Air Canada · TSX:AC
Air Canada — Investor Day (June 2015)
97 slides from Air Canada's investor day presentation, Jun 2, 2015
Slide 1: Long Term Sustained Profitability – Taking It to the Next Level
LONG TERM SUSTAINED PROFITABILITY – TAKING IT TO THE NEXT LEVEL Calin Rovinescu President & Chief Executive Officer June 2, 2015
Slide 2: Caution Regarding Forward-Looking Information
CAUTION REGARDING FORWARD- LOOKING INFORMATION This news 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 de
Slide 3: Progress on Our Business Plan
PROGRESS ON OUR BUSINESS PLAN Fleet initiatives, capital programs, liquidity targets and debt levels on target Delivering permanently lower cost structure, profitably growing our business Expanded margins, increased adjusted net income, improved ROIC Strengthened our balance sheet Reduced
Slide 4: On Track to Exceed 2013 Investor Day Targets
ON TRACK TO EXCEED 2013 INVESTOR DAY TARGETS 2013 Target Results* CASM Lower CASM using CASM savings of 2012 as baseline 21% by 2018 ROIC 10 to 13% 15.2% Leverage Ceiling Leverage ceiling ratio 2.6 Ratio of 3.5:1 over the medium term Liquidity Unrestricted liquidity $3.1 billion level of $1.7 billio
Slide 5: New Financial Targets 2015-2018
NEW FINANCIAL TARGETS 2015-2018 EBITDAR margin 15% to 18% Return on Invested Capital (ROIC) 13% to 16% Leverage ratio of 2.2 by 2018 5
Slide 6: Strategy Increases Value
STRATEGY INCREASES VALUE 1,600% INCREASE SINCE BEGINNING 2009 6
Slide 7: Our Four Priorities
OUR FOUR PRIORITIES 1 International expansion 2 Cost reduction and revenue growth 3 Customer engagement 4 Culture change 7
Slide 8: International Expansion
INTERNATIONAL EXPANSION 8
Slide 9: International Expansion
INTERNATIONAL EXPANSION APPROXIMATELY 50% SEAT INCREASE SINCE 2009 9
Slide 10: International Expansion: Profitable Growth
INTERNATIONAL EXPANSION PROFITABLE GROWTH Disciplined approach – Contribute to profitability – Focus on expanded margins, adjusted net income, ROIC 10
Slide 11: International Expansion: Sixth Freedom
INTERNATIONAL EXPANSION SIXTH FREEDOM International connecting traffic grew 23% in 2014 In the first quarter 2015 this traffic grew 25%, 30% through Toronto Pearson alone 11
Slide 12: International Expansion: Premium Product
INTERNATIONAL EXPANSION PREMIUM PRODUCT 12
Slide 13: International Expansion: Air Canada Rouge
INTERNATIONAL EXPANSION AIR CANADA ROUGE 30% LOWER UNIT COST ON BOEING 767 AIRCRAFT LEISURE MARKETS FLEXIBILITY 13
Slide 14: Cost Reduction and Revenue Growth
COST REDUCTION AND REVENUE GROWTH 14
Slide 15: Costs and Revenues: Improved Financial Performance
COSTS AND REVENUES IMPROVED FINANCIAL PERFORMANCE BOEING 787 31% SAVINGS IN MAINTENANCE AND FUEL COMPARED TO BOEING 767 AIR CANADA ROUGE BOEING 767 UNIT COST IS 30% LOWER THAN MAINLINE 15
Slide 16: Costs and Revenues: Regional Carriers
COSTS AND REVENUES REGIONAL CARRIERS Amended and extended capacity purchase agreement with Jazz, a win/win Estimated $550 million in financial value over next six years Expanded capacity purchase agreements with Sky Regional and Air Georgian 16
