP Financial Measures Below is a description of certain non- GAAP financial measures and ratios used by Air Canada to provide readers with additional i nformation on its financial and operating performance. Such measures are not recognized measures for financial statement presentation under GAAP, do not have standardi zed meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. The non- GAAP financial measures or ratios described in this section typically have exclusions or adjustments that include one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of past or future operating results. T hese items are excluded because the company believes these may distort the analysis of certain business trends and render comparative analysis across periods less meaningful and their exclusion generally allows for a more meaningful analysis of Air Canada’s operating expense performance and may allow for a more meaningful comparison to other a irlines. Air Canada excludes the effect of impairment of assets, if any, when calculating adjusted CASM, adjusted EBITDA, adjusted EBI TDA margin, adjusted pre- tax income (loss) and adjusted net income (loss) as it may distort the analysis of certain business trends and render comparative analysis across periods or to other airlines less meaningful. A charge of $34 million was recorded in the third quarter of 2024 in other operating expenses related to estimated costs associa ted with contractual lease obligations. Air Canada excluded this expense in computing adjusted CASM, adjusted EBITDA, adjusted pre- tax income and adjusted net income. In the third quarter of 2025 Air Canada recorded a one- time pension past service cost and other labour related charges of $173 m illion, including from the pension plan amendments made in conjunction with the tentative agreement reached with CUPE. Air Canada has excluded this charge in computi ng its adjusted EBITDA, adjusted CASM, adjusted pre- tax income and adjusted net income.
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Non-GAAP Financial Measures (Cont’d) Adjusted Cost per Available Seat Mile Air Canada uses adjusted CASM to assess the operating and cost performance of its ongoing airline business without the effect s o f aircraft fuel expense, the cost of ground packages at Air Canada Vacations, freighter costs and other items discussed above. These items may distort the analysis of certain business trends and render c omparative analysis across periods less meaningful and their exclusion generally allows for a more meaningful analysis of Air Canada’s operating expense performance and may allow for a more meaningful comparis on to that of other airlines. In calculating adjusted CASM, aircraft fuel expense is excluded from operating expense results as it fluctuates widely depending on many factors, including international market conditions, geopolitical events, jet fuel refining costs and Canada/U.S. currency exchange rates. Air Canada also incurs expenses related to ground packages at Ai r C anada Vacations which some airlines, without comparable tour operator businesses, may not incur. In addition, these costs do not generate ASMs and therefore excluding these costs from operating expe nse results provides for a more meaningful comparison across periods when such costs may vary. Air Canada also incurs expenses related to the operation of freighter aircraft which some airlines, without comparable cargo businesses, may not incur. Air Canada had six Boeing 767 dedicated freighter aircraft in service as at September 30, 2025, and September 30, 2024. These costs do not generate ASMs and therefore excluding these cost s f rom operating expense results provides for a more meaningful comparison of the passenger airline business across periods. Adjusted CASM is reconciled to GAAP operating expense as follows: (Canadian dollars in millions, except where indicated) Third Quarter First Nine Months 2025 2024 Change 2025 2024 Change Operating expense – GAAP $ 5,490 $ 5,066 $ 424 $ 16,008 $ 15,334 $ 674 Adjusted for: Aircraft fuel (1,212) (1,377) 165 (3,546) (3,964) 418 Ground package costs (103) (102) (1) (633) (574) (59) Freighter costs (excluding fuel) (44) (40) (4) (128) (113) (15) Provision for contractual lease obligations - (34) 34 - (34) 34 Pension plan amendments and other labor related charges (173) - (173) (173) - (173) Operating expense, adjusted for the above- noted items $ 3,958 $ 3,513 $ 445 $ 11,528 10,649 879 ASMs (millions) 28,282 28,892 (2.1) % 79,382 79,432 (0.1) % Adjusted CASM (cents) ¢ 13.99 ¢ 12.15 ¢ 1.84 ¢ 14.52 ¢ 13.41 ¢ 1.11
