Air Canada · TSX:AC
Air Canada — Q2 2008 Earnings Presentation
22 slides from Air Canada's earnings presentation, Aug 8, 2008
Slide 1: Second Quarter 2008
Second Quarter 2008 August 8, 2008
Slide 2: Table of Contents
Table of Contents • Operating Statistics • Revenue Highlights • Expense Highlights
Slide 3: 2nd Quarter EBITDAR of $249 mln
2nd Quarter EBITDAR of $249 mln Change (millions) Q2 2008 Q2 2007 Fav./(Unfav.) Oper. Revenue $ 2,782 $ 2,639 $ 143 Oper. Expense 2,775 2,551 (224) Oper. Income $ 7 $ 88 $ (81) EBITDAR $ 249 $ 299 $ (50)
Slide 4: Q2 Net Interest Expense Increased $20 mln
Q2 Net Interest Expense Increased $20 mln Change (millions) Q2 2008 Fav./(Unfav.) Net Interest Expense $ (55) $ (20) Gain on Disposal 7 (7) Other Non-Oper. Income (Exp.) 176 188 - fair value adjustment on derivatives Total Non-Oper. Income $ 128 $ 161
Slide 5: Q2 2008 Actual vs Prior Year
Q2 2008 Actual vs Prior Year ASMs RPMs PLF Yield RASM Rev Canada Ï 2.3% Ï 2.2% 0.0 PP Ï 4.1% Ï 4.0% Ï 6.4% US Transborder Ð 5.8% Ð 7.7% Ð 1.6 PP Ï 5.5% Ï 3.5% Ð 2.5% Atlantic Ï 0.8% Ï 0.7% 0.0 PP Ï 1.6% Ï 1.6% Ï 2.4% Pacific Ï 2.5% Ï 3.5% Ï 0.9 PP Ð 0.9% Ï 0.1% Ï 2.6% Latin Amer. & Other Ï 25.0% Ï 2
Slide 6: Capacity Growth Slows on Domestic Services and Decreases in the U.S.
Capacity Growth Slows on Domestic Services and Decreases in the U.S. (Y-O-Y Changes in Capacity) % Change in ASMs 10% 5% 0% -5% -10% Canada U.S. Int'l Total Q2 2007/2006 Q3 2007/2006 Q4 2007/2006 Q1 2008/2007 Q2 2008/2007
Slide 7: System Traffic Growth Matches Increase in Capacity
System Traffic Growth Matches Increase in Capacity (Y-O-Y Changes in Traffic) % Change in RPMs 10% 5% 0% -5% -10% Canada U.S. Int'l Total Q2 2007/2006 Q3 2007/2006 Q4 2007/2006 Q1 2008/2007 Q2 2008/2007
Slide 8: International Yield Resumes Growth
International Yield Resumes Growth (Y-O-Y Changes in Passenger Yield) % Change in Yield 10% 8% 6% 4% 2% 0% -2% -4% -6% Canada U.S. Int'l Total Q2 2007/2006 Q3 2007/2006 Q4 2007/2006 Q1 2008/2007 Q2 2008/2007
Slide 9: Solid RASM Performance on All Services
Solid RASM Performance on All Services (Y-O-Y Changes in Revenue per ASM) % Change in RASM 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% Canada U.S. Int'l Total Q2 2007/2006 Q3 2007/2006 Q4 2007/2006 Q1 2008/2007 Q2 2008/2007
Slide 10: Solid Domestic & International Revenue Performance While U.S. Revenues Contract
Solid Domestic & International Revenue Performance While U.S. Revenues Contract (Y-O-Y Changes in Passenger Revenue) % Change in Revenue 10% 5% 0% -5% Canada U.S. Int'l Total Q2 2007/2006 Q3 2007/2006 Q4 2007/2006 Q1 2008/2007 Q2 2008/2007
Slide 11: Canada – Q2 RASM Increases 4.0% all on Higher Yield
Canada – Q2 RASM Increases 4.0% all on Higher Yield Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 8 4 6 2 4 0 2 0 -2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008 % Change Yield % Change RASM 6 8 4 6 2 4 0 2 -2 0 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008
Slide 12: US Transborder – RASM Improves 3.5% All on Yield as LF Declines 1.6 Points
US Transborder – RASM Improves 3.5% All on Yield as LF Declines 1.6 Points Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 2 2 0 1 -2 0 -4 -6 -1 -8 -2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008 Yield RASM % Change % Change 10 15 10 5 5 0 0 -5 -5 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2
