-
Net income of $131 million in 2012 on a GAAP basis; Adjusted net income
of $53 million in 2012
-
Fourth Quarter EBITDAR of $284 million, an increase of $122 million
-
Annual EBITDAR of $1.451 billion, including the impact of benefit plan
amendments
-
Cash and short-term investments of $2.026 billion at December 31, 2012
MONTREAL, Feb. 7, 2013 /CNW Telbec/ - Air Canada today reported full
year and fourth quarter earnings before interest, taxes, depreciation,
amortization and impairment, and aircraft rent ("EBITDAR") of $1.451
billion (or $1.327 billion before the impact of benefit plan
amendments) compared to EBITDAR of $1.242 billion in 2011. Including
the favourable impact of benefit plan amendments, EBITDAR of $1.451
billion increased $209 million year-over-year (or $85 million before
the impact of benefit plan amendments). On a GAAP basis, in 2012, net
income was $131 million or $0.45 per diluted share compared to a net loss of $249 million or $0.92 per diluted share
in 2011. On an adjusted basis, net income was $53 million or $0.19 per
diluted share compared to a net loss of $122 million or $0.44 per
diluted share in 2011.
For the fourth quarter of 2012, Air Canada reported EBITDAR of $284
million compared to EBITDAR of $162 million in the fourth quarter of
2011, an improvement of $122 million. On a GAAP basis, in the fourth
quarter of 2012, Air Canada reported net income of $8 million or $0.03
per diluted share compared to a net loss of $60 million or $0.22 per diluted share
in the fourth quarter of 2011. Air Canada reported an adjusted net
loss of $6 million or $0.02 per diluted share compared to an adjusted
net loss of $167 million or $0.60 per diluted share in the same quarter
in 2011.
"I am extremely pleased to report a strong fourth quarter and a full
year net profit for Air Canada of $131 million in 2012," said Calin
Rovinescu, President and Chief Executive Officer. "These results
reflect the success of Air Canada's ongoing transformation aligned with
strict cost control and disciplined capacity management. In
particular, the strong revenue performance of our international network
was led by significant improvements, not only in the Pacific region but
also on the Atlantic where we overcame challenges faced by the industry
earlier in the year. Our focus remains firmly fixed on further cost
reduction and increased revenue generation, including improved yields,
positioning us well for the future.
"Air Canada marked its 75th anniversary in 2012 by proving it is dynamic
and adaptable to an ever-changing industry. In pursuing our global
strategy we will continue to build our international network with
expanding services to Asia and new routes and destinations such as
Istanbul, Venice and Edinburgh. Our commitment to this priority is
underscored by our ongoing fleet modernization with the addition of
five new Boeing 777s. The further enhancement of our range of
international product and service offerings, including the introduction
of a Premium Economy product and launch of our leisure carrier Air
Canada rougeTM, gives us the tools to more effectively compete in a wider range of
international markets. I thank our 27,000 employees for taking care of
our customers as recognized by our many awards and accolades throughout
the year, culminating in Air Canada recently receiving a Four-Star
rating in the Skytrax Airline Star Ranking, the only international
network carrier in North America to earn this distinction."
Full Year Income Statement Highlights
In 2012, system passenger revenues were $10.737 billion, an increase of
$529 million or 5.2 per cent, on a 2.6 per cent growth in traffic and a
1.8 per cent improvement in yield. Passenger revenue per available seat
mile (RASM) increased 3.2 per cent from 2011 due to the yield growth
and a 1.1 percentage point improvement in passenger load factor.
Adjusted CASM increased 1.0 per cent from 2011, in line with the 0.75
per cent to 1.25 per cent full year increase projected in Air Canada's
news release dated November 8, 2012.
In 2012, operating expenses increased $250 million from 2011, reflecting
increases in fuel expense, wages, salaries and benefits expense,
capacity purchase costs and other expenses. Partly offsetting these
increases was an operating expense reduction of $124 million related to
changes to the terms of the ACPA collective agreement pertaining to
retirement age and a decrease in depreciation, amortization and
impairment expense.
In 2012, operating income of $437 million increased $258 million from
2011.
Fourth Quarter Income Statement Highlights
In the fourth quarter of 2012, system passenger revenues increased $139
million or 5.8 per cent, on a 4.2 per cent growth in traffic and a 1.2
per cent improvement in yield. RASM increased 4.2 per cent from the
fourth quarter of 2011 due to a 2.3 percentage point improvement in
passenger load factor and to the yield growth.
