Air Canada · TSX:AC
Air Canada — Q4 2007 Earnings Presentation
22 slides from Air Canada's earnings presentation, Feb 7, 2008
Slide 1: Fourth Quarter 2007
Fourth Quarter 2007 February 7, 2008
Slide 2: Table of Contents
Table of Contents • Operating Statistics • Revenue Highlights • Expense Highlights
Slide 3: Record Air Canada Operating Income of $72 mln
Record Air Canada Operating Income of $72 mln Change (millions) Q4 2007 Q4 2006 Fav./(Unfav.) Oper.Revenue $ 2,513 $ 2,423 $ 90 Oper. Expense 2,441 2,428 (13) Oper. Income $ 72 $ (5) $ 77 Oper. Income (excl. special charge*) $ 72 $ (13) $ 85 EBITDAR $ 274 $ 213 $ 61 EBITDAR (excl. special charge*) $
Slide 4: Q4 Net Interest Expense Increases $5 mln
Q4 Net Interest Expense Increases $5 mln Change (millions) Q4 2007 Fav./(Unfav.) Net Interest Expense $ (47) $ (5) Loss on Disposal in ‘06 - 10 Other Non-Operating Expense (5) (5) Total Non-Operating Expense $ (52) $ -
Slide 5: Q4 2007 Actual vs Prior Year
Q4 2007 Actual vs Prior Year ASMs RPMs PLF Yield RASM Rev Canada Ï 3.0% Ï 2.5% Ð 0.4 PP Ï 5.3% Ï 4.8% Ï 8.0% US Transborder Ï 0.1% Ï 1.0% Ï 0.7 PP Ï 4.3% Ï 5.3% Ï 5.4% Atlantic Ï 4.4% Ï 4.1% Ð 0.2 PP Ð 3.7% Ð 4.0% Ï 0.3% Pacific Ï 0.3% Ð 2.0% Ð 1.9 PP Ð 2.3% Ð 4.5% Ð 4.2% Latin Amer. & Other Ï 6.2%
Slide 6: Capacity Growth Slows Particularly Domestic in 4th Qtr
Capacity Growth Slows Particularly Domestic in 4th Qtr (Y-O-Y Changes in Capacity) % Change in ASMs 15% 10% 5% 0% -5% Canada U.S. Oth. Int'l Total Q4 2006/2005 Q1 2007/2006 Q2 2007/2006 Q3 2007/2006 Q4 2007/2006
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 15% 10% 5% 0% -5% Canada U.S. Oth. Int'l Total Q4 2006/2005 Q1 2007/2006 Q2 2007/2006 Q3 2007/2006 Q4 2007/2006
Slide 8: Very Strong North American Yields
Very Strong North American Yields (Y-O-Y Changes in Passenger Yield) % Change in Yield 6% 4% 2% 0% -2% -4% -6% Canada U.S. Oth. Int'l Total Q4 2006/2005 Q1 2007/2006 Q2 2007/2006 Q3 2007/2006 Q4 2007/2006
Slide 9: RASM Also Shows Strong N.A. performance – Weak International
RASM Also Shows Strong N.A. performance – Weak International (Y-O-Y Changes in Revenue per ASM) % Change in RASM 8% 6% 4% 2% 0% -2% -4% -6% Canada U.S. Oth. Int'l Total Q4 2006/2005 Q1 2007/2006 Q2 2007/2006 Q3 2007/2006 Q4 2007/2006
Slide 10: Close to ¾ of System Psgr. Revenue Growth Generated by Domestic Services
Close to ¾ of System Psgr. Revenue Growth Generated by Domestic Services (Y-O-Y Changes in Passenger Revenue) % Change in Revenue 15% 10% 5% 0% -5% Canada U.S. Oth. Int'l Total Q4 2006/2005 Q1 2007/2006 Q2 2007/2006 Q3 2007/2006 Q4 2007/2006
Slide 11: Canada – Q4 RASM Increases 4.8% all on Higher Yield
Canada – Q4 RASM Increases 4.8% all on Higher Yield Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 8 4 6 2 4 0 2 0 -2 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007 2006 2007 % Change Yield % Change RASM 6 8 4 6 2 4 0 2 -2 0 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007 2006 2007
Slide 12: US Transborder – RASM Improves 5.3% Also on Strong Yield
