Air Canada · TSX:AC
Air Canada — Shareholder Meeting (2014)
81 slides from Air Canada's shareholder meeting presentation, 2014
Slide 1: 2014 Annual and Special Meeting of Shareholders
2014 Annual and Special Meeting of Shareholders
Slide 2: Caution forward-looking statements
Caution forward-looking statements Air Canada’s public communications may include forward-looking statements within the meaning of applicable securities laws. Such statements may be included in this presentation and may be included in other communications, including filings with regulatory authoriti
Slide 3: YUL: Air Canada's Headquarters
YUL: Air Canada’s Headquarters 5,300 employees 150 flights per day 44 direct destinations
Slide 4: Building Air Canada into a global powerhouse
Canadian emblem Building Air Canada into a global powerhouse of which all Canadians can be proud
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Slide 17: » ag Yf d we bs: we _
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Slide 19: Air Canada: Watershed year
2013 Financial year in review Air Canada: Watershed year ! Global company ! Sustainably profitable ! Nimble, creative, entrepreneurial ! We can create more jobs ! Continue with good pay and benefits ! Preserve pensions ! Customer-centric ! Deliver value to shareholders
Slide 20: Record financial results
2013 Financial year in review Record financial results ! Operational successes ! Industry awards ! Carried more people safely to destination
Slide 21: The market noticed
2013 Financial year in review The market noticed 323% ! Highest performing return shares on S&P TSX
Slide 22: $12.4B record operating revenues
Financial highlights – 2013 $12.4B $268M Record Increase from 2012 operating revenues
Slide 23: $11B passenger revenues
Financial highlights – 2013 $11B $284M Passenger Increase from 2012 revenues 0.5% Yield improvement
Slide 24: Record load factor
Financial highlights – 2013 More than 35M passengers 82.8% Record Record load factor load factor
Slide 25: Cost reduction from 2012
Financial highlights – 2013 1.5% Cost reduction from 2012
Slide 26: $340M record adjusted net income
Financial highlights – 2013 $340M $285M Improvement Record adjusted over 2012 net income
Slide 27: $1.4B record EBITDAR
Financial highlights – 2013 $1.4B $113M Increase Record over 2012 EBITDAR
Slide 28: Adjusted net debt to EBITDAR
Financial highlights – 2013 3.0 3.1 Adjusted net Ratio in 2012 debt to EBITDAR ratio Maintain ratio below 3.5
Slide 29: $2.4B unrestricted liquidity
Financial highlights – 2013 $2.4B Unrestricted liquidity Maintain minimum $1.7B
Slide 30: Return on invested capital
Financial highlights – 2013 11% 7.9% Return on In 2012 invested capital Achieve 10-13% by 2015
Slide 31: Global industry
Global industry Exceeded 3 billion passengers Demand in international markets grew faster than 25% domestic traffic increase projected by 2017
Slide 32: Long-term, sustainable profitability
Air Canada goal Long-term, sustainable profitability for the benefit of: ! employees ! retirees ! lenders ! shareholders
Slide 33: Corporate Priorities
Corporate Priorities International Cost reduction Culture Customer powerhouse and transformation change engagement
Slide 34: International powerhouse
International powerhouse Ready for investment growth and opportunity 32% international capacity increase since 2009
Slide 35: International powerhouse | Capacity
International powerhouse | Capacity
Slide 36: International powerhouse | Capacity
International powerhouse | Capacity
Slide 37: Star Alliance and joint ventures
International powerhouse | Capacity Star Alliance and joint ventures
Slide 38: Capturing global traffic
International powerhouse | 6th Freedom Capturing global traffic
Slide 39: 6th Freedom revenue
International powerhouse | 6th Freedom revenue Revenue up almost 3% Potential of more than $400M in incremental annual revenue
Slide 40: Expedited security screening
International powerhouse Expedited security screening ! TSA Pre-check program ! Even footing with U.S. carriers
Slide 41: Investing in our future
International powerhouse | Growth Investing in our future Approx. Over $8B $850M
Slide 42: State-of-the-art mission control
International powerhouse | Growth State-of-the-art mission control
Slide 43: Capital commitments
International powerhouse | Growth Capital commitments Investing in product, people and service
Slide 44: Cost transformation
Cost transformation ! Cost transformation and margin expansion for improved profitability
Slide 45: Elimination of Canadian pension plan solvency deficit
Cost transformation | Pensions Elimination of Canadian pension plan solvency deficit 2012 2013 2014 ($4B) ($3.7B) surplus
Slide 46: Cost transformation | Pensions
Cost transformation | Pensions ! Reassures employees and retirees ! Encourages investment community
Slide 47: Investing in Air Canada
Cost transformation | Investing in Air Canada ! Increased ratings on Air Canada debt ! Greater interest from U.S. investors
Slide 48: Successful US$400 million private offering
Cost transformation | Investing in Air Canada ! Successful US$400 million private offering ! Lower borrowing costs
Slide 49: $1.4 billion refinancing
Cost transformation | Refinancing $1.4 billion refinancing ! Lowered debt costs ! Extended debt maturity ! Strengthened balance sheet ! Improved credit profile
Slide 50: Enhanced Equipment Trust Certificates (EETCs)
Cost transformation | Refinancing Enhanced Equipment Trust Certificates (EETCs) ! Among first non-U.S. airlines ! Raised US$715 million for Boeing 777 high-density aircraft
Slide 51: Air Canada rouge
Cost transformation | Cost initiatives Air Canada rouge A319 21% unit cost savings Boeing 767 29% unit cost savings
