ACE Aviation Files Second Quarter Financials



    MONTREAL, Aug. 7 /CNW Telbec/ - ACE Aviation Holdings Inc. (ACE) today
filed its interim unaudited consolidated financial statements and MD&A for
Quarter 2, 2009.
    In accordance with applicable accounting standards, ACE has reverted to
preparing its financial statements on a going concern basis of presentation
rather than a liquidation basis. This reflects ACE's announcement on July 29,
2009 of its participation in Air Canada's credit facility and that it is
unlikely that ACE will pursue a liquidation of its net assets in the near
term. On a going concern basis, ACE consolidates the operating results and
financial position of Air Canada and also it is assumed that liabilities are
satisfied in the ordinary course of business. ACE has also today filed audited
consolidated financial statements for 2008 and unaudited consolidated
financial statements for Quarter 1, 2009 prepared on a going concern basis of
presentation. The related MD&As for these periods have also been filed.
Statements and MD&As for these periods were previously prepared and filed on a
liquidation basis.
    ACE reported EBITDAR(1) of $131 million for the second quarter of 2009.
Air Canada reported EBITDAR of $135 million for the quarter, a decrease of
$114 million from the second quarter 2008.
    ACE recorded an operating loss of $115 million for the quarter. Air
Canada reported an operating loss of $113 for the quarter, compared to
operating income of $7 million for second quarter 2008.
    ACE recorded net income of $110 million for the second quarter of 2009.
    At July 31, 2009, ACE's principal assets are cash and cash equivalents of
$208 million, a loan to Air Canada of $150 million and its 75 million shares
in Air Canada, which had a market value of $140 million on that date. ACE's
obligations include convertible senior notes with a principal amount
outstanding of $64 million, 3.2 million convertible preferred shares with a
fully accreted value of $81 million at July 31, 2009 and accounts payable and
accrued liabilities of $1 million.

    For further information on ACE's public disclosure file, including ACE's
Annual Information Form, please consult SEDAR at www.sedar.com.

    (1) Non-GAAP Measures

    EBITDAR is a non-GAAP financial measure commonly used in the airline
industry to assess earnings before interest, taxes, depreciation and aircraft
rent. EBITDAR is used to view operating results before aircraft rent and
depreciation, amortization and obsolescence as these costs can vary
significantly among airlines due to differences in the way airlines finance
their aircraft and other assets. EBITDAR is not a recognized measure for
financial statement presentation under GAAP and does not have standardized
meaning and is therefore not likely to be comparable to similar measures
presented by other public companies. Readers should refer to ACE's Second
Quarter 2009 Management's Discussion and Analysis (MD&A) for a reconciliation
of EBITDAR to operating income (loss).

    CAUTION REGARDING FORWARD-LOOKING INFORMATION
    ---------------------------------------------

    Certain statements in this news release may contain forward-looking
statements. These forward-looking statements are identified by the use of
terms and phrases such as "anticipate", "believe", "could", "estimate",
"expect", "intend", "may", "plan", "predict", "project", "will", "would", and
similar terms and phrases, including references to assumptions. Such
statements may involve but are not limited to comments with respect to
strategies, expectations, planned operations or future actions.
Forward-looking statements, by their nature, are based on assumptions and are
subject to important risks and uncertainties. Any forecasts or forward-looking
predictions or statements cannot be relied upon due to, amongst other things,
changing external events and general uncertainties of the business. Such
statements involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements to differ
materially from those expressed in the forward-looking statements. Results
indicated in forward-looking statements may differ materially from actual
results for a number of reasons, including without limitation, energy prices,
general industry, market, credit and economic conditions, war, terrorist acts,
changes in demand due to the seasonal nature of the business, the ability to
reduce operating costs and employee counts, employee relations, labour
negotiations or disputes, pension issues, currency exchange and interest
rates, changes in laws, adverse regulatory developments or proceedings,
pending and future litigation and actions by third parties as well as the
factors identified throughout ACE's filings with securities regulators in
Canada and, in particular, those identified in the Risk Factors section of
ACE's 2008 MD&A dated August 7,2009. The forward-looking statements contained
herein represent ACE's expectations as of the date they are made and are
subject to change after such date. However, ACE 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.