Slide 17: Eliminated Pension Deficit $1.2B
COSTS AND REVENUES ELIMINATED PENSION DEFICIT $1.2B ESTIMATED PENSION SURPLUS AS OF MAY 20, 2015 17
Slide 18: Operating Revenue $13.3B
COSTS AND REVENUES OPERATING REVENUE 2014 $13.3B $890M INCREASE FROM 2013 18
Slide 19: Joint Ventures
COSTS AND REVENUES JOINT VENTURES SUCCESSFUL PARTNERSHIPS 19
Slide 20: New Approach to Revenue Management
COSTS AND REVENUES NEW APPROACH TO REVENUE MANAGEMENT Implementing sophisticated revenue management system to optimize passenger flows and revenue Expected to deliver annual incremental revenues in excess of $100 million 20
Slide 21: Premium Services
COSTS AND REVENUES PREMIUM SERVICES 21
Slide 22: Customer Engagement
CUSTOMER ENGAGEMENT 22
Slide 23: Customer Engagement: Awards
CUSTOMER ENGAGEMENT AWARDS Skytrax Award – Best Airline North America fifth consecutive year Ipsos Reid Canadian Business Traveller Survey – Preferred carrier 83% (up by 14 percentage points over the last six years) Premier Traveler – Best Flight Attendants in North America 23
Slide 24: Culture Change
CULTURE CHANGE 24
Slide 25: Culture Change: Employee Engagement
CULTURE CHANGE EMPLOYEE ENGAGEMENT Employee surveys Work photo demonstrated significant improvements Nearly 50% year-over-year increase to profit-sharing pool 8% of total issued shares held by employees 25
Slide 26: Culture Change: Positive Shifts
CULTURE CHANGE POSITIVE SHIFTS 10-year agreement reached with Air Canada Pilots Association New labour agreements with unions in the U.S. and U.K. 26
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Slide 28: Transforming into a Global Champion
TRANSFORMING INTO A GLOBAL CHAMPION Benjamin Smith President, Passenger Airlines June 2, 2015
Slide 29: Transformation Plan
TRANSFORMATION PLAN ACCELERATED, BALANCED TRANSFORMATION OF AIR CANADA TOWARD SUSTAINED PROFITABILITY Between 2015 and 2018: Network Optimization Strategic international Aircraft Growth and Reconfiguration growth Delivery of 787 order Flexibility to adjust to shifting Increase diversification of mar
Slide 30: Evolving Our Value Proposition
EVOLVING OUR VALUE PROPOSITION Strong foundation for profitable growth 30
Slide 31: Widebody Fleet Plan (Summer Peak)
WIDEBODY FLEET PLAN (SUMMER PEAK) Fleet 2012 Fleet 2015 Fleet 2016 Fleet 2017 Fleet 2018 Fleet 777 18 23 25 25 25 787 0 9 21 26 34 A330 8 8 8 8* 8* 767 30 17 15 5-8* 5-8* rouge 767 0 13 16-19 19-25 25 Total Widebody Fleet 56 70 85-88 83-92* 97-100* *Swing/flexible capacity 31
Slide 32: Narrowbody Fleet Plan (Summer Peak)
NARROWBODY FLEET PLAN (SUMMER PEAK) Fleet 2012 Fleet 2015 Fleet 2016 Fleet 2017 Fleet 2018 Fleet Airbus NBJ 86 73 75 75 63-70* Boeing NBJ 0 0 0 0 18 Embraer E75/E90 60 45 25 25 25 rouge NBJ 0 20 25 25 25 Total Narrowbody Fleet 146 137 125 125 131-138* Total AC Mainline Fleet 202 174 169-173 169-172
Slide 33: Regional Fleet Plan (Summer Peak)