In the fourth quarter of 2012, operating expenses decreased $2 million
from the fourth quarter of 2011, mainly due to lower aircraft
maintenance expense and a decrease in ownership costs (comprised of
depreciation, amortization and impairment and aircraft rent).
Offsetting these decreases were increases in wages, salaries and
benefits expense, fuel expense, capacity purchase costs, food, beverage
and supplies expense and other expenses.
Adjusted CASM decreased 2.0 per cent from the fourth quarter of 2011, in
line with the 2.0 per cent to 3.0 per cent fourth quarter decrease
projected in Air Canada's news release dated November 8, 2012.
In the fourth quarter of 2012, operating income of $46 million improved
$144 million from the fourth quarter of 2011.
Liquidity Highlights
At December 31, 2012, cash and short-term investments amounted to $2,026
million, or 17 per cent of 2012 annual operating revenues.
At December 31, 2012, adjusted net debt of $4,281 million decreased $295
million from December 31, 2011, reflecting net debt repayments made
during 2012.
Appointment to the Board of Directors
The Corporation also announced the appointment of Thomas Birks to the
Air Canada Board of Directors. The appointment is effective
immediately. Currently, he is the President of Birinco Inc., a merchant
bank with investment portfolios ranging from private equity to passive
investments. He previously served as President of Henry Birks and Sons
Ltd. and as Chair of the board of directors of Viterra Inc. Mr. Birks
has extensive global experience having worked in various countries
including Australia, Japan and South Africa.
In addition, Mr. Birks has served as Chair and board member of numerous
corporations, education institutions, hospitals and foundations.
Current Outlook
In the first quarter of 2013, Air Canada expects its system ASM
capacity, as measured by available seat miles (ASMs), to decrease in
the range of 0 to 1.5 per cent when compared to the first quarter of
2012. The comparative decrease in capacity in the first quarter of 2013
versus the first quarter of 2012 is due, in large part, to the first
quarter of 2012 having had an additional leap year day.
Air Canada continues to expect full year 2013 system capacity to
increase in the range of 1.5 to 3.0 per cent when compared to the full
year 2012. Air Canada expects its full year 2013 domestic capacity to
increase in the range of 0 to 1.5 per cent from the full year 2012.
As described in Air Canada's 2012 consolidated financial statements, Air
Canada will be required to adopt certain revised and new accounting
standards beginning on January 1, 2013, with retroactive restatement of
2012 comparative figures. These revised standards include changes to
the accounting for pensions and other employee benefits and changes to
the accounting for consolidation.
Air Canada continues to evaluate the impact of these standards on its
consolidated financial statements however, for the purposes of
providing adjusted CASM guidance for 2013, Air Canada has assumed that
these standards will result in the following restatements to 2012
operating expenses:
|
|
Canadian dollars in millions
|
Full Year 2012
|
Decrease to employee benefits expense
|
(2)
|
Decrease to depreciation, amortization and impairment
|
(9)
|
Net operating expense decrease due to impact of 2012 restatements
|
(11)
|
The adjusted CASM guidance for the first quarter and full year 2013 are
compared to the first quarter and full year 2012, respectively,
assuming the adjustments to operating expense noted above.
For the first quarter of 2013, Air Canada expects adjusted CASM to
increase by 3 to 4 per cent when compared to the first quarter of 2012.
For the full year 2013, Air Canada expects adjusted CASM to decrease in
the range of 0 to 1.0 per cent from the full year 2012.
Air Canada's above-mentioned outlook assumes Canadian GDP growth of 1.5
to 2.0 per cent for 2013. In addition, Air Canada expects that the
Canadian dollar will trade, on average, at C$1.00 per U.S. dollar in
the first quarter and the full year 2013 and that the price of jet fuel
will average 88 cents per litre in the first quarter of 2013 and 89
cents per litre for the full year 2013.
The following table summarizes Air Canada's above-mentioned outlook for
the first quarter of 2013 and for the full year 2013 and related major
assumptions:
|
|
|
|
|
First Quarter 2013 versus First Quarter 2012
|
|
Full Year 2013 versus Full Year 2012
|
Current Outlook
|
|
|
|
Available seat miles (System)
|
Decrease 0% to 1.5%
|
|
Increase 1.5% to 3.0%
|
Available seat miles (Canada)
|
n/a
|
|
Increase 0% to 1.5%
|
Adjusted CASM (1) |
Increase 3% to 4%
|
|
Decrease 0% to 1.0%
|
|
|
|
|
|
|
|
|
|
Major Assumptions - First Quarter 2013
|
|
Major Assumptions - Full Year 2013
|
Major Assumptions
|
|
|
|
Canadian dollar per U.S. dollar
|
1.00
|
|
1.00
|
Jet fuel price - CAD cents per litre (net of fuel hedging)
|
88 cents
|
|
89 cents
|
Canadian economy
|
2013 annualized Canadian
GDP growth of 1.5% to 2.0%
|
|
Canadian GDP
growth of 1.5% to 2.0%
|
For the full year 2013, Air Canada also projects the following:
-
Depreciation, amortization and impairment expense to decrease by
approximately $130 million from the full year 2012.