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Non-GAAP Financial Measures (Cont’d) Adjusted Cost per Available Seat Mile Adjusted CASM is reconciled to GAAP operating expense as follows: (Canadian dollars in millions, except where indicated) Full Year 2024 2023 Operating expense – GAAP $ 20,992 $ 19,554 Adjusted for: Aircraft fuel (5,118) (5,318) Ground package costs (782) (720) Freighter costs (excluding fuel) (163) (157) Provision for contractual lease obligations (34) - Pension plan amendments (490) - Operating expense, adjusted for the above- noted items 14,405 13,359 ASMs (millions) 104,381 99,012 Adjusted CASM (cents) ¢ 13.80 ¢ 13.49
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Non-GAAP Financial Measures (Cont’d) Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and impairment) and adjusted EBITDA margin (adjuste d EBITDA as a percentage of operating revenues) are commonly used in the airline industry and are used by Air Canada as a means to view operating results and the related margin before interest, taxes, depreciation, amortization and impairment and other items discussed above. These items can vary significantly among airlines due to differences in the way airlines finance their aircraft and other ass ets . Adjusted EBITDA and adjusted EBITDA margin are reconciled to GAAP operating income as follows: (Canadian dollars in millions, except where indicated) Third Quarter First Nine Months 2025 2024 Change 2025 2024 Change Operating income – GAAP $ 284 $ 1,040 $ (756) $ 594 $ 1,517 $ (923) Add back: Depreciation, amortization and impairment 504 449 55 1,490 1,339 151 Provision for contractual lease obligations - 34 (34) - 34 (34) Pension plan amendments and other labour related charges 173 - 173 173 - 173 Adjusted EBITDA $ 961 $ 1,523 $ (562) $ 2,257 $ 2,890 $ (633) Operating revenues $ 5,774 $ 6,106 $ (332) $ 16,602 $ 16,851 $ (249) Operating margin (%) 4.9 17.0 (12.1) pp 3.6 9.0 (5.4) pp Adjusted EBITDA margin (%) 16.6 24.9 (8.3) pp 13.6 17.2 (3.6) pp
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Non-GAAP Financial Measures (Cont’d) Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA and adjusted EBITDA margin are reconciled to GAAP operating income as follows: (Canadian dollars in millions, except where indicated) Full Year 2024 2023 Operating income – GAAP $ 1,263 $ 2,279 Add back: Depreciation and amortization 1,799 1,703 EBITDA 3,062 3,982 Add back: Provision for contractual lease obligations 34 - Pension plan amendments 490 - Adjusted EBITDA $ 3,586 $ 3,982 Total operating revenues $ 22,255 $ 21,833 Operating margin (%) 6 10 Adjusted EBITDA margin (%) 16 18
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Non-GAAP Financial Measures (Cont’d) Adjusted Net Income (loss) and Adjusted Earnings (Loss) per Share – Diluted Air Canada uses adjusted net income (loss) and adjusted earnings (loss) per share – diluted as a means to assess the overall financial performance of its business without the after -tax effects of foreign exchange gains or losses, net financing expense relating to employee benefits, gains or losses on financial instruments recor ded at fair value, gains or losses on sale and leaseback of assets, gains or losses on debt settlements and modifications, gains or losses on disposal of assets and other items discussed above. These items may distort the analysis of certain business trends and render comparative analysis to other airlines less meaningful. A corporate charge for the settlement of tax matters related to the 2019 acquisition of Aeroplan $26 million was recorded in the first nine months of 2025. As this item is non- recurring and cash- neutral to Air Canada, since a related tax refund was also recorded, it has been excluded from adjusted net income. Adjusted net income and adjusted earnings per share are reconciled to GAAP net income as follows: (Canadian dollars in millions) Third Quarter First Nine Months 2025 2024 Change 2025 2024 Change Net income – GAAP $ 264 $ 2,035 $ (1,771) $ 348 $ 2,364 $ (2,016) Adjusted for: Provision for contractual lease obligations - 34 (34) - 34 (34) Pension plan amendments and other labour related charges 173 - 173 173 - 173 Foreign exchange (gain) loss (343) 85 (428) (142) 28 (170) Net interest relating to employee benefits (4) (5) 1 (14) (16) 2 Gain on financial instruments recorded at fair value (16) (26) 10 (76) (66) (10) Loss on debt settlements - - - - 46 (46) Other corporate expenses 8 - 8 26 - 26 Income tax, including for the above reconciling items 141 (1,154) 1,295 (35) (1,148) 1,113 Adjusted net income $ 223 $ 969 $ (746) $ 280 $ 1,242 $ (962) Weighted average number of outstanding shares used in computing diluted income per share (in millions) 297 376 (79) 328 376 (48) Adjusted earnings per share – diluted $ 0.75 $ 2.57 $ (1.82) $ 0.85 $ 3.30 $ (2.45)