    
    Consolidated Statement of Operations

                             ------------------------------------------------
    Unaudited
    (Canadian dollars             Three Months Ended        Six Months Ended
     in millions except                 June 30                 June 30
     per share figures)             2009        2008        2009        2008
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Operating revenues
      Passenger                 $  2,058    $  2,454    $  4,069    $  4,765
      Cargo                           76         139         156         263
      Other                          196         190         496         481
    -------------------------------------------------------------------------
                                   2,330       2,783       4,721       5,509
    -------------------------------------------------------------------------

    Operating expenses
      Aircraft fuel                  572         848       1,165       1,563
      Wages, salaries and
       benefits                      440         487         900         983
      Airport and navigation
       fees                          241         255         471         496
      Capacity purchase
       with Jazz                     254         233         500         468
      Depreciation and
       amortization                  163         171         320         340
      Aircraft maintenance           185         172         374         375
      Food, beverages and
       supplies                       73          81         140         158
      Communications and
       information technology         80          72         159         145
      Aircraft rent                   83          69         169         132
      Commissions                     40          47          89         100
      Other                          314         350         741         778
    -------------------------------------------------------------------------
                                   2,445       2,785       5,028       5,538
    -------------------------------------------------------------------------

    Operating loss before
     under-noted item               (115)         (2)       (307)        (29)
    Provision for cargo
     investigations                    -           -           -        (125)
    -------------------------------------------------------------------------
    Operating loss                  (115)         (2)       (307)       (154)
    -------------------------------------------------------------------------
    Non-operating income
     (expense)
      Interest income                  3          23          11          48
      Interest expense               (97)        (87)       (205)       (183)
      Interest capitalized             2           8           3          25
      Gain (loss) on assets          (71)        915         (71)        961
      Loss on repurchase of
       ACE convertible senior
       notes and preferred
       shares                          -           -         (33)          -
      Gain on financial
       instruments recorded
       at fair value                  79         176          69         153
      Equity and other
       investment income               -           5           -          17
      Other                            -           -          (1)         (1)
    -------------------------------------------------------------------------
                                     (84)      1,040        (227)      1,020
    -------------------------------------------------------------------------
    Income (loss) before the
     following items                (199)      1,038        (534)        866
      Non-controlling interest       (44)        (32)         52          32
      Foreign exchange gain
       (loss)                        355          48         254         (41)
      Recovery of (provision
       for) income taxes
        Current                       (1)         (1)          2          (1)
        Future                        (1)       (223)         (8)       (208)
    -------------------------------------------------------------------------
    Net income (loss) for
     the period                 $    110    $    830    $   (234)   $    648
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income (loss) per
     share
      Basic                     $   3.16    $  15.46    $  (6.68)   $  11.24
      Diluted                   $   2.68    $  10.76    $  (6.68)   $   8.18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The notes are an integral part of the interim consolidated financial
    statements and are available on SEDAR at www.sedar.com.


                 Consolidated Statement of Financial Position

                                                   --------------------------
    Unaudited                                           June 30  December 31
    (Canadian dollars in millions)                         2009         2008
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    ASSETS
    Current
      Cash and cash equivalents                       $     851    $   1,307
      Short-term investments                                419          506
    -------------------------------------------------------------------------
                                                          1,270        1,813
    -------------------------------------------------------------------------

      Restricted cash                                        22           45
      Accounts receivable                                   748          700
      Aircraft fuel inventory                                40           97
      Spare parts and supplies                               80           20
      Collateral deposits for fuel derivatives              109          328
      Prepaid expenses and other current assets             194          206
    -------------------------------------------------------------------------
                                                          2,463        3,209
    -------------------------------------------------------------------------

    Property and equipment                                7,180        7,469
    Intangible assets                                       632          698
    Deposits and other assets                               507          495
    -------------------------------------------------------------------------
                                                      $  10,782    $  11,871
    -------------------------------------------------------------------------