-
Employee benefits expense to increase by approximately $70 million from
the full year 2012. Refer to section 14 of Air Canada's 2012 MD&A for
important disclosures on changes to accounting for employee benefits
effective January 1, 2013.
-
Aircraft maintenance expense to increase by up to 5 per cent from the
full year 2012, which includes the impact of the favourable maintenance
return provision adjustment of $32 million recorded in the fourth
quarter of 2012.
The following table summarizes the above-mentioned projections for the
full year 2013:
|
|
|
|
|
Full Year 2013 versus Full Year 2012
|
Depreciation, amortization and impairment expense
|
|
Decrease by approximately $130 million
|
Employee benefits expense
|
|
Increase by approximately $70 million
|
Aircraft maintenance expense
|
|
Increase up to 5%
|
The outlook provided constitutes forward-looking statements within the
meaning of applicable securities laws and is based on a number of
additional assumptions and subject to a number of risks. Please see
section below entitled "Caution Regarding Forward-Looking Information."
(1) Non-GAAP Measures
Below is a description of certain non-GAAP measures used by Air Canada
to provide additional information on its financial and operating
performance. Such measures are not recognized measures for financial
statement presentation under Canadian GAAP and do not have standardized
meanings and may not be comparable to similar measures presented by
other public companies. Readers should refer to Air Canada's 2012 MD&A
for a reconciliation of non-GAAP financial measures.
-
Adjusted net income (loss) and adjusted net income (loss) per diluted
share are used by Air Canada to assess share performance without the
effects of foreign exchange, net financing income (expense) on employee
benefits, mark-to-market adjustments on derivatives and other financial
instruments recorded at fair value and unusual items.
-
EBITDAR is commonly used in the airline industry and is used by Air
Canada to assess earnings before interest, taxes, depreciation,
amortization and impairment, and aircraft rent, as these costs can vary
significantly among airlines due to differences in the way airlines
finance their aircraft and other assets.
-
Adjusted CASM is used by Air Canada to assess the operating performance
of its ongoing airline business without the effects of fuel expense,
the cost of ground packages at Air Canada Vacations and unusual items
as such expenses may distort the analysis of certain business trends
and render comparative analyses to other airlines less meaningful.
-
Free cash flow is used by Air Canada as an indicator of the financial
strength and performance of its business because it shows how much cash
is available for such purposes as repaying debt, meeting ongoing
financial obligations and reinvesting in Air Canada.
-
Adjusted net debt is a key component of the capital managed by Air
Canada and provides a measure of the airline's net indebtedness.
Air Canada's 2012 Audited Consolidated Financial Statements and Notes
and its 2012 Management's Discussion and Analysis (MD&A) are available
on Air Canada's website at aircanada.com, and will be filed on SEDAR at www.sedar.com.
For further information on Air Canada's public disclosure file,
including Air Canada's Annual Information Form dated March 29, 2012,
consult SEDAR at www.sedar.com.
Analyst Conference Call Advisory
Air Canada will host its quarterly analysts' call today, February 7,
2013 at 09:00 ET. Calin Rovinescu, President and Chief Executive
Officer, Michael Rousseau, Executive Vice President and Chief Financial
Officer, Ben Smith, Executive Vice President and Chief Commercial
Officer, and Pierre Houle, Treasurer, will review Air Canada's fourth
quarter 2012 financial results and will be available to answer
questions from analysts and high yield bond holders.
