Air Canada · TSX:AC
Air Canada — Q4 2006 Earnings Presentation
20 slides from Air Canada's earnings presentation, Feb 9, 2007
Slide 1: Fourth Quarter 2006
Fourth Quarter 2006 February 9, 2007
Slide 2: Table of Contents
Table of Contents • Operating Statistics • Revenue Highlights • Expense Highlights
Slide 3: Q4 2006 Actual vs Prior Year
Q4 2006 Actual vs Prior Year Consolidated ASMs RPMs PLF Yield RASM Rev Canada Ï 4.1% Ï 6.5% Ï 1.7 PP --- 0.0% Ï 2.2% Ï 6.4% US Transborder Ï 11.4% Ï 14.6% Ï 2.0 PP Ð 3.5% Ð 0.7% Ï 10.4% Atlantic Ï 2.0% Ï 1.8% --- 0.0 PP Ï 2.3% Ï 2.2% Ï 4.2% Pacific Ï 0.2% Ï 0.4% Ï 0.1 PP Ï 0.7% Ï 0.9% Ï 1.1% Latin A
Slide 4: North American Growth is the Driver in 3.9% Overall Capacity Increase
North American Growth is the Driver in 3.9% Overall Capacity Increase (Y-O-Y Changes in Consolidated Capacity) % Change in ASMs 25% 20% 15% 10% 5% 0% -5% Canada U.S. Oth. Int'l Total Q4 2005/2004 Q1 2006/2005 Q2 2006/2005 Q3 2006/2005 Q4 2006/2005
Slide 5: Strong Traffic Outpaces Capacity Growth in All Sectors
Strong Traffic Outpaces Capacity Growth in All Sectors (Y-O-Y Changes in Consolidated Traffic) % Change in RPMs 20% 15% 10% 5% 0% -5% Canada U.S. Oth. Int'l Total Q4 2005/2004 Q1 2006/2005 Q2 2006/2005 Q3 2006/2005 Q4 2006/2005
Slide 6: Flat Domestic Yield Slows Overall Yield Growth
Flat Domestic Yield Slows Overall Yield Growth (Y-O-Y Changes in Consolidated Passenger Yield) % Change in Yield 15% 10% 5% 0% -5% Canada U.S. Oth. Int'l Total Q4 2005/2004 Q1 2006/2005 Q2 2006/2005 Q3 2006/2005 Q4 2006/2005
Slide 7: System RASM Growth Strengthens on Higher LF
System RASM Growth Strengthens on Higher LF (Y-O-Y Changes in Consolidated Revenue per ASM) % Change in RASM 20% 15% 10% 5% 0% -5% -10% Canada U.S. Oth. Int'l Total Q4 2005/2004 Q1 2006/2005 Q2 2006/2005 Q3 2006/2005 Q4 2006/2005
Slide 8: System Revenue Growth Accelerates on Higher Int'l Revenues
System Revenue Growth Accelerates on Higher Int'l Revenues (Y-O-Y Changes in Consolidated Passenger Revenue) % Change in Revenue 30% 25% 20% 15% 10% 5% 0% Canada U.S. Oth. Int'l Total Q4 2005/2004 Q1 2006/2005 Q2 2006/2005 Q3 2006/2005 Q4 2006/2005
Slide 9: Canada – Q4 RASM Up 2.2% All on 1.7 PP LF Increase
Canada* – Q4 RASM Up 2.2% All on 1.7 PP LF Increase Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 10 2 0 5 -2 0 -4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2005 2006 2005 2006 % Change Yield P-RASM % Change 15 15 10 10 5 5 0 0 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2005 2006 2005 2006 *Consolidated
Slide 10: US Transborder – RASM Declines Marginally as Strong Load Factor Almost Offsets Soft Yield
US Transborder* – RASM Declines Marginally as Strong Load Factor Almost Offsets Soft Yield Y-O-Y Change 25 Capacity (ASM) Load Factor % Change PP Change 20 10 15 5 10 5 0 0 -5 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2005 2006 2005 2006 % Change Yield % Change P-RASM 15 20 10 15 10 5 5 0 0 -5 -5 -10 -10 Q4 Q1
Slide 11: Atlantic – Strong Yield Continues to Lift RASM