US Transborder – RASM Improves 5.3% Also on Strong Yield Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 15 2 10 0 5 -2 0 -5 -4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007 2006 2007 Yield RASM % Change % Change 8 8 6 6 4 4 2 2 0 0 -2 -2 -4 -4 -6 -6 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007 2006
Slide 13: Atlantic – Difficult Competitive Environment Pushes Fares Down
Atlantic – Difficult Competitive Environment Pushes Fares Down Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 6 2 4 0 2 -2 0 -2 -4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007 2006 2007 Yield RASM % Change % Change 4 6 2 4 0 2 0 -2 -2 -4 -4 -6 -6 -8 -8 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007
Slide 14: Pacific – 4.5% RASM Decline on Weaker Yield and LF
Pacific – 4.5% RASM Decline on Weaker Yield and LF Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 4 2 2 1 0 0 -1 -2 -2 -4 -3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007 2006 2007 Yield RASM % Change % Change 8 10 6 5 4 2 0 0 -5 -2 -4 -10 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007 2006 2007
Slide 15: Caribbean, Latin America & Australia – RASM Increases 1.6% on Very Strong Traffic
Caribbean, Latin America & Australia – RASM Increases 1.6% on Very Strong Traffic Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 8 4 6 2 4 0 2 -2 0 -4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007 2006 2007 Yield RASM % Change % Change 2 6 4 0 2 -2 0 -4 -2 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 20
Slide 16: Total – System RASM Lifts 2.1% All on Higher Yield – CASM Declines 2.0%
Total – System RASM Lifts 2.1% All on Higher Yield – CASM Declines 2.0% Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 4 2 3 1 2 0 1 0 -1 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2006 2007 2006 2007 % Change Yield RASM CASM RASM % Change 4 4 2 3 0 2 -2 1 -4 0 -6 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2007
Slide 17: Average Salary Declines 0.2%; Employee Levels Up 583 or 2.5%
Average Salary Declines 0.2%; Employee Levels Up 583 or 2.5%. (Y-O-Y Change – Average Salaries & Employees) % Change Y-O-Y 6% 4% 2% 0% -2% -4% Q1'07 Q2'07 Q3'07 Q4'07 Average Salaries Employees
Slide 18: Cost/Litre Up 5.3% While Fuel Productivity Improves 2.7%
Cost/Litre Up 5.3% While Fuel Productivity Improves 2.7% Reflecting the New 777's and the Removal of Two Freighters (Fuel Productivity & Unit Cost) % Change Y-O-Y 6% 4% 2% 0% -2% -4% -6% -8% -10% Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Fuel Productivity (ASMs/Lt) Fuel Cost (Cdn cts/Lt)
Slide 19: "Other" Cat. Incr. 2.7% as Higher ACV Gr. Pkg. Costs, Cr. Card Fees & Taxes
"Other" Cat. Incr. 2.7% as Higher ACV Gr. Pkg. Costs, Cr. Card Fees & Taxes are Partially Offset by Lower Utilities, Uniform Charges, Terminal Handling & Misc. Fees % Change Y-O-Y 10% 5% 0% -5% -10% -15% -20% -25% -30% 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
Slide 20: Unit Cost Down 2.0% Due to the Positive Impact and Large Reductions
Unit Cost Down 2.0% Due to the Positive 777 Impact and Large Reductions in Ownership, Mtce. and Commissions (Cost Per ASM) % Change Y-O-Y 2% 0% -2% -4% -6% Q1'07 Q2'07 Q3'07 Q4'07
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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