Dial (416) 695-9706 or 1-866-225-0198 or listen (only) through our live
audio web cast at http://bellwebcasting.ca/audience/index.asp?eventid=92604791
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This press release includes forward-looking statements within the
meaning of applicable securities laws. Forward-looking statements
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
preliminary results, guidance, strategies, expectations, planned
operations or future actions. Forward-looking statements are
identified by the use of terms and phrases such as "preliminary",
"anticipate", "believe", "could", "estimate", "expect", "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 important risks and
uncertainties. Forward-looking statements cannot be relied upon due
to, amongst other things, changing external events and general
uncertainties of the business. Actual results may differ materially
from results indicated in forward-looking statements due to a number of
factors, including without limitation, industry, market, credit and
economic conditions, the ability to reduce operating costs and secure
financing, pension issues, energy prices, employee and labour
relations, currency exchange and interest rates, competition, war,
terrorist acts, epidemic diseases, environmental factors (including
weather systems and other natural phenomena and factors arising from
man-made sources), insurance issues and costs, changes in demand due to
the seasonal nature of the business, supply issues, changes in laws,
regulatory developments or proceedings, pending and future litigation
and actions by third parties as well as the factors identified
throughout this news release and those identified in section 18 "Risk
Factors" of Air Canada's 2012 MD&A dated February 7, 2013. The
forward-looking statements contained in this news release represent Air
Canada's expectations as of the date of this news release (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 revise any forward-looking statements whether
as a result of new information, future events or otherwise, except as
required under applicable securities regulations.
HIGHLIGHTS
The financial and operating highlights for Air Canada for the periods
indicated are as follows.
|
|
|
|
Fourth Quarter
|
Full Year
|
(Canadian dollars in millions, except where indicated)
|
2012
|
2011
|
Change $
|
2012
|
2011
|
Change $
|
Financial Performance Metrics
|
|
|
|
|
|
|
Operating revenues
|
2,841
|
2,699
|
142
|
12,120
|
11,612
|
508
|
Operating income (loss)
|
46
|
(98)
|
144
|
437
|
179
|
258
|
Non-operating income (expense)
|
(38)
|
38
|
(76)
|
(250)
|
(429)
|
179
|
Income (loss) before income taxes and discontinued operations
|
8
|
(60)
|
68
|
187
|
(250)
|
437
|
Net income (loss) from continuing operations
|
8
|
(60)
|
68
|
186
|
(249)
|
435
|
Net income (loss) from discontinued operations - Aveos
|
-
|
-
|
-
|
(55)
|
-
|
(55)
|
Net income (loss)
|
8
|
(60)
|
68
|
131
|
(249)
|
380
|
Adjusted net income (loss) (1) |
(6)
|
(167)
|
161
|
53
|
(122)
|
175
|
Operating margin (%), excluding the impact of benefit plan amendments (2) |
1.6%
|
(3.6)%
|
5.2 pp
|
2.6%
|
1.5%
|
1.1 pp
|
Operating margin %
|
1.6%
|
(3.6)%
|
5.2 pp
|
3.6%
|
1.5%
|
2.1 pp
|
EBITDAR, excluding the impact of benefit plan amendments (2) (3) |
284
|
162
|
122
|
1,327
|
1,242
|
85
|
EBITDAR (3) |
284
|
162
|
122
|
1,451
|
1,242
|
209
|
EBITDAR margin (%), excluding the impact of benefit plan amendments (2) (3) |
10.0%
|
6.0%
|
4.0 pp
|
10.9%
|
10.7%
|
0.2 pp
|
EBITDAR margin % (3) |
10.0%
|
6.0%
|
4.0 pp
|
12.0%
|
10.7%
|
1.3 pp
|
Cash, cash equivalents and short-term investments
|
2,026
|
2,099
|
(73)
|
2,026
|
2,099
|
(73)
|
Free cash flow (4) |
(23)
|
(62)
|
39
|
187
|
356
|
(169)
|
Adjusted net debt (5) |
4,281
|
4,576
|
(295)
|
4,281
|
4,576
|
(295)
|
Net income (loss) per share - diluted
|
$ 0.03
|
$ (0.22)
|
$ 0.25
|
$ 0.45
|
$ (0.92)
|
$ 1.37
|
Adjusted net income (loss) per share - diluted (1) |
$ (0.02)
|
$ (0.60)
|
$ 0.58
|
$ 0.19
|
$ (0.44)
|
$ 0.63
|
|
