MONTREAL, June 10, 2013 /CNW Telbec/ - 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 the future."
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 rougeTM, 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 initiatives.
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 rougeTM.
Air Canada's outlook assumes Canadian GDP growth of 1.25 to 1.75 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 average 84 cents per
litre in the second quarter of 2013 and 85 cents per litre for the full
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
Second Quarter 2012
Full Year 2013 versus
Full Year 2012
Available seat miles (System)
Increase 2.0% to 3.0%
Increase 1.5% to 2.5%
Available seat miles (Canada)
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 -
Second Quarter 2013
Major Assumptions -
Full Year 2013
Canadian dollar per U.S. dollar
Jet fuel price - CAD cents per litre
2013 Annualized Canadian
GDP growth of 1.25% to 1.75%
Canadian GDP growth of
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
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
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
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.
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
For further information:
Isabelle Arthur (Montréal) 514 422-5788
Peter Fitzpatrick (Toronto) 416 263-5576
Angela Mah (Vancouver) 604 270-5741
Internet : aircanada.com