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Non-GAAP Financial Measures (Cont’d) Free Cash Flow Air Canada uses free cash flow as an indicator of the financial strength and performance of its business, indicating the amount of cash Air Canada can generate from operations and after capital expenditures. Free cash flow is calculated as net cash flows from operating activities minus additions to property, equipment, and intangible assets, and is net of proceeds from sale and leaseback transactions. The tables below reconcile free cash flow to net cash flows from (used in) operating activities for the periods indicated. (Canadian dollars in millions) Third Quarter First Nine Months 2025 2024 Change 2025 2024 Change Net cash flows from operating activities $ 813 $ 737 $ 76 $ 3,234 $ 3,253 $ (19) Additions to property, equipment, and intangible assets (602) (455) (147) (2,009) (1,464) (545) Free cash flow $ 211 $ 282 $ (71) $ 1,225 $ 1,789 $ (564) (Canadian dollars in millions) Full Year 2024 2023 Net cash flows from operating activities $ 3,930 $ 4,320 Additions to property, equipment, and intangible assets (2,636) (1,564) Free cash flow $ 1,294 $ 2,756
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Non-GAAP Financial Measures (Cont’d) Net Debt Net debt is a capital management measure and a key component of the capital managed by Air Canada and provides management wit h a measure of its net indebtedness. Net Debt to Trailing 12- Month Adjusted EBITDA (Leverage Ratio) Net debt to trailing 12- month adjusted EBITDA ratio (also referred to as “leverage ratio”) is commonly used in the airline indus try and is used by Air Canada as a means to measure financial leverage. Leverage ratio is calculated by dividing net debt by trailing 12- month adjusted EBITDA. The table below reconciles leverage ratio to Air Canada’s net debt balances as at the dates indicated. (Canadian dollars in millions) September 30, 2025 December 31, 2024 September 30, 2024 Total long-term debt and lease liabilities $ 8,699 $ 10,915 $ 10,716 Current portion of long-term debt and lease liabilities 3,070 1,755 1,652 Total long-term debt and lease liabilities (including current portion) 11,769 12,670 12,368 Less cash, cash equivalents and short and long-term investments (6,939) (7,752) (8,942) Net debt $ 4,830 $ 4,918 $ 3,426 Adjusted EBITDA (trailing 12 months) $ 2,953 3,586 $ 3,411 Net debt to adjusted EBITDA ratio 1.6 1.4 1.0
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Non-GAAP Financial Measures (Cont’d) Net cash flows from operating activities as a percentage of adjusted EBITDA Air Canada uses net cash flows from operating activities as a percentage of adjusted EBITDA to measure cash conversion from adjusted EBITDA. This measure is defined as the ratio of net cash flows from operating activities to adjusted EBITDA. Additions to property, equipment and intangible assets as a percentage of operating revenues Air Canada uses additions to property, equipment and intangible assets as a percentage of operating revenues to measure the prop ortion of operating revenues that are reinvested as capital expenditures. This measure is defined as the ratio of additions to property, equipment and intangible assets to operating revenues. Free cash flow margin Air Canada uses free cash flow margin to measure the amount its free cash flow represents as a percentage of operating revenues. This measure is defined as the ratio of free cash flow to operating revenues. The table below presents the quantitative reconciliation for net cash flows from operating activities as a percentage of adjuste d EBITDA, additions to property, equipment and intangible assets as a percentage of operating revenues and free cash flow margin, in each case for the financial years ended December 31, 2024 and 2023. (Canadian dollars in millions) 2024 2023 Total operating revenues – GAAP $ 22,255 $ 21,833 Adjusted EBITDA $ 3,586 $ 3,982 Net cash flows from operating activities $ 3,930 $ 4,320 Additions to property, equipment and intangible assets (2,636) (1,564) Free cash flow $ 1,294 $ 2,756 Net cash flows from operating activities as a percentage of adjusted EBITDA 110% 108% Additions to property, equipment and intangible assets as a percentage of operating revenues 12% 7% Free cash flow margin 6% 13%