Air Canada Reports First Quarter 2013 Results


    --  Adjusted net loss of $143 million versus an adjusted net loss
        of $162 million in the first quarter of 2012
    --  Net loss of $260 million versus a net loss of $274 million in
        the first quarter of 2012
    --  Operating loss of $106 million versus an operating loss of $91
        million in the first quarter of 2012
    --  EBITDAR (earnings before interest, taxes, depreciation,
        amortization and impairment, and aircraft rent) of $145 million
        versus $174 million in the first quarter of 2012

MONTREAL, May 3, 2013 /CNW Telbec/ - Consistent with the news release issued 
on April 22, 2013 disclosing preliminary results for the first quarter of 
2013, Air Canada today reported an adjusted net loss of $143 million or $0.52 
per diluted share compared to an adjusted net loss of $162 million or $0.58 
per diluted share in the first quarter of 2012. On a GAAP basis, Air 
Canada's net loss was $260 million or $0.95 per diluted share compared to a 
net loss of $274 million or $0.99 per diluted share in the same quarter in 
2012. First quarter EBITDAR amounted to $145 million compared to EBITDAR of 
$174 million in the first quarter of 2012.

"In the quarterwemade progresstowardsthe sustainable transformation of 
Air Canadaby narrowing our net loss as compared to the previous year. In 
addition, we reached an important agreement withthe Government of Canadaon 
extending Air Canada's pension funding arrangements to January 30, 
2021.This was then followed last week by the launch and pricing of a 
private offering of enhanced equipment trust certificates (EETCs) -- a first 
for a Canadian airline," said Calin Rovinescu, President and Chief Executive 
Officer.

"I would especially like to express our gratitude to the Government of Canada 
and certain provincial governments for implementing the so-called Cape Town 
Convention effective April 1, 2013, which helps level the playing field for 
Canadian airlines by facilitating their access to debt capital markets for 
financing their aircraft acquisitions on more favourable terms. Significant 
work over many years was undertaken by Government officials, in conjunction 
with our legal and finance teams, to permit adoption of the Cape Town 
Convention in the most optimal way, and I want to recognize these individuals 
for their outstanding work.

"While the first quarter's loss was narrowed compared to the previous year, 
the quarter fell short of our expectations, in part due to a decline in 
premiumtravel demand.We are encouraged to see an improvement in second 
quarter economy and premium class cabin booking trends which are running above 
last year's levels, although the yield environment remains challenging. We 
remain focused on executing on our plan to increase value for our stakeholders 
and to continue to reduce our cost structure with the upcoming deliveries of 
five additional Boeing 777 aircraft, the launch of our leisure carrier Air 
Canada rouge, the transfer of Embraer 175 regional aircraft to Sky Regional, 
and the development of our international network with Toronto Pearson as its 
North American gateway airport. Along with ongoing initiatives for revenue 
generation and cost control, we are confident of continued improvements and a 
successful performance for the year ahead. I thank our 27,000 employees for 
their commitment to taking care of our customers and their dedication to 
helping ensure Air Canada's long term success."

First Quarter Income Statement Highlights

First quarter 2013 system passenger revenues were $2.527 billion, an increase 
of $3 million, on a 1.1 per cent growth in traffic and a 1.1 per cent decline 
in yield. Passenger revenue per available seat mile (RASM) increased 1.1 per 
cent from the first quarter of 2012 on a 1.8 percentage point improvement in 
passenger load factor. Air Canada reported a record passenger load factor of 
81.0% for the first quarter of 2013, reflecting an effective approach to 
capacity management. The overall yield decline versus last year's quarter 
was due to a number of factors including: relatively more leisure versus 
business passengers in part due to a shift of the Easter holiday from the 
first week of April in 2012 to the last week of March in 2013, flight 
cancellations due to severe weather and de-icing service delays at Toronto 
Pearson International airport which adversely impacted business travel demand, 
increased industry capacity and competitive pricing activities in certain 
markets, an unfavourable foreign currency impact, and having one less calendar 
day in February 2013 than in February 2012 on account of the leap year. In the 
premium class cabin, passenger revenues decreased $38 million or 6.7 per cent 
on an 8.4 per cent decline in traffic, partly offset by a yield improvement of 
1.8 per cent.

Operating expenses increased $6 million from the first quarter of 2012, 
reflecting decreases in all major line categories with the exception of wages, 
salaries and benefits, capacity purchase agreements and the category of 
"other" operating expenses. In the first quarter of 2013, Air Canada 
recorded a non-cash impairment charge of $24 million related to Airbus 
A340-300 aircraft (none of which are operated by Air Canada) in depreciation, 
amortization and impairment expense.

