Air Canada Reports First Quarter 2013 Results
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 quarter we made progress towards the sustainable transformation of Air Canada by narrowing our net loss as compared to the previous year. In addition, we reached an important agreement with the Government of Canada on 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 premium travel 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.
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.
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 of 1.25 to 1.75 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 average 85 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:
For the full year 2013, Air Canada also expects:
The following table summarizes the above-mentioned projections for the full year 2013:
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.
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.
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.
The financial and operating highlights for Air Canada for the periods indicated are as follows.
SOURCE: Air Canada