Air Canada · TSX:AC
Air Canada — Q3 2010 Earnings Presentation
23 slides from Air Canada's earnings presentation, Nov 4, 2010
Slide 1: Third Quarter Financial Results
2010 Third Quarter Financial Results November 4, 2010
Slide 2: Table of Contents
Table of Contents • Financial Highlights • Passenger Revenue • Operating Expense 2
Slide 3: Financial Highlights – Results of Operations
Financial Highlights – Results of Operations Q3 10 / Q3 09 (millions) Q3 2010 Q3 2009 Change Operating Revenue $ 3,026 $ 2,670 $ 356 Operating Income $ 327 $ 68 $ 259 EBITDAR $ 581 $ 320 $ 261 Net Income $ 261 $ 277 $ (16) Operating Margin 10.8% 2.5% 8.3 PP EBITDAR Margin 19.2% 12.0% 7.2 PP RASM (ce
Slide 4: Financial Highlights – Financial Position and Cash Flow
Financial Highlights – Financial Position and Cash Flow Q3 10 / Q3 09 (millions) Q3 2010 Q3 2009 Change Cash Flow from (used for) Operations (1) $ 137 $ (234) $ 371 Additions to Capital Assets $ (25) $ (34) $ 9 Free Cash Flow $ 112 $ (268) $ 380 Cash, Cash Equivalents & Short-term $ 2,173 $ 1,209 $
Slide 5: Non-Operating Expense
Non-Operating Expense Q3 10 / Q3 09 (millions) Q3 2010 Q3 2009 Change Net Interest Expense $ (82) $ (84) $ 2 Gain on Assets $ 2 $ 1 $ 1 Gain on Financial Instruments $ 5 $ 4 $ 1 Other $ - $ (4) $ 4 Total Non-Operating Expense $ (75) $ (83) $ 8 5
Slide 6: Q3 2010 Versus Q3 2009
Q3 2010 Versus Q3 2009 Passenger Capacity Traffic Passenger Revenue (ASMs) (RPMs) LF Yield RASM (%) (%) (%) (PP) (%) (%) Canada Ï 5.9 Ï 0.8 Ï 1.7 Ï 0.7 Ï 4.1 Ï 5.0 US Transborder Ï 10.4 Ï 13.3 Ï 12.8 Ð 0.3 Ð 2.3 Ð 2.7 Atlantic Ï 16.3 Ï 12.3 Ï 12.3 - Ï 3.5 Ï 3.4 Pacific Ï 37.7 Ï 10.9 Ï 17.1 Ï 4.8 Ï 1
Slide 7: System Capacity Increased 8.2% – Domestic Capacity Up 0.8%
System Capacity Increased 8.2% – Domestic Capacity Up 0.8% While US Transborder & International Each Up 12.0% (Y-O-Y Changes in Capacity) % Change in ASMs 15% 10% 5% 0% -5% -10% Canada U.S. Int'l Total Q3 2009/2008 Q4 2009/2008 Q1 2010/2009 Q2 2010/2009 Q3/2010/2009 7
Slide 8: System Traffic Increased 9.7% on Capacity Growth of 8.2%
System Traffic Increased 9.7% on Capacity Growth of 8.2% (Y-O-Y Changes in Traffic) % Change in RPMs 15% 10% 5% 0% -5% -10% Canada U.S. Int'l Total Q3 2009/2008 Q4 2009/2008 Q1 2010/2009 Q2 2010/2009 Q3 2010/2009 8
Slide 9: Despite Unfavourable Foreign Currency Impact, Yield Up 3.2%
Despite Unfavourable Foreign Currency Impact, Yield Up 3.2% (Y-O-Y Changes in Passenger Yield) % Change in Yield 10% 5% 0% -5% -10% -15% Canada U.S. Int'l Total Q3 2009/2008 Q4 2009/2008 Q1 2010/2009 Q2 2010/2009 Q3 2010/2009 9
Slide 10: System RASM Increased 4.7% due to 3.2% Yield Growth and 1.2 PP LF Improvement
System RASM Increased 4.7% due to 3.2% Yield Growth and 1.2 PP LF Improvement – Pacific Up Significantly at 24% YOY (Y-O-Y Changes in Revenue per ASM) % Change in RASM 15% 10% 5% 0% -5% -10% -15% Canada U.S. Int'l Total Q3 2009/2008 Q4 2009/2008 Q1 2010/2009 Q2 2010/2009 Q3 2010/2009 10
Slide 11: System Revenues Increased 13.4% due to 9.7% Traffic Growth and 3.2% Yield Improvement
System Revenues Increased 13.4% due to 9.7% Traffic Growth and 3.2% Yield Improvement (Y-O-Y Changes in Passenger Revenue) % Change in Revenue 30% 20% 10% 0% -10% -20% Canada U.S. Int'l Total Q3 2009/2008 Q4 2009/2008 Q1 2010/2009 Q2 2010/2009 Q3 2010/2009 11
Slide 12: Canada – RASM Increased 5.0% Mainly Due to 4.1% Yield Growth