Air Canada's adjusted cost per available seat mile ("adjusted CASM"), which 
excludes fuel expense, the cost of ground packages at Air Canada Vacations and 
unusual items (such as impairment charges) increased 1.4 per cent compared to 
the first quarter of 2012.

In the first quarter 2013, Air Canada recorded an operating loss of $106 
million compared to an operating loss of $91 million in the same quarter in 
2012, a deterioration of $15 million. The deterioration in Air Canada's 
operating results was in large part due to flight cancellations caused by 
severe weather conditions and aircraft deicing service delays at Toronto 
Pearson International Airport. Air Canada estimates that these events 
resulted in a $10 million unfavourable net impact on its financial results in 
the first quarter of 2013.

Liquidity Highlights

At March 31, 2013, cash and short-term investments amounted to $2,056 million, 
or 17 per cent of 12-month trailing revenues (March 31, 2012 - $2,185 million, 
or 18 per cent of 12-month trailing revenues).

At March 31, 2013, adjusted net debt of $3,987 million decreased $246 million 
from March 31, 2012, reflecting the impact of lower debt balances, a decrease 
in capitalized operating leases, partially offset by a decrease in cash 
balances.

Free cash flow of $147 million increased $7 million from the first quarter of 
2012.

Current Outlook

In the second quarter of 2013, Air Canada expects its system ASM capacity, as 
measured by available seat miles (ASMs), to increase in the range of 2.0 to 
3.0 per cent when compared to the second quarter of 2012.

Air Canada continues to expect full year 2013 system ASM capacity to increase 
in the range of 1.5 to 2.5 per cent when compared to the full year 2012. Air 
Canada also continues to expect its full year 2013 domestic capacity to 
increase in the range of 0.5 to 1.5 per cent from the full year 2012.

For the second quarter of 2013, Air Canada expects adjusted CASM to be in the 
range of a decrease of 0.5 per cent to an increase of 0.5 per cent when 
compared to the second quarter of 2012.

Taking into account the better than expected adjusted CASM result in the first 
quarter of 2013, Air Canada now expects its full year 2013 adjusted CASM to 
decrease in the range of 0.5 to 1.5 per cent from the full year 2012.

Air Canada's outlook assumes Canadian GDP growth of1.25 to1.75 per cent 
for 2013. In addition, Air Canada expects that the Canadian dollar will 
trade, on average, at C$1.02 per U.S. dollar for the second quarter of 2013 
and for the full year 2013 and that the price of jet fuel will average85 
cents per litre in the second quarter of 2013 and 86 cents per litre for the 
full year 2013.

The following table summarizes Air Canada's above-mentioned outlook for the 
second quarter and full year 2013 and related major assumptions:
                                                 
                          Second Quarter 2013  
                                       versus   Full Year 2013 versus
                          Second Quarter 2012          Full Year 2012

Current Outlook                                                      

Available seat miles                           
(System)                Increase 2.0% to 3.0%   Increase 1.5% to 2.5%

Available seat miles                           
(Canada)                                  n/a   Increase 0.5% to 1.5%


                         Decrease 0.5% to  
Adjusted CASM ((1))       an increase of 0.5%   Decrease 0.5% to 1.5% 
((1)) Excludes fuel expense, the cost of ground packages at Air Canada 


      Vacations and unusual items (such as impairment charges).
                                                 
                          Major Assumptions -      Major Assumptions -
                          Second Quarter 2013           Full Year 2013

Major Assumptions                                                     

Canadian dollar per                      1.02  
U.S. dollar                                                       1.02

Jet fuel price - CAD                 85 cents  
cents per litre                                               86 cents
                              2013 Annualized  
                                     Canadian


                   GDP growth of 1.25% to   Canadian GDP growth of
Canadian economy                        1.75%           1.25% to 1.75% 


    For the full year 2013, Air Canada also expects:
    --  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 be essentially unchanged from
        the full year 2012 level (including 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   Decrease $115 million
expense

Employee benefits expense                    Increase $70 million

Aircraft maintenance expense                  Unchanged from 2012


The financial and operating results presented in this news release are in line 
with those preliminary results disclosed in Air Canada's April 22, 2013 news 
release. 
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 First Quarter 2013 MD&A for a reconciliation of 
non-GAAP financial measures. 


    --  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, such as impairment charges, 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.  Adjusted net debt is calculated as the sum of
        total long-term debt and finance lease obligations and
        capitalized operating leases less cash and cash equivalents and
        short-term investments.

Air Canada's First Quarter 2013 unaudited Consolidated Financial Statements 
and Notes and its First Quarter 2013 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 22, 2013, consult SEDAR at 
www.sedar.com.

