Air Canada Executives Present at Investor Day Conference and Provide an Update
MONTREAL, June 10, 2013
MONTREAL, June 10, 2013 /PRNewswire/ - Air Canada will discuss its plans for
pursuing sustainable improvement in profitability and shareholder value at its
2013 Investor Day to be held today in Toronto from 08:30 to 12:30 EST. A live,
listen-only audio webcast of the event will be available through a link on Air
Canada's website at www.aircanada.com (Investors section), along with
accompanying presentation slides.
Air Canada reported 2012 EBITDAR (earnings before interest, taxes,
depreciation, amortization and impairment, and aircraft rent), excluding
benefit plan amendments, of $1.3 billion and adjusted net income of $55
million and the price of its common shares increased by 76 per cent over that
year. It is management's plan to continue improving on these results.
"Our focus will remain on the execution of our strategic priorities to
continue to transform Air Canada into a sustainably profitable airline," said
Calin Rovinescu, President and Chief Executive Officer. "We continue to reduce
costs, develop new sources of revenue, reduce indebtedness and improve the
customer experience while adapting to the competitive environment. We have
confidence our financial plan can earn a return on invested capital that
exceeds its weighted average cost of capital and reward shareholders far into
Key points to be covered at the conference include Air Canada's:
*On-going plans to enhance its margins and improve its competitive position
through the execution of a number of strategic initiatives and actions
designed to lower its cost structure, improve its balance sheet and
increase the return on invested capital.
*Existing plans and initiatives which would be expected, over the medium
term, to lower Air Canada's cost per available seat mile ("CASM") by up to
approximately 15 per cent. The initiatives include plans relating to the
growth of Air Canada rouge^TM, the scheduled arrival of Boeing 787
aircraft to replace less efficient Boeing 767 aircraft, the introduction
of higher density Boeing 777-300ER aircraft, the transfer of Embraer 175
aircraft to a lower cost regional provider, new maintenance arrangements,
and other on-going and planned initiatives.
*On-going commitment to improve its balance sheet and to attain a return on
invested capital that exceeds its weighted average cost of capital by
2015. The airline is also targeting to maintain its existing adjusted net
debt/trailing 12-month normalized EBITDAR leverage ratio below 3.5 for
2013 and over the medium term.
*Concrete steps taken to reduce the pension solvency deficit in its
registered pension plans. Given pension plan changes (subject to
regulatory approval) which will permanently reduce solvency liabilities
(estimated at $1.1 billion based on 2012 valuations) and assuming new
funding relief regulations pursuant to the agreement reached with the
Government of Canada are adopted, plausible conditions (discount rate
increasing to 3.3 per cent, return on assets of 6.7 per cent) could have
the solvency deficit eliminated no later than 2020.
Attendance at this event is by invitation only.
For the second quarter of 2013, Air Canada continues to expect 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 expects its 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
expects its full year 2013 domestic capacity to increase in the range of 1.5
to 2.5 per cent from the full year 2012 (as opposed to the increase of 0.5 to
1.5 per cent projected in Air Canada's news release dated May 3, 2013). The
increase in projected domestic capacity is due to schedule changes.
For the second quarter of 2013, Air Canada expects adjusted CASM to decrease
0.5 to 1.5 per cent when compared to the second quarter of 2012 (as opposed to
the range of a decrease of 0.5 per cent to an increase of 0.5 per cent
projected in Air Canada's news release dated May 3, 2013). The improved CASM
projection is largely due to expected cost saving benefits from tactical
Air Canada 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.
In addition, Air Canada plans to increase its full year 2014 system capacity
by 9.0 to 11.0 per cent when compared to the full year 2013. This projected
increase in capacity is consistent with the fleet plan discussed in Air
Canada's First Quarter 2013 MD&A and is largely due to the addition of five
high-density Boeing 777-300ER aircraft scheduled for delivery between June
2013 and February 2014, the scheduled arrival in 2014 of the first seven
Boeing 787 aircraft and the planned growth from Air Canada rouge^TM.
Air Canada's outlook assumes Canadian GDP growth of1.25 to1.75 per cent for
2013 and Canadian GDP growth of 2.0 to 3.0 per cent for 2014.
Air Canada also expects that the Canadian dollar will trade, on average, at
C$1.03 per U.S. dollar for the second quarter of 2013 and for the full year
2013 and that the price of jet fuel will average84 cents per litre in the
second quarter of 2013 and 85 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
Available seat miles
(System) Increase 2.0% to 3.0% Increase 1.5% to 2.5%
Available seat miles
(Canada) n/a Increase 1.5% to 2.5%
Adjusted CASM ^(1) Decrease 0.5% to 1.5% Decrease 0.5% to 1.5%
^(1) Excludes fuel expense, the cost of ground packages at Air Canada
Vacations and unusual items
Major Assumptions - Major Assumptions -
Second Quarter 2013 Full Year 2013
Canadian dollar per U.S.
dollar 1.03 1.03
Jet fuel price - CAD cents
per litre 84 cents 85 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 decrease by $40 million from the full year
2012 level (as opposed to what was disclosed in Air Canada's news release
dated May 3, 2013 which projected aircraft maintenance expense to be
essentially unchanged from the 2012 level). The improved projection is
primarily due to expected cost saving benefits from tactical initiatives.
The following table summarizes the above-mentioned projections for the full
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
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. Refer to
Air Canada's 2012 MD&A and news releases dated February 7, 2013 and Air
Canada's First Quarter 2013 MD&A and news release dated May 3, 2013 for
additional information, including reconciliation to GAAP 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
*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
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.
SOURCE Air Canada
IsabelleArthur (Montréal)514 422-5788
PeterFitzpatrick (Toronto)416 263-5576
AngelaMah (Vancouver)604 270-5741
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