Air Canada · TSX:AC
Air Canada — Shareholder Meeting (May 2016)
54 slides from Air Canada's shareholder meeting presentation, May 10, 2016
Slide 1: 2016 Annual Meeting of Shareholders
2016 ANNUAL MEETING OF SHAREHOLDERS HALIFAX, NOVA SCOTIA May 10, 2016
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Slide 3: 2016 Annual Meeting of Shareholders
2016 ANNUAL MEETING OF SHAREHOLDERS HALIFAX, NOVA SCOTIA May 10, 2016
Slide 4: Caution Forward-Looking Statements
CAUTION FORWARD-LOOKING STATEMENTS 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 other communications, including filings with regulat
Slide 5: 2016 Annual Meeting of Shareholders
2016 ANNUAL MEETING OF SHAREHOLDERS HALIFAX, NOVA SCOTIA May 10, 2016
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Slide 18: 2016 Annual Meeting of Shareholders
2016 ANNUAL MEETING OF SHAREHOLDERS HALIFAX, NOVA SCOTIA May 10, 2016
Slide 19: September 2010: Emerged from Worst Years
SEPTEMBER 2010 EMERGED FROM WORST YEARS Jet fuel spiked to over $140/barrel Net loss over $1B Pension plan deficit exceeded over $4B Stock price less than $1 19
Slide 20: Global Champion Goal
Slide 21: Canadian Businesses Lost
CANADIAN BUSINESSES LOST The hollowing out of Canada 21
Slide 22: The Case for a Global Champion
THE CASE FOR A GLOBAL CHAMPION Are we capable of really thinking big? 22
Slide 23: Global Leadership at Air Canada
GLOBAL LEADERSHIP AT AIR CANADA Valuable lessons: – Take some risk – Play to strengths – Be nimble 23
Slide 24: Our Report Card
OUR REPORT CARD 24
Slide 25: Sustaining Profitable Growth: Operating Revenues
SUSTAINING PROFITABLE GROWTH Operating Revenues 2015 2009 Change $13.9B $9.7B 40% 25
Slide 26: Sustaining Profitable Growth: EBITDAR
SUSTAINING PROFITABLE GROWTH EBITDAR 2015 2009 Change $2.5B $679M 270% EBITDAR margin Targeted EBITDAR 2015 2009 margin of: 15% to 18.3% 7% 18% 26
Slide 27: CASM
CASM Significant Progress since 2009 – Decreased 9.3% from 2014 – Cost Transformation Program - $530M improvement – Better fleet use through seat densification – Efficient aircraft (Boeing 787s) – Air Canada rouge – Revised capacity purchase agreement with Jazz Moving forward – Target CASM savin
Slide 28: Sustaining Profitable Growth: Adjusted Net Income
SUSTAINING PROFITABLE GROWTH Adjusted Net Income 2015 2009 $1,22B $(671)M* * 2009 – Income (loss) before non-controlling interest, foreign exchange and income taxes 28
Slide 29: Sustaining Profitable Growth: Return on Invested Capital
SUSTAINING PROFITABLE GROWTH Return on Investment Capital (ROIC) 2015 2009 Change 18.3% -1.5% 20 percentage points Record improvement 29
Slide 30: Strengthening Our Balance Sheet
STRENGTHENING OUR BALANCE SHEET Unrestricted Liquidity 2015 2009 $3B $1.4B Target leverage Leverage Ratio ratio of: 2.2X by 2018 2.5X 8.3X 30
Slide 31: Pension Plans
PENSION PLANS 2015 2009 $1.3B –$2.7B Stabilized our plans by matching 75% of Air Canada’s pension liabilities to fixed income products 31
Slide 32: Share Price Is Up More Than 800%
SHARE PRICE IS UP MORE THAN 800% Air Canada Five Year Price Performance 32
Slide 33: 6 Continents, 29 Countries, 28,000 Employees
EMPLOYMENT 6 Continents 29 Countries 28,000 Employees 33
Slide 34: Employment: Continued Growth
EMPLOYMENT Continued Growth + 320 pilots + 640 Air Canada Flight Attendants + 425 Air Canada rouge Flight Attendants + 5,500 jobs for our regional carriers 34
Slide 35: Employment: Continued Growth
EMPLOYMENT Continued Growth – Air Canada employs 350 people in the Halifax region – Jazz Aviation, our largest Express partner, employs about 800 people 35