Analyst Conference Call Advisory

Air Canada will host its quarterly analysts' call today, May 3, 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 first quarter 2013 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 through our live audio webcast 
at http://bell.media-server.com/m/p/n8ftq3yd

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 13 of Air Canada's First 
Quarter 2013 MD&A dated May 3, 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.
                                          
                                                     First Quarter

(Canadian dollars in millions, except        2013
where indicated)                                        2012   Change $

Financial Performance Metrics                                          

Operating revenues                          2,952      2,961        (9)

Operating loss                              (106)       (91)       (15)

Non-operating expense                       (154)      (128)       (26)

Loss before income taxes and
discontinued operations                     (260)      (219)       (41)

Net loss from continuing operations         (260)      (219)       (41)

Net loss from discontinued operations -
Aveos                                           -       (55)         55

Net loss                                    (260)      (274)         14

Adjusted net loss ((1))                     (143)      (162)         19

Operating margin %                         (3.6)%     (3.1)%   (0.5) pp

EBITDAR ((2))                                 145        174       (29)

EBITDAR margin %( (2))                       4.9%       5.8%   (1.0) pp

Cash, cash equivalents and short-term
investments                                 2,056      2,185      (129)

Free cash flow( (3))                          147        140          7

Adjusted net debt ((4))                     3,987      4,233      (246)

Net loss per share - basic and diluted   $ (0.95)   $ (0.99)     $ 0.04

Adjusted net loss per share - diluted(
(1))                                     $ (0.52)   $ (0.58)     $ 0.06
                                                                       

Operating Statistics ((5))                                     Change %

Revenue passenger miles (millions) (RPM)   13,087     12,946        1.1

Available seat miles (millions) (ASM)      16,164     16,344      (1.1)

Passenger load factor %                     81.0%      79.2%     1.8 pp

Passenger revenue per RPM ("Yield")
(cents)                                      19.0       19.2      (1.1)

Passenger revenue per ASM ("RASM")
(cents)                                      15.4       15.2        1.1

Operating revenue per ASM (cents)            18.3       18.1        0.8

Operating expense per ASM ("CASM")
(cents)                                      18.9       18.7        1.3

Adjusted CASM (cents) ((6))                  12.5       12.3        1.4

Average number of full-time equivalent
(FTE) employees (thousands) ((7))            24.5       24.0        2.2

Aircraft in operating fleet at period
end( )                                        350        352      (0.6)

Average fleet utilization (hours per
day)                                         10.0        9.9        1.1

Aircraft frequencies (thousands)              134        135      (0.9)

Average aircraft flight length (miles)        826        832      (0.6)

Economic fuel cost per litre  (cents) (
(8))                                         92.4       91.7        0.8

Fuel litres  (millions)                       953        977      (2.5)

Revenue passengers carried (millions) (
(9))                                          8.5        8.3        1.8

(1) Adjusted net income (loss) and adjusted net income (loss) per share
    - diluted are non-GAAP financial measures.  Refer to section15
    "Non-GAAP Financial Measures" of Air Canada's First Quarter 2013
    MD&A for additional information.

(2) EBITDAR (earnings before interest, taxes, depreciation,
    amortization and impairment, and aircraft rent) is a non-GAAP
    financial measure.  Refer to section15 "Non-GAAP Financial
    Measures" of Air Canada's First Quarter 2013 MD&A for additional
    information.

(3) 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 6.5 of Air Canada's First
    Quarter 2013 MD&A for additional information.

(4) 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 6.3 of Air Canada's
    First Quarter 2013 MD&A for additional information.

(5) Operating statistics (except for average number of FTE employees)
    include third party carriers (such as Jazz Aviation LP ("Jazz"))
    operating under capacity purchase agreements with Air Canada.

(6) Adjusted CASM is a non-GAAP financial measure.  Refer to section 15
    "Non-GAAP Financial Measures" of Air Canada's First Quarter 2013
    MD&A for additional information.

(7) Reflects FTE employees at Air Canada.  Excludes FTE employees at
    third party carriers (such as Jazz) operating under capacity
    purchase agreements with Air Canada.

(8) Includes fuel handling expenses. Economic fuel price per litre is a
    non-GAAP financial measure.  Refer to section 4 of Air Canada's
    First Quarter 2013 MD&A for additional information.

(9) Revenue passengers are counted on a flight number basis which is
    consistent with the IATA definition of revenue passengers
    carried.  



IsabelleArthur (Montréal)514 422-5788 PeterFitzpatrick 
(Toronto)416 263-5576 AngelaMah (Vancouver)604 270-5741

Internet:aircanada.com

SOURCE: Air Canada

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CO: AIR CANADA - CORPORATE - FINANCE
ST: Quebec
NI: AIR ERN CONF 

-0- May/03/2013 10:00 GMT