Atlantic – Strong Yield Continues to Lift RASM Y-O-Y Change Capacity (ASM) % Change PP Change Load Factor 15 4 10 2 5 0 0 -5 -10 -2 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2005 2006 2005 2006 Yield P-RASM % Change % Change 4 6 4 2 2 0 0 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2005 2006 2005 2006
Slide 12: Pacific – RASM Regains Growth on Improved Yield
Pacific – RASM Regains Growth on Improved Yield Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 4 10 3 5 2 0 1 -5 0 -10 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2005 2006 2005 2006 % Change Yield % Change P-RASM 6 10 4 5 2 0 0 -2 -4 -5 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2005 2006 2005 2006
Slide 13: Caribbean, Latin America & Australia – RASM Growth Accelerates on Stronger Load Factor
Caribbean, Latin America & Australia – RASM Growth Accelerates on Stronger Load Factor Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 10 6 4 5 2 0 0 -5 -2 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2005 2006 2005 2006 Yield P-RASM % Change % Change 15 15 10 10 5 5 0 0 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 20
Slide 14: Total – System RASM Picks Up Speed as Strong Overall Demand Pushes Up Load Factor
Total* – System RASM Picks Up Speed as Strong Overall Demand Pushes Up Load Factor Y-O-Y Change % Change Capacity (ASM) PP Change Load Factor 10 4 2 5 0 0 -2 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2005 2006 2005 2006 Yield P-RASM % Change % Change CASM RASM 10 15 10 5 5 0 0 -5 Q4 Q1 Q2 Q3 Q4 Q1** Q2 Q3 Q4 20
Slide 15: Average Salary Up 4.4%, Employee Levels Down 3.2%
Average Salary Up 4.4%, Employee Levels Down 769 or 3.2%. Air Canada Services (Y-O-Y Change – Average Salaries & Employees) % Change Y-O-Y 6% 4% 2% 0% -2% -4% Q1'06 Q2'06 Q3'06 Q4'06 Average Salaries Employees
Slide 16: Cost/Litre Down 2.5% While Fuel Productivity is Unchanged
Cost/Litre Down 2.5% While Fuel Productivity is Unchanged (Fuel Productivity & Unit Cost) % Change Y-O-Y 30% 20% 10% 0% -10% Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Fuel Productivity (ASMs/Lt) Fuel Cost (Cdn cts/Lt)
Slide 17: Other Than Mtce., User Charges, Depreciation and Capacity Purchase, Most Cost Categories are Down
Other Than Mtce., User Charges, Depreciation and Capacity Purchase, Most Cost Categories are Down Air Canada Services % Change Y-O-Y 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% h. r es Ba . urc IT i ss t uel &B en Fe .c m& p. P / mm pre Ms Ms R F er e. od er SW O th A/C A/C Mtc RP AS Fo Co De Co Ca
Slide 18: Unit Cost Down 1.4% Due Lower Fuel, Improvements in SW&B, Food & Bar and Other Costs
Unit Cost Down 1.4% Due Lower Fuel, Improvements in SW&B, Food & Bar and "Other" Costs Air Canada Services (Cost Per ASM) % Change Y-O-Y 10% 5% 0% -5% Q1'06 Q2'06 Q3'06 Q4'06
Slide 19: Caution Concerning Forward-looking Information
Caution Concerning Forward-looking Information: Certain statements made in this presentation may be of a forward-looking nature and subject to important risks and uncertainties. Any forecasts or forward looking information cannot be relied upon due to, amongst other things, the changing external eve
Slide 20: Air Canada
AIR CANADA @&)