Slide 13: Atlantic – Tight Capacity Improves LF and Yield
Atlantic – Tight Capacity Improves LF and Yield Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 8 2 6 4 0 2 -2 0 -2 -4 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008 Yield RASM % Change % Change 4 5 2 0 0 -2 -4 -5 -6 -8 -10 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008
Slide 14: Pacific – RASM Flat as Better Load Factor Offsets Soft Yield
Pacific – RASM Flat as Better Load Factor Offsets Soft Yield Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 4 2 2 1 0 0 -1 -2 -2 -4 -3 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008 Yield RASM % Change % Change 8 10 6 4 5 2 0 0 -2 -5 -4 -6 -10 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2008 2
Slide 15: Caribbean, Latin America & Australia – RASM Jumps 6.5% on Strong Yield and LF
Caribbean, Latin America & Australia – RASM Jumps 6.5% on Strong Yield and LF Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 30 4 25 2 20 15 0 10 -2 5 0 -4 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008 Yield RASM % Change % Change 5 10 0 5 -5 0 -10 -5 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 20
Slide 16: Total – System RASM Lifts 2.6% All on Higher Yield – Total CASM Incr. 6.3%
Total – System RASM Lifts 2.6% All on Higher Yield – Total CASM Incr. 6.3% All on Fuel – Ex. Fuel CASM Down 1.7% Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 6 1 4 0 2 0 -1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008 % Change Yield RASM CASM RASM % Change 4 8 6 3 4 2 2 0 1 -2 -4
Slide 17: Average Salary Up 1%; Employee Levels Up 1.5%
Average Salary Up 1%; Employee Levels Up 353 or 1.5% (Y-O-Y Change – Average Salaries & Employees) % Change Y-O-Y 4% 2% 0% -2% Q3'07 Q4'07 Q1'08 Q2'08 Average Salaries Employees
Slide 18: Cost/Litre Up 32.6% While Fuel Productivity Improves 1.8%
Cost/Litre Up 32.6% While Fuel Productivity Improves 1.8% Reflecting the New 777's and the Removal of Two Freighters (Fuel Productivity & Unit Cost) % Change Y-O-Y 40% 30% 20% 10% 0% -10% Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Fuel Productivity (ASMs/Lt) Fuel Cost (Cdn cts/Lt)
Slide 19: "Other" Cat. Incr. 1.8% on Higher ACV Gr. Pkg. Costs, Credit Card Fees & Advertising
"Other" Cat. Incr. 1.8% on Higher ACV Gr. Pkg. Costs, Credit Card Fees & Advertising % Change Y-O-Y 40% 30% 20% 10% 0% -10% -20% h. p r es . urc Ba IT s hi i ss &B uel Fe m& p. P ner mm / Ms Ms F er e. od er SW O th A/C Mtc Ow RP Co AS Co Ca Us Fo Q2 2008/2007
Slide 20: Unit Cost Up 6.3% as Positive 777 Impact, Currency Benefit and Other Cost Reductions
Unit Cost Up 6.3% as Positive 777 Impact, Currency Benefit and Other Cost Reductions More Than Offset by Soaring Fuel – Ex Fuel Unit Cost Down 1.7% (Cost Per ASM) % Change Y-O-Y 8% 6% 4% 2% 0% -2% -4% -6% Q3'07 Q4'07 Q1'08 Q2'08
Slide 21: Caution Regarding Forward-looking Information
Caution Regarding Forward-looking Information Air Canada’s public communications may include written or oral forward looking statements within the meaning of applicable securities laws. Such statements are included in this presentation and may be included in filings with regulatory authorities and s
Slide 22: Air Canada
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