Slide 36: Strong Regional Partner
STRONG REGIONAL PARTNER An integral part of our North American Strategy – New capacity agreement to 2025 – Better aligns interests of both companies – Provides for further modernization of the Jazz fleet – Pilot mobility agreement
Slide 37: Powerful Brand
POWERFUL BRAND Among top 15-20 largest airlines in the world – 41 million passengers last year – 200 destinations worldwide 37
Slide 38: Economic Growth
ECONOMIC GROWTH Spent approximately $9.5 billion on products and services in 2015 – $100 million locally on operational expenses – More than $1 billion Capacity Purchase Agreement with Jazz 38
Slide 39: Engaged Workforce
ENGAGED WORKFORCE 10-year labour agreements with most of our major unions 39
Slide 40: Diversity and Inclusion
GLOBAL CHAMPION CANADA'S BEST ALR S@ANAD ‘gfe’ 2 A © DIVERSITY EMPLOYERS
Slide 41: Diversity and Inclusion
us MDA UR Vi ae NE CLOBAL_ BHAMPION DIVERSITY AND | aon ON
Slide 42: Unique Selling Points: Investments
UNIQUE SELLING POINTS (USP) Investments – $9 billion capital expenditure program – Youngest fleet – Taking delivery of 37 Boeing 787 Dreamliner aircraft – Boeing 737 Max in 2017 – Bombardier C Series in 2019 42
Slide 43: Unique Selling Points: Network and Geographic Advantage
UNIQUE SELLING POINTS (USP) Network and geographic advantage – Next-generation cabin features – New lie-flat seats in International Business Class – First dedicated Premium Economy cabin in North America – WiFi installed on North America flights and plan on installing satellite WiFi on International
Slide 44: Air Canada rouge
EMBRACE RISK, SEIZE OPPORTUNITIES, INNOVATE, EXPAND Air Canada rouge – Contributing to profitability – Expanding our leisure routes – Job opportunities – Swing capacity 44
Slide 45: Culture of Success
CULTURE OF SUCCESS Our greatest success: Changing the very culture at Air Canada – Entrepreneurship – High performance – Just do it mindset 45
Slide 46: Global Mindset
GLOBAL MINDSET We have increased capacity outside Canada by more than 47% – 90% of growth in international markets – Since 2009, we launched non-stop service to more than 30 destinations 46
Slide 47: Support Key Industries
SUPPORT KEY INDUSTRIES First major North American carrier to order Bombardier C Series 47
Slide 48: Manage for the Long-Term
MANAGE FOR THE LONG-TERM Investment timeframe must match long term strategy. LONG TERM We need to run our business and make capital allocation decisions based on sustainable profitability in the long term interests of our stakeholders. 48
Slide 49: A Level Playing Field
A LEVEL PLAYING FIELD Canadian Public Policy – Not always favourable to our industry – Higher travel costs impede economic activity – No other airlines in Canada subject to similar restrictions 49
Slide 50: Social Responsibility
SOCIAL RESPONSIBILITY Sustainability is an integral aspect of our operations – Improved fuel efficiency by 10% since 2009 and 38% since 1990 50
Slide 51: Social Responsibility
SOCIAL RESPONSIBILITY In 2015, Air Canada Foundation donated – More than 1,100 promotional tickets to charities – More than 15 million Aeroplan® Miles – Over $1 million in financial grants 88% increase over 2014 51
Slide 52: Social Responsibility
SOCIAL RESPONSIBILITY In 2015, Air Canada and the Breakfast Clubs of Canada flew young Trent Leon to Montreal to meet his hero, Montreal Canadiens goalie Carey Price. 52
Slide 53: Iconic Global Brand
ICONIC GLOBAL BRAND Staying ahead of the curve We embrace change! 53
Slide 54: Thank You
c) THANK re =—s