REGIONAL FLEET PLAN (SUMMER PEAK) Fleet 2012 Fleet 2015 Fleet 2016 Fleet 2017 Fleet 2018 Fleet 76 seat jet 16 31 31-50 31-60 31-60 76 seat prop 11 31 37-42 39-45 39-45 50 seat jet 45 24 19 17 17 37-50 seat prop 60 54 45 42 41 18 seat prop 17 17 17 17 17 Total AC Regional Fleet 149 157 149-173 146-18
Slide 34: Higher Utilization Means Lower CASM
HIGHER UTILIZATION MEANS LOWER CASM Aircraft utilization (Peak Summer) Average Hours/Day 2015 2016 2017 2018 11.57 12.08 12.42 12.56 Achieving enhanced aircraft utilization through: Longer average stage length Optimising network efficiency Focus on new international destinations 34
Slide 35: Configuration Optimization Continues
CONFIGURATION OPTIMIZATION CONTINUES RECONFIGURATION IS LOWERING CASM AND ENHANCING REVENUE Seats Seats Latest Aircraft Fleet June 2015 2018 Entry Into Service 349 777-300ER 400 Spring 2016 270 777-200LR 300 Spring 2016 251 787-8 255 Fall 2016 265 A330-300 292 Winter 2016 174 A321 181-188 Fall 2016
Slide 36: Air Canada Flies Over 38 Million Passengers Annually
TODAY AIR CANADA FLIES OVER 38 MILLION PASSENGERS ANNUALLY TO OVER 175 DESTINATIONS 36
Slide 37: 2018 Network Opportunities
2018 NETWORK OPPORTUNITIES +>3-5 million additional passengers annually 37
Slide 38: Leverage Strong Competitive Advantages
LEVERAGE STRONG COMPETITIVE ADVANTAGES Favourable Slot Times at Busy Airports • Beijing (2) • Tokyo HND (1) • New York LGA (24) • Shanghai (2) • Paris CDG (2) • Washington DCA (8) • Hong Kong (2) • Frankfurt (5) • Tokyo NRT (3) • London LHR (S13/W9) Extensive Global Network • Largest foreign carrier
Slide 39: Best in Class Connections Process at YYZ
BEST IN CLASS CONNECTIONS PROCESS AT YYZ International-to-US & international-to-international connections process is objectively the simplest in North America – Competitive elapsed time – No need to pick up and/or re-check bags – No need to change terminals – US CBP pre-clearance facilities Passen
Slide 40: Leveraging Our Geography to Maximize 6th Freedom Traffic Potential
LEVERAGING OUR GEOGRAPHY TO MAXIMIZE 6TH FREEDOM TRAFFIC POTENTIAL 40
Slide 41: Air Canada Is the Largest Foreign Carrier Operating to the USA
AIR CANADA IS THE LARGEST FOREIGN CARRIER OPERATING TO THE USA Air Canada serves 51 online destinations in the USA 41
Slide 42: Regional Lift Pivotal to Success
REGIONAL LIFT PIVOTAL TO SUCCESS 42
Slide 43: Recent Growth in 6th Freedom Market
RECENT GROWTH IN 6TH FREEDOM MARKET Revenue Growth Since 2010, total 6th freedom revenue +75% via all AC hubs has grown in excess of 75%, or $250 million Traffic Growth In 2014, Air Canada transported nearly 1.9 million 6th freedom passengers Growth of 56% since 2010 6th Freedom traffic has in
Slide 44: Enormous Potential for Continued Growth in US 6th Freedom Market
ENORMOUS POTENTIAL FOR CONTINUED GROWTH IN US 6TH FREEDOM MARKET Target 1.5% market Big network potential share, which equates to an additional 1.68M % of US-Europe/Asia Market by non-US Carriers passengers per year, or approximately $605M in incremental revenue 5.5% 2.5% 2.4% 2.2% 1.9% 1.4% 1.2% 0.
