Air Canada · TSX:AC
Air Canada — Q2 2007 Earnings Presentation
22 slides from Air Canada's earnings presentation, Aug 10, 2007
Slide 1: Second Quarter 2007
Second Quarter 2007 August 10, 2007
Slide 2: Table of Contents
Table of Contents • Operating Statistics • Revenue Highlights • Expense Highlights
Slide 3: Air Canada Operating Results Decline by $25 mln
Air Canada Operating Results Decline by $25 mln Change (millions) Q2 2007 Q2 2006 Fav./(Unfav.) Oper. Revenue $ 2,635 $ 2,576 $ 59 Oper. Expense 2,547 2,463 (84) Oper. Income 88 113 (25) Non-oper. Income (Expense) (33) (46) 13 Income Before NCI, FX & Tax 55 67 (12) Non-controlling Interest (4) (3) (
Slide 4: Q2 Net Interest Expense Down $8 mln
Q2 Net Interest Expense Down $8 mln Change (millions) Q2 2007 Fav./(Unfav.) Net Interest Expense $ (35) $ 8 Gain on Disposal 14 13 Other Non-Operating Expense (12) (8) Total Non-Operating Expense $ (33) $ 13
Slide 5: Q2 2007 Actual vs Prior Year
Q2 2007 Actual vs Prior Year ASMs RPMs PLF Yield RASM Rev Canada Ï 2.7% Ï 6.2% Ï 2.7 PP Ð 0.8% Ï 2.6% Ï 5.4% US Transborder Ï 0.7% Ï 1.7% Ï 0.9 PP Ð 1.7% Ð 0.6% Ï 0.1% Atlantic Ï 3.3% Ï 1.2% Ð 1.8 PP Ð 0.6% Ð 2.5% Ï 0.7% Pacific Ð 1.9% Ð 0.9% Ï 0.9 PP Ï 6.0% Ï 7.1% Ï 5.1% Latin Amer. & Other Ï 6.1%
Slide 6: U.S. Capacity Growth Slows Sharply in Second Quarter
U.S. Capacity Growth Slows Sharply in Second Quarter (Y-O-Y Changes in Capacity) % Change in ASMs 25% 20% 15% 10% 5% 0% -5% Canada U.S. Oth. Int'l Total Q2 2006/2005 Q3 2006/2005 Q4 2006/2005 Q1 2007/2006 Q2 2007/2006
Slide 7: Strong Domestic Traffic Growth Accounts for Almost ¾ of Total Increase
Strong Domestic Traffic Growth Accounts for Almost ¾ of Total Increase (Y-O-Y Changes in Traffic) % Change in RPMs 20% 15% 10% 5% 0% -5% Canada U.S. Oth. Int'l Total Q2 2006/2005 Q3 2006/2005 Q4 2006/2005 Q1 2007/2006 Q2 2007/2006
Slide 8: System Yield Growth Slows in 2nd Quarter Reflecting a Decline in Domestic Yield
System Yield Growth Slows in 2nd Quarter Reflecting a Decline in Domestic Yield (Y-O-Y Changes in Passenger Yield) % Change in Yield 4% 2% 0% -2% -4% -6% Canada U.S. Oth. Int'l Total Q2 2006/2005 Q3 2006/2005 Q4 2006/2005 Q1 2007/2006 Q2 2007/2006
Slide 9: System RASM Growth Also Slows on More Moderate Domestic and International Increases
System RASM Growth Also Slows on More Moderate Domestic and International Increases (Y-O-Y Changes in Revenue per ASM) % Change in RASM 10% 5% 0% -5% -10% Canada U.S. Oth. Int'l Total Q2 2006/2005 Q3 2006/2005 Q4 2006/2005 Q1 2007/2006 Q2 2007/2006
Slide 10: 3.3% System Psgr. Rev. Growth Reflects More Modest Improvements
3.3% System Psgr. Rev. Growth Reflects More Modest Dom. & Int'l. Improvements and a Flat Transborder (Y-O-Y Changes in Passenger Revenue) % Change in Revenue 20% 15% 10% 5% 0% Canada U.S. Oth. Int'l Total Q2 2006/2005 Q3 2006/2005 Q4 2006/2005 Q1 2007/2006 Q2 2007/2006
Slide 11: Canada – Q2 RASM Increases 2.6% on Higher LF as Yield Declines
Canada – Q2 RASM Increases 2.6% all Higher on LF as Yield Declines Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 6 4 4 2 0 2 -2 0 -4 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2007 2006 2007 % Change Yield % Change RASM 4 8 6 2 4 0 2 -2 0 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2007 2006 2007
Slide 12: US Transborder – RASM Declines 0.6%
