Air Canada Reports September Load Factor and Updates Guidance
- Third quarter load factor of 86.2% near all-time high
- Third quarter adjusted net income and EBITDAR (excluding the impact of benefit plan amendments in 2012) forecasted to be above last year's
MONTREAL, Oct. 3, 2013 /CNW Telbec/ - For the month of September, Air Canada reported a system load factor of 83.2 per cent, versus 84.9 per cent in September 2012, and a system load factor for the third quarter of 86.2 per cent, versus a record of 86.3 per cent for the quarter last year. System traffic for September increased 1.9 per cent on a system-wide capacity increase of 3.9 per cent. Air Canada reports traffic results on a system-wide basis, including Air Canada rouge, which began operations on July 1, 2013, and regional airlines from which Air Canada purchases capacity.
"I am pleased to report solid traffic results for the month of September, led by strong gains of almost six per cent in the Pacific market," said Calin Rovinescu, President and Chief Executive Officer. "For the third quarter, our load factor of 86.2 per cent is in line with last year's all-time high for the same period and is a strong indication of the effectiveness of our capacity management strategy given the increase in industry capacity that came into the markets in the quarter. Based on our third quarter load factor, and coupled with the ongoing positive results of our cost transformation and revenue enhancement initiatives, we expect EBITDAR (excluding the impact of benefit plan amendments in 2012) and adjusted net income for the third quarter to be above last year's level for the same period.
"Our achievements in September are the result of our ongoing focus on the execution of our priorities. During the month, we successfully completed the refinancing of our 2010 notes, an important milestone in achieving our priorities as this significantly lowers our cost structure, strengthens our balance sheet and improves our credit profile. We also announced the implementation of an expanded commercial agreement with Air China, our valued Star Alliance partner, for enhanced codeshare and interline services that provide our customers seamless connections on a single itinerary for travel via our respective hubs to new destinations in China and in Canada. This year's Ipsos Reid Business Traveller Survey released in September confirms that Canada's frequent business travelers recognize Air Canada as their preferred airline by a growing margin - the widest margin versus our domestic competitors since 2008. This recognition by our most discerning customers reflects Air Canada's award-winning product and our employees' focus on taking care of our customers while transporting them safely to their destination," concluded Mr. Rovinescu.
As a result of the impact of cost reduction initiatives across various expense line categories, including sales and distribution costs, food, beverage and supplies and other operating expenses, Air Canada now expects its third quarter 2013 adjusted CASM to decrease between 3.0 to 3.5 per cent when compared to the third quarter of 2012 (as opposed to the adjusted CASM decrease of 1.5 to 2.5 per cent projected in its August 7, 2013 news release).
Taking into account the projected improvement in adjusted CASM for the third quarter of 2013, Air Canada now expects its full year 2013 adjusted CASM to decrease in the range of 1.5 to 2.0 per cent from the full year 2012 (as opposed to the 1.0 to 2.0 per cent decrease projected in its August 7, 2013 news release).
Air Canada continues to expect its full year 2013 system and domestic ASM capacity to each increase in the range of 1.5 to 2.5 per cent when compared to the full year 2012.
Air Canada expects that the Canadian dollar will trade, on average, at C$1.03 per U.S. dollar for the full year 2013 and that the price of jet fuel will average 88 cents per litre for the full year 2013.
The following table summarizes Air Canada's above-mentioned outlook:
Third Quarter 2013 versus
Third Quarter 2012
Full Year 2013 versus
Full Year 2012
|Adjusted CASM (1)||Decrease 3.0% to 3.5%||Decrease 1.5% to 2.0%|
(1) Excludes fuel expense, the cost of ground packages at Air Canada Vacations and unusual items
|Full Year 2013 versus Full Year 2012|
|Available seat miles (System)||Increase 1.5% to 2.5%|
|Available seat miles (Canada)||Increase 1.5% to 2.5%|
|Major Assumptions - Full Year 2013|
|Canadian dollar per U.S. dollar||1.03|
|Jet fuel price - CAD cents per litre||88 cents|
|Canadian economy||Canadian GDP growth of 1.25% to 1.75%|
For the full year 2013, Air Canada continues to expect:
- Depreciation, amortization and impairment expense to decrease by $115 million from the full year 2012.
- Employee benefits expense to increase by $70 million from the full year 2012. Refer to section 14 of Air Canada's 2012 MD&A dated February 7, 2013 for important disclosures on changes to accounting for employee benefits effective January 1, 2013.
- Aircraft maintenance expense to decrease by $40 million from the full year 2012 level.
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 $115 million|
|Employee benefits expense||Increase $70 million|
|Aircraft maintenance expense||Decrease $40 million|
All projections referred to in this news release related to EBITDAR and adjusted net income with respect to the third quarter of 2013 are preliminary, have not been reviewed by Air Canada's auditors and are subject to change as Air Canada's third quarter 2013 financial results are finalized. 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."
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.
- Adjusted net income (loss) is used by Air Canada to assess its performance without the effects of foreign exchange, net financing 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.
For further information on Air Canada's public disclosure file, including Air Canada's Annual Information Form dated March 22, 2013, consult SEDAR at www.sedar.com.
|September||Q3||Year to Date|
|Traffic (RPMs mln)||5,078||4,984||+1.9%||16,728||16,258||+2.9%||43,908||43,072||+1.9%|
|Capacity (ASMs mln)||6,100||5,869||+3.9%||19,404||18,836||+3.0%||52,540||51,785||+1.5%|
|Load Factor||83.2%||84.9%||- 1.7 pts||86.2%||86.3%||- 0.1 pts||83.6%||83.2%||+0.4 pts|
|LF||81.6%||82.0%||- 0.4 pts||84.2%||84.6%||- 0.4 pts||82.7%||82.3%||+0.4 pts|
|LF||76.4%||76.8%||- 0.4 pts||81.7%||80.0%||+1.7 pts||80.0%||78.7%||+1.3 pts|
|LF||87.7%||90.6%||- 2.9 pts||89.7%||88.8%||+0.9 pts||84.8%||83.8%||+1.0 pts|
|LF||84.8%||88.5%||- 3.7 pts||87.9%||90.8%||- 2.9 pts||86.6%||88.2%||- 1.6 pts|
Latin America &
|LF||79.8%||80.3%||- 0.5 pts||85.3%||85.2%||+0.1 pts||82.6%||81.9%||+0.7|
* Australia has been reclassified to "Pacific" from "Latin America & Caribbean".
Air Canada is Canada's largest domestic and international airline serving more than 175 destinations on five continents. Canada's flag carrier is among the 20 largest airlines in the world and in 2012 served close to 35 million customers. Air Canada provides scheduled passenger service directly to 60 Canadian cities, 49 destinations in the United States and 67 cities in Europe, the Middle East, Asia, Australia, the Caribbean, Mexico and South America. Air Canada is a founding member of Star Alliance, the world's most comprehensive air transportation network serving 1,328 destinations in 195 countries. Air Canada is the only international network carrier in North America to receive a Four-Star ranking according to independent U.K. research firm Skytrax that ranked Air Canada in a worldwide survey of more than 18 million airline passengers as Best Airline in North America in 2013 for the fourth consecutive year. For more information, please visit: www.aircanada.com.
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 and in section 14 of Air Canada's Second Quarter 2013 MD&A dated August 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.
SOURCE Air Canada