Slide 45: Network Composition Continues to Shift to International
NETWORK COMPOSITION CONTINUES TO SHIFT FROM NORTH AMERICA TO INTERNATIONAL Cost base is relatively more competitive in the international sector 2011 2012 2013 2014 2015 2016 2017 2018 North America 46% 46% 46% 46% 45% 43% 40% 38% International 54% 54% 54% 54% 55% 57% 60% 62% 45
Slide 46: Achieve Market Leadership at YYZ
ACHIEVE MARKET LEADERSHIP AT YYZ 46
Slide 47: Path Toward Global Champion
PATH TOWARD GLOBAL CHAMPION Improved margin Market position strength Sustained profitability through margin expansion 47
Slide 48: Canada – Leisure Europe Continues to Grow Significantly
CANADA LEISURE EUROPE CONTINUES TO GROW SIGNIFICANTLY Canada - Leisure Europe Passenger Demand Growth Canada Leisure Europe (Q3 2010 - Q3 2015) passenger demand growth has averaged +6.3% since 2010 CAGR +6.3% Relatively lower growing demand for premium cabin travel Air Canada, with its rou
Slide 49: Air Canada Rouge Unit Cost Advantage
AIR CANADA ROUGE UNIT COST ADVANTAGE -30% Through a combination -23-24% of higher seating density and lower operating costs, Air Canada rouge is able to dramatically reduce unit costs 49
Slide 50: Enhancing Market Presence: Star Alliance, Commercial Agreements & Joint Venture
ENHANCING MARKET PRESENCE: STAR ALLIANCE, COMMERCIAL AGREEMENTS & JOINT VENTURE 27 Members 1,321 Airports >637M Passengers/year >1000 193 Countries Served >18,500 Daily Departures >4,400 Aircraft Lounges 50
Slide 51: A++ Joint Venture Has Been a Springboard for Transatlantic Expansion
A++ JOINT VENTURE HAS BEEN A SPRINGBOARD FOR AIR CANADA’S TRANSATLANTIC NETWORK EXPANSION Since the inception of A++, Air Canada results have been impressive: AC transatlantic capacity grew more than 30% Access to corporate contracts in all markets where offered by A++ partners Increased U.S. six
Slide 52: Opportunity to Profitably Increase Market Share Over the Atlantic
CONSIDERABLE OPPORTUNITY FOR AC TO PROFITABLY INCREASE MARKET SHARE OVER THE ATLANTIC Atlantic Markets from Canada Ranked by 2014 Market Size and A++ JV Share 3,000 80% 74% 73% 70% 2,500 60% 60% 56% 57% 2,000 53% 53% 50% 50% 46% 42% 42% 41% 1,500 40% 40% 40% 39% 39% 36% 37% 32% 32% 30% 30% 30% 29% 1
Slide 53: Focus on China – The Next JV Hotspot
FOCUS ON CHINA – THE NEXT JV HOTSPOT • Air Canada and Air China signed MOU for a revenue sharing joint venture on routes Canada ⇆ China (scheduled implementation W2015/2016) • Already realising tangible results: • Air China announced Beijing- Montreal for September 2015 • Air Canada to add capacity
Slide 54: Revenue Optimization
REVENUE OPTIMIZATION • New dynamic pricing and inventory tool, RMODC, will bring Air Canada in line with industry best practices Best Practices • Drives network optimization, making better economic decisions on local vs international passengers 6th Freedom Traffic • Price & inventory determined by o
Slide 55: Leverage Superior Product
LEVERAGE SUPERIOR PRODUCT 55 55
Slide 56: Reconsidering Position at Billy Bishop
RECONSIDERING POSITION AT BILLY BISHOP Insufficient slots due to Porter monopoly Commuter facility unsuited to jets 56
Slide 57: Transformation Plan Strategically Targets Competition
TRANSFORMATION PLAN STRATEGICALLY TARGETS COMPETITION 57
Slide 58: AC's Three Hubs: Toronto Pearson
AC’S THREE HUBS PRESENT A VARIETY OF INTERNATIONAL EXPANSION OPPORTUNITIES Toronto Pearson (YYZ) Global Hub Hub Strategy: Global Hub Improve market position Achieve margin expansion Leverage extensive network to/from North America into Europe, Asia, and South America 58