Slide 52: High-density Boeing 777
Cost transformation | Cost initiatives High-density Boeing 777 777-300 777-300 21% 349 seats 458 seats unit cost savings Premium Economy
Slide 53: Fleet rationalization
Cost transformation | Cost initiatives Fleet rationalization Moved 15 Embraer 175s to a lower-cost regional partner 11% Unit cost reduction
Slide 54: Permanent approach to business transformation
Cost transformation | Business transformation Permanent approach to business transformation ! Pursue cost-saving opportunities ! Review business processes ! Improve employee productivity
Slide 55: New passenger revenue management system
Cost transformation | Revenue generation New passenger revenue management system ! Managing network routes ! Optimizing passenger flows $100M+ across networks in incremental annual revenues
Slide 56: Q1-2014 Highlights
Cost transformation | Q1-2014 Highlights Q1-2014 Q1-2013 EBITDAR $147M $145M Operating loss ($62M) ($106M) Adjusted net loss ($132M) ($143M) Adjusted CASM decreased 2.5% to Q1-2013 Return on investment capital for 12 months ended March 31, 2014 was 10.7 per cent
Slide 57: Agility
Cost transformation Agility Responded to falling Canadian dollar by: ! Adjusting capacity ! Implementing cost-saving measures ! Shares responded positively
Slide 58: Culture change
Culture change Leadership, accountability, empowerment, entrepreneurship, rewarding performance
Slide 59: Communicating with our employees
Culture change | Communicating with our employees Instill common purpose, values and goals ! Effectively communicate ! Employee survey shows engagement is rising
Slide 60: Tools and training
Culture change | Tools and training November 2013 | No. 1035 ! Expanded training activities ! New customer-service training for Air Canada Air Canada named one of 787 Canada’s top employers mainline flight pilot attendants training ! Disney customer-service course for new Air Canada rouge flight att
Slide 61: Air Canada encourages suggestions and feedback from employees
Culture change Air Canada encourages suggestions and feedback from employees ! They are best-placed to identify improvements
Slide 62: Compensation aligned to performance
Culture change | Compensation aligned to performance ! Air Canada employees are among the best paid in the Canadian industry ! Only Canadian airline with a defined benefit pension plan ! Profit sharing program • Paid out $31 million in early 2014
Slide 63: Employee Share Ownership Plan revamped
Culture change | Compensation Employee Share Ownership Plan (ESOP) program revamped ! More flexibility ! Enriched company contribution ! More than 23 million shares (8%) owned by employees and unions at year-end
Slide 64: Top employers
Culture change Top 100 employers 75,000 potential candidates Most attractive employer: Randstad Canada Top 25 7,000 jobseekers and workers employers in Montreal Career page aircanada.com/careers 110,000 visits each month 100 people per job that is filled
Slide 65: Giving back to the community
Culture change | Giving back to the community The Foundation encourages employee participation ! Volunteer Involvement Program (VIP) for employees involved in local charities ! $200,000 donated to Canadian Red Cross (Typhoon Haiyan, Philippines) ! On-going support to Haiti
Slide 66: Foundation contributions to children's charities
Culture change | Giving back to the community In 2013 with Air Canada’s support, the Foundation contributed close to $4 million to charities focused mainly on the the health and well-being of children.
Slide 67: Hospital transportation program
Culture change | Giving back to the community HOSPITAL TRANSPORTATION PROGRAM
Slide 68: Support for arts and culture
Culture change | Giving back to the community HONOURING A MAN December 18, 2013 10:25 AM SOUTENIR LES ARTISTES D’ICI, OF CONVICTION. C’EST DANS NOTRE CULTURE. Air Canada is proud to pay tribute to James Eetoolook for his continuous dedication to AIR CANADA the people of his home community of Taloyoa
Slide 69: Customer engagement
Customer engagement
Slide 70: Customer engagement
Customer engagement aS @) ge AIR CANADA @ _i * AL ALTITUDE 56 °
Slide 71: Better on-time performance
Customer engagement | Improved travel experience Better on-time performance ! Double-digit improvements
Slide 72: Dreamliner superior travel experience
Customer engagement | Better customer experience Dreamliner to offer ! Superior travel experience
Slide 73: Boeing 737 MAX
Customer engagement | Better customer experience Boeing 737 MAX ! To replace existing narrow-body aircraft
Slide 74: Gathering feedback
Customer engagement | Gathering feedback ! Introduction of a customer-centric relationship management system
Slide 75: Awards
Customer engagement | Awards Survey of more than 18 million passengers
Slide 76: Canada's Favourite Airline for Business Travel
Customer engagement | Awards Canada’s Favourite Airline 81% Preferred by for Business Travel frequent business travellers
Slide 77: Awards
Customer engagement | Awards The Best Long Haul Airline (Americas) Best Airline in North America Best North American Airline International Travel Best North American Airline Inflight Experience Best North American Airline International Travel Best Flight Attendants in North America
Slide 78: Safety
Safety Canada’s Safest Employer Awards 2013 recognizes Air Canada for workplace health and safety record
Slide 79: Conclusion
Conclusion ! In 2013, we moved from managing key challenges to solving them ! Will continue to focus on innovation, adaptability, resilience and seize opportunities to achieve and sustain profitability
Slide 80: Ongoing commitment
Ongoing commitment
Slide 81: Thank you
Thank you