|
|
|
|
|
|
Operating Statistics
|
|
|
Change %
|
|
|
Change %
|
Revenue passenger miles (millions) (RPM)
|
12,574
|
12,065
|
4.2
|
55,646
|
54,223
|
2.6
|
Available seat miles (millions) (ASM)
|
15,484
|
15,290
|
1.3
|
67,269
|
66,460
|
1.2
|
Passenger load factor %
|
81.2%
|
78.9%
|
2.3 pp
|
82.7%
|
81.6%
|
1.1 pp
|
Passenger revenue per RPM ("Yield") (cents)
|
19.7
|
19.5
|
1.2
|
19.0
|
18.7
|
1.8
|
Passenger revenue per ASM ("RASM") (cents)
|
16.0
|
15.4
|
4.2
|
15.8
|
15.3
|
3.2
|
Operating revenue per ASM (cents)
|
18.4
|
17.7
|
3.9
|
18.0
|
17.5
|
3.1
|
Operating expense per ASM ("CASM") (cents)
|
18.1
|
18.3
|
(1.3)
|
17.4
|
17.2
|
1.0
|
Adjusted CASM (cents) (6) |
12.4
|
12.6
|
(2.0)
|
11.8
|
11.7
|
1.0
|
Average number of full-time equivalent (FTE) employees (thousands) (7) |
24.1
|
23.6
|
2.1
|
24.0
|
23.7
|
1.4
|
Aircraft in operating fleet at period end (8) |
351
|
352
|
(0.3)
|
351
|
352
|
(0.3)
|
Average fleet utilization (hours per day) (9) |
9.5
|
9.4
|
1.3
|
10.1
|
10.1
|
0.6
|
Revenue frequencies (thousands)
|
134
|
133
|
0.5
|
557
|
551
|
1.1
|
Average aircraft flight length (miles) (9) |
863
|
857
|
0.8
|
891
|
892
|
(0.1)
|
Economic fuel cost per litre (cents) (10) |
88.8
|
88.6
|
0.2
|
89.7
|
85.2
|
5.3
|
Fuel litres (millions) (9) |
924
|
912
|
1.3
|
3,976
|
3,937
|
1.0
|
Revenue passengers carried (millions) (11) |
8.3
|
7.9
|
5.1
|
34.9
|
33.9
|
2.9
|
(1)
|
Adjusted net income (loss) and adjusted net income (loss) per share -
diluted are non-GAAP financial measures. Refer to section 20 "Non-GAAP
Financial Measures" of Air Canada's 2012 MD&A dated February 7, 2013
for additional information.
|
(2)
|
In the third quarter of 2012, Air Canada recorded an operating expense
reduction of $124 million related to changes to the terms of the ACPA
collective agreement pertaining to retirement age.
|
(3)
|
EBITDAR (earnings before interest, taxes, depreciation, amortization and
impairment, and aircraft rent), excluding the impact of benefit plan
amendments, and EBITDAR are non-GAAP financial measures. Refer to
section 20 "Non-GAAP Financial Measures" of Air Canada's 2012 MD&A
dated February 7, 2013 for additional information.
|
(4)
|
Free cash flow (cash flows from operating activities less additions to
property, equipment and intangible assets) is a non-GAAP financial
measure. Refer to section 9.5 of Air Canada's 2012 MD&A dated February
7, 2013 for additional information.
|
(5)
|
Adjusted net debt (total debt less cash, cash equivalents and short-term
investments plus capitalized operating leases) is a non-GAAP financial
measure. Refer to section 9.3 of Air Canada's 2012 MD&A dated February
7, 2013 for additional information.
|
(6)
|
Adjusted CASM is a non-GAAP financial measure. Refer to section 20
"Non-GAAP Financial Measures" of Air Canada's 2012 MD&A dated February
7, 2013 for additional information.
|
(7)
|
Reflects FTE employees at Air Canada. Excludes FTE employees at third
party carriers (such as at Jazz Aviation LP ("Jazz")) operating under
capacity purchase agreements with Air Canada.
|
(8)
|
Includes Jazz aircraft covered under the capacity purchase agreement
between Jazz and Air Canada ("Jazz CPA") and aircraft operated by third
party carriers operating under capacity purchase agreements. Refer to
section 8 of Air Canada's 2012 MD&A dated February 7, 2013 for
additional information on Air Canada's operating fleet.
|
(9)
|
Excludes charter operations. Also excludes third party carriers
operating under capacity purchase agreements, other than Jazz aircraft
covered under the Jazz CPA.
|
(10)
|
Excludes third party carriers, other than Jazz, operating under capacity
purchase agreements. Includes fuel handling expenses. Economic fuel
price per litre is a non-GAAP financial measure. Refer to sections 6
and 7 of Air Canada's 2012 MD&A dated February 7, 2013 for additional
information.
|
(11)
|
Revenue passengers are counted on a flight number basis which is
consistent with the IATA definition of revenue passengers carried.
|
SOURCE: AIR CANADA