Slide 59: AC's Three Hubs: Montreal Trudeau
AC’S THREE HUBS PRESENT A VARIETY OF INTERNATIONAL EXPANSION OPPORTUNITIES Montreal Trudeau (YUL) Specialized Hub Hub Strategy: Special Market Hub Minimise duplication with YYZ Focus on key francophone markets & key global markets 59
Slide 60: AC's Three Hubs: Vancouver International
AC’S THREE HUBS PRESENT A VARIETY OF INTERNATIONAL EXPANSION OPPORTUNITIES Vancouver International (YVR) Specialized Hub Hub Strategy: Transpacific focused hub Leverage geography Closest North American hub to Asia 60
Slide 61: Transforming an Iconic Canadian Brand into a True Global Champion
Transforming an iconic Canadian brand into a true global champion 61
Slide 62: Cost Reduction and Customer Service Transformation
COST REDUCTION AND CUSTOMER SERVICE TRANSFORMATION Klaus Goersch Executive Vice President and Chief Operating Officer 02/06/2015
Slide 63: Continued Focus on Cost Reduction
CONTINUED FOCUS ON COST REDUCTION while maintaining… Operational Excellence Outstanding Customer Service 63
Slide 64: Cost Reduction – 2014 Successes
COST REDUCTION – 2014 SUCCESSES 2014 – $85 million in operational cost reductions 2015 – continuing further cost reductions – goal to achieve another $100 million 64
Slide 65: Cost Reduction Focus
COST REDUCTION FOCUS Maintenance – Restructuring of all major maintenance contracts (engines, airframe, components) – Leveraging Air Canada volume to lower maintenance costs at Regional partners – Reduced inventory ownership costs – Leveraging benefits of new aircraft (787) – Appropriately managin
Slide 66: Cost Reduction Focus - Continued
COST REDUCTION FOCUS - CONTINUED In-Flight Service – Renegotiating global catering contract Fuel Efficiency – 767 Winglets – Air Canada Fuel Optimizer – Single Engine Taxi compliance – Reduced ground power hook-up time to minimize APU usage 66
Slide 67: Running a Reliable Airline
RUNNING A RELIABLE AIRLINE 2014 – Another Successful Year 2012 2013 2014 Arrival @14 61% 75% 78% Departure @00 44% 59% 61% Start-up Departure @00 66% 77% 78% Flight Completion 98.3% 98.5% 98.8% Missed Bag Ratio 4.1 3.5 3.9 Avg AOG at 0700L 7.3 5.1 4.0 67
Slide 68: Airport and Customer Service Improvements
AIRPORT AND CUSTOMER SERVICE IMPROVEMENTS Investing in Customer Focused Employee Training – Applause, Standing Ovation, Manage the AC Way, Leading the AC Way Baggage – Baggage delivery, mishandled baggage rate improvement, – Customer relations and lost & found, IT Solutions Policies & Procedur
Slide 69: Airport and Customer Service Improvements
AIRPORT AND CUSTOMER SERVICE IMPROVEMENTS Reorganization of In-Flight Service Bases – Balanced between operational integrity and customer focus – Improved support and focus on Customer Service Initiatives In-Flight Service Base “Own a Route” – Senior In-Flight Service managers own a key operatio
Slide 70: Airport and Customer Service Improvements
AIRPORT AND CUSTOMER SERVICE IMPROVEMENTS Concierge Desk at Call Centre – Centralized contact for premium customers – Offers personalized service across all Concierge touchpoints Drive for 5 – 5 minute average speed of answer – Target achieved as of March 2015 Toronto Car Chauffeur – Airside B
Slide 71: Airport and Customer Service Improvements
AIRPORT AND CUSTOMER SERVICE IMPROVEMENTS Airport Initiatives – Self Service Bag Drop – Mobile Payments solution – New SmartGate boarding application – First Foreign airline in the USA approved for TSA Pre-Check – Irregular Operations Program Call Centres - Virtual Call Centre Solution – A suite
Slide 72: Air Canada Leading in Technology