    LIABILITIES
    Current
      Accounts payable and accrued liabilities        $   1,292    $   1,288
      Fuel derivatives                                      110          420
      Advance ticket sales                                1,548        1,333
      Current portion of long-term debt and
       capital leases                                       623          663
    -------------------------------------------------------------------------
                                                          3,573        3,704
    -------------------------------------------------------------------------
    Long-term debt and capital leases                     4,438        4,980
    Convertible preferred shares                             57          206
    Future income taxes                                      50           50
    Pension and other benefit liabilities                 1,368        1,585
    Other long-term liabilities                             362          370
    -------------------------------------------------------------------------
                                                          9,848       10,895
    -------------------------------------------------------------------------

    Non-controlling interest                                456          512

    SHAREHOLDERS' EQUITY
      Share capital and other equity                        152          307
      Contributed surplus                                   323          163
      Retained earnings                                     366          600
      Accumulated other comprehensive loss                 (363)        (606)
    -------------------------------------------------------------------------
                                                            478          464
    -------------------------------------------------------------------------
                                                      $  10,782    $  11,871
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The notes are an integral part of the interim consolidated financial
    statements and are available on SEDAR at www.sedar.com.


                     Consolidated Statement of Cash Flow

                             ------------------------------------------------
    Unaudited                      Three Months Ended       Six Months Ended
    (Canadian dollars in                June 30                 June 30
     millions)                      2009        2008        2009        2008
    -------------------------------------------------------------------------
    Cash flows from (used for)

    Operating
      Net Income (loss) for
       the period                $   110     $   830     $  (234)    $   648
      Adjustments to
       reconcile to net cash
       from operations
        Depreciation and
         amortization                163         171         320         340
        Loss (gain) on assets         71        (915)         71        (961)
        Loss on repurchase of
         ACE convertible
         senior notes and
         preferred shares              -           -          33           -
        Foreign exchange (gain)
         loss                       (355)        (64)       (212)          1
        Future income taxes            1         223           8         208
        Excess of employee
         future benefit
         funding over expense       (109)        (31)       (212)        (82)
        Provision for cargo
         investigations                -           -           -         125
        Non-controlling
         interest                     44          36         (52)        (32)
        Fuel and other
         derivatives                  19        (161)        (63)       (142)
        Fuel hedge collateral
         deposits, net                62           -         209           -
        Equity investment income       -          (2)          -         (12)
      Changes in non-cash
       working capital balances     (123)        135         158         380
      Other                           13          (5)         25         (27)
    -------------------------------------------------------------------------
                                    (104)        217          51         446
    -------------------------------------------------------------------------

    Financing
      Issue of common shares           -          29           -          30
      Repurchase and
       cancellation of
       common shares                   -        (500)          -      (1,998)
      Borrowings                      76         126         343         313
      Repurchase of ACE
       convertible senior notes        -           -        (233)          -
      Repurchase of ACE
       preferred shares                -           -        (186)          -
      Reduction of other
       long-term debt and
       capital lease obligations    (177)       (319)       (600)       (642)
    -------------------------------------------------------------------------
                                    (101)       (664)       (676)     (2,297)
    -------------------------------------------------------------------------

    Investing
      Short-term investments          68        (165)         87          (4)
      Proceeds from sale of
       Aeroplan units                  -         692           -         692
      Proceeds from sale of
       Jazz units                      -          85           -         182
      Exercise of ACTS Aero
       put option                      -         (19)          -         (19)
      Proceeds from escrow
       related to sale of ACTS         -           -           -          40
      Additions to capital
       assets                        (49)       (225)       (156)       (628)
      Proceeds from sale of
       assets                         93           -          93          27
      Proceeds from sale
       lease-back transactions         -         297         172         708
      Other                          (33)          9         (27)         34
    -------------------------------------------------------------------------
                                      79         674         169       1,032
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash and cash equivalents      (126)        227        (456)       (819)
    Cash and cash equivalents,
     beginning of period             977       1,254       1,307       2,300
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period               $   851     $ 1,481     $   851     $ 1,481
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash payments of interest    $    87     $    81     $   181     $   154
    -------------------------------------------------------------------------
    Cash payments (recoveries)
     of income taxes             $     -     $     1     $    (2)    $     3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The notes are an integral part of the interim consolidated financial
    statements and are available on SEDAR at www.sedar.com.
    




For further information:

For further information: Des Beaumont, (514) 205-7639; Internet:
aceaviation.com


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