US Transborder – RASM Declines 0.6% as Better LF is Offset by a Soft Yield Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 25 10 20 15 5 10 0 5 0 -5 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2007 2006 2007 Yield RASM % Change % Change 2 10 0 5 -2 0 -4 -5 -6 -10 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006
Slide 13: Atlantic – A Weak UK Performance Pushes Atlantic RASM Down
Atlantic – A Weak UK Performance Pushes Atlantic RASM Down 2.5% Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 4 4 2 2 0 -2 0 -4 -2 -6 -8 -4 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2007 2006 2007 Yield RASM % Change % Change 4 6 4 2 2 0 0 -2 -2 -4 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2007 2006
Slide 14: Pacific – 7.1% RASM Growth on 6% Jump in Yield and Solid LF
Pacific – 7.1% RASM Growth on 6% Jump in Yield and Solid LF Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 4 4 2 3 0 2 -2 1 -4 -6 0 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2007 2006 2007 Yield RASM % Change % Change 8 10 6 4 5 2 0 0 -2 -4 -5 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2007 2006 2007
Slide 15: Caribbean, Latin America & Australia – RASM Declines 0.9%
Caribbean, Latin America & Australia – RASM Declines 0.9% as Soft LF Offsets Yield Gains Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 8 6 6 4 4 2 2 0 0 -2 -2 -4 -4 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2007 2006 2007 Yield RASM % Change % Change 8 15 6 10 4 5 2 0 0 -5 Q2 Q3 Q4 Q1 Q2 Q2 Q3
Slide 16: Total – System RASM Lifts 1.3% on Higher Yield and LF
Total – System RASM Lifts 1.3% on Higher Yield and LF Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 4 2 3 1 2 0 1 0 -1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2006 2007 2006 2007 % Change Yield RASM CASM RASM % Change 4 4 3 3 2 2 1 0 1 -1 0 -2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2006 2007 2006 2007
Slide 17: Average Salary Up 3.3%; Employee Levels Up
Average Salary Up 3.3%; Employee Levels Up 447 or 1.9%. (Y-O-Y Change – Average Salaries & Employees) % Change Y-O-Y 6% 4% 2% 0% -2% -4% Q3'06 Q4'06 Q1'07 Q2'07 Average Salaries Employees
Slide 18: Cost/Litre Down 0.2% While Fuel Productivity Improves 1.0%
Cost/Litre Down 0.2% While Fuel Productivity Improves 1.0% Reflecting the Removal of one Freighter (Fuel Productivity & Unit Cost) % Change Y-O-Y 15% 10% 5% 0% -5% Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Fuel Productivity (ASMs/Lt) Fuel Cost (Cdn cts/Lt)
Slide 19: "Other" Cat. up 2.7% on ACV Ground Pkg. Costs, Equip. Rental, Training
"Other" Cat. up 2.7% on ACV Ground Pkg. Costs, Equip. Rental, Training, Crew Cycle Costs, Cr. Card Fees & Cust. Inconvenience % Change Y-O-Y 10% 5% 0% -5% -10% -15% h. p r . es IT urc Ba i ss s hi uel &B Fe m& mm p. P ner / Ms Ms F er e. od er SW O th A/C Mtc Ow Co Co RP AS Ca Us Fo Q2 2007/2006
Slide 20: Unit Cost Up 1.4% Due Higher Average Salaries and Mtce. Expenses
Unit Cost Up 1.4% Due Higher Average Salaries, Increased Employee Levels and Mtce. Expenses (Cost Per ASM) % Change Y-O-Y 3% 2% 1% 0% -1% -2% -3% Q3'06 Q4'06 Q1'07 Q2'07
Slide 21: Caution Concerning Forward-looking Information
Caution Concerning Forward-looking Information: Certain statements made in this Q2 2007 presentation are forward-looking statements, which are, by their nature, based on assumptions and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements canno
Slide 22: Air Canada
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