AIR CANADA LEADING IN TECHNOLOGY Mobile Technology – Flight Operations eManuals and charts to replace paper copies – Maintenance Replacement of paper manuals and processes with electronic real time information systems for line maintenance – InFlight Service Electronic defect log replacing pa
Slide 73: Air Canada – Canada's Best Run Airline
AIR CANADA – CANADA’S BEST RUN AIRLINE 73
Slide 74: Achieving New Heights
ACHIEVING NEW HEIGHTS Mike Rousseau Executive Vice President & Chief Financial Officer June 2, 2015
Slide 75: Annual Assumptions - 2015-2018
ANNUAL ASSUMPTIONS - 2015-2018 Annually 2015-2018 GDP – Canada 2.0% to 2.4% CPI – Canada 2.1% Average jet fuel price (CAD cents per litre) 70¢ to 81.5¢ Average currency exchange (US$1 = C$) $1.22 to $1.23 Average wage rate increase (based on collective agreements and management 2% assumptions) 75
Slide 76: Financial Transformation Continues
FINANCIAL TRANSFORMATION CONTINUES NEW TARGETS SET FOR NEXT LEVEL OF PERFORMANCE IMPROVEMENT Average Average New Target 2010 – 2012 2013 – 2014 2015 – 2018 EBITDAR margin 11.5% 12.1% 15% to 18% ROIC 5.2% 11.3% 13% to 16% Leverage ratio by 2018 3.4 3.1 2.2 Jan 1, 2012 Jan 1, 2015 Maintain Pension (de
Slide 77: Stock Price Performance
STOCK PRICE PERFORMANCE DELIVERING SUSTAINABLE SHAREHOLDER RETURNS Air Canada May 28 $13.60 Dow Jones U.S. Total Stock Market/Airlines Dec 31 $11.87 Dec 31 $7.41 Dec 31 $3.45 Dec 31 Dec 31 Dec 31 $1.75 $1.32 $0.99 2010 2011 2012 2013 2014 2015 77
Slide 78: The Path 2011-2015: A Solid Foundation Has Been Built
THE PATH 2011-2015 A SOLID FOUNDATION HAS BEEN BUILT Disciplined capacity management – Growth focused on higher margin international routes, supported by sixth freedom traffic – Margin expansion through Air Canada rouge in leisure markets Unrelenting commitment to deliver sustainable cost reduct
Slide 79: What We Accomplished Since We Last Met
WHAT WE ACCOMPLISHED SINCE WE LAST MET June 2013 Target As of June 2, 2015 CASM reduction of 15% over medium term Trending to 21% (excluding the impact of foreign exchange and fuel prices) FY 2014 Q1 2015 June 2013 Targets Achieved Actuals Actuals ROIC of 11-13% by 2015 12.1% 15.2% Leverage ratio
Slide 80: 15% CASM Reduction Promise
15% CASM REDUCTION PROMISE Initiative Original Benefit Updated Benefit Air Canada rouge 21-29% reduction vs mainline 23-30% reduction vs mainline Boeing 787 29% fuel and maintenance reduction 31% fuel and maintenance reduction vs Boeing 767 vs Boeing 767 Boeing 777HD 21% reduction vs Boeing 777 20%
Slide 81: CASM Reduction Remains a Top Priority
CASM REDUCTION REMAINS A TOP PRIORITY UNRELENTING FOCUS ON COST COMPETITIVENESS Execution and realization of 21% CASM savings (excluding the impact of foreign exchange and fuel prices) by end of 2018 when compared to 2012 – Fleet initiatives and reconfigurations (B777s, A330s) – B737 MAX program –
Slide 82: Focus on Procurement
FOCUS ON PROCUREMENT LEVERAGING PROCESSES AND TECHNOLOGY TO FURTHER REDUCE COSTS Launched a procurement transformation initiative in 2010 aimed at applying best sourcing practices company-wide to leverage our global spend – Overall objective is to achieve best value for money on goods and services
Slide 83: Improving Competitiveness in Regional Markets
IMPROVING COMPETITIVENESS IN REGIONAL MARKETS Diversification strategy being implemented – Sky Regional & Air Georgian have very competitive cost structures Significant enhancements to Jazz CPA driven by fleet changes and pilot mobility agreement – Estimated $550 million in incremental value 201
Slide 84: Pension Turnaround Story
PENSION TURNAROUND STORY SIGNIFICANT REALLOCATION OF CAPITAL TO OTHER USES $5.4 billion improvement in pension solvency position over four years – $3.5 billion of net value created on top quartile investment returns – $0.9 billion in pension contributions – $1 billion in negotiated pension benefit
Slide 85: Risk Mitigation – Fuel
RISK MITIGATION – FUEL Fuel hedging strategy is designed to manage our exposure to fuel price volatility – Use of call options protects us against short-term price spikes while allowing us to participate 100% in fuel price declines – Target hedge ratio is approximately 40% of planned fuel consumpt
Slide 86: Risk Mitigation – Currency
RISK MITIGATION – CURRENCY Foreign exchange risk strategy is to cover 65% of net U.S. exposure on a rolling 18-month basis using derivatives and U.S. cash reserves – Currently hedged at a weighted average price of C$1.18 – Impact of hedging benefits cash flow but hedging results reported in non-op
Slide 87: Assets Available for Future Use
ASSETS AVAILABLE FOR FUTURE USE Income tax shelter of $6.3 billion – Operating loss carry-forwards of approximately $1 billion and tax shields related to fixed assets and pension obligations of $5.3 billion – No statutory limitations – Capital expenditure programs provide additional source of tax
Slide 88: Air Canada – A Global Champion
AIR CANADA – A GLOBAL CHAMPION Significant expansion in EBITDAR margin from current levels to a range of between 15% to 18% during the period 2015-2018 – Strategic initiatives are at/above expectations Balance sheet and risk management top priority – Pension risk largely eliminated – Fuel price
Slide 89: Long Term Sustained Profitability – Taking It to the Next Level
LONG TERM SUSTAINED PROFITABILITY – TAKING IT TO THE NEXT LEVEL Calin Rovinescu President & Chief Executive Officer June 2, 2015
Slide 90: Target EBITDAR Margin 15%-18% 2015-2018
TARGET EBITDAR MARGIN 15%-18% 2015-2018 15% - 18% 12.6% 11.6% 10.7% 10.9% 2011 2012 2013 2014 Q1 2015 Target 90
Slide 91: Target ROIC of 13%-16% and Leverage Ratio of 2.2
TARGET ROIC OF 13%-16% 2015-2018 TARGET LEVERAGE RATIO OF 2.2 BY 2018 ROIC 15.2% 13% - 16% WACC 12.1% 10.5% 6.7% 4.2% 2011 2012 2013 2014 Q1 2015 Target Leverage Ratio 2.2 2011 2012 2013 2014 Q1 2015 Target 91
Slide 92: Taking It to the Next Level
TAKING IT TO THE NEXT LEVEL We are leveraging our accomplishments We are executing on the right strategic plan We will deliver sustained profitability and value for shareholders 92
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Slide 94: Appendix
APPENDIX 94
Slide 95: Financial Information
FINANCIAL INFORMATION Financial information contained in this presentation has been derived from the historical consolidated financial statements of the Corporation for the applicable periods noted. Air Canada’s consolidated financial statements are prepared in accordance with generally accepted a
Slide 96: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES Adjusted CASM (or Adjusted Cost per Available Seat Mile) – Air Canada uses adjusted CASM to assess the operating performance of its ongoing airline business without the effects of aircraft fuel expense, the cost of ground packages at Air Canada Vacations, and unusual it
Slide 97: Non-GAAP Financial Measures
NON-GAAP FINANCIAL EBITDAR – EBITDAR (earnings before interest, taxes, depreciation, amortization and impairment, and aircraft rent) is a non- GAAP financial measure commonly used in the airline industry to view operating results before depreciation, amortization and impairment, and aircraft rent