Canada – RASM Increased 5.0% Mainly Due to 4.1% Yield Growth Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 3 3 2 2 1 1 0 0 -1 -1 -2 -2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010 2009 2010 % Change Yield % Change RASM 5 10 5 0 0 -5 -5 -10 -10 -15 -15 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010
Slide 13: US Transborder – RASM Decreased 2.7% Due Mostly to a 2.3% Drop in Yield
US Transborder – RASM Decreased 2.7% Due Mostly to a 2.3% Drop in Yield Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 15 4 10 2 5 0 0 -2 -5 -10 -4 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010 2009 2010 % Change Yield % Change RASM 5 5 0 0 -5 -5 -10 -10 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010
Slide 14: Atlantic – RASM Increased 3.4% Due to 3.5% Yield Growth
Atlantic – RASM Increased 3.4% Due to 3.5% Yield Growth Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 15 2 10 0 5 0 -2 -5 -4 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010 2009 2010 Yield RASM % Change % Change 10 15 5 10 5 0 0 -5 -5 -10 -10 -15 -15 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010 2009
Slide 15: Pacific – RASM Increased 24.1% Due to 17.5% Higher Yield and 4.8 PP LF Improvement
Pacific – RASM Increased 24.1% Due to 17.5% Higher Yield and 4.8 PP LF Improvement Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 30 8 20 6 4 10 2 0 0 -10 -2 -20 -4 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010 2009 2010 Yield RASM % Change % Change 20 30 10 20 10 0 0 -10 -10 -20 -20 Q3 Q4 Q1
Slide 16: Other – RASM Increased 6.7% Due to 3.7% Higher Yield & 2.3 PP LF Improvement
Australia, Caribbean, Mexico & S. A. ("Other") – RASM Incr. 6.7% Due to 3.7% Higher Yield & 2.3 PP LF Improvement Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 15 4 10 2 5 0 0 -5 -10 -2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010 2009 2010 Yield RASM % Change % Change 5 10 0 0 -5 -10 -10 -1
Slide 17: Total – RASM Incr. 4.7% Due to 3.2% Higher Yield and 1.2 PP LF Improvement
Total – RASM Incr. 4.7% Due to 3.2% Higher Yield and 1.2 PP LF Improvement Y-O-Y Change Capacity (ASM) Load Factor PP Change % Change 10 3 2 5 1 0 0 -1 -5 -2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010 2009 2010 % Change Yield % Change RASM CASM RASM 5 10 0 5 0 -5 -5 -10 -10 -15 -15 Q3 Q4 Q1 Q2 Q3 Q3 Q4
Slide 18: SW&B Expenses Up 8.0% Due to Increase in Pension Expense
SW&B Expenses Up 8.0% Due to Increase in Pension Expense – Employee Levels Increased by 1.3% (Y-O-Y Change – Average Salaries & Employees) % Change Y-O-Y 2% 0% -2% -4% -6% Q4'09 Q1'10 Q2'10 Q3'10 Average Salaries Employees 18
Slide 19: Fuel Cost Per Litre Down 2.5% – Fuel Productivity Down 1.9%
Fuel Cost Per Litre Down 2.5% – Fuel Productivity Down 1.9% – Economic Cost of Fuel Per Litre Up 7.0% (Fuel Productivity & Cost per Litre) % Change Y-O-Y 10% 0% -10% -20% -30% -40% Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Fuel Productivity (# of litres/100 ASMs) Fuel Cost (Cdn cents/litre) 19
Slide 20: Oper. Exp. Up $97M Largely on 8.2% ASM Growth, Higher Fuel Prices
Oper. Exp. Up $97M Largely on 8.2% ASM Growth, Higher Fuel Prices, Increased Pension Expense & Fav FX – Partly Offset by Lower Acft. Mtce. Exp. % Change Y-O-Y 50% 40% 30% 20% 10% 0% -10% -20% r Ba p e. es IT . PA s hi i ss Mtc uel Fe &B & & zC ner mm Ms Ms F er od m. er ft. O th A/C J az SW Ow RP AS
Slide 21: Unit Cost Down 4.1% – Down 5.3% Excluding Fuel
Unit Cost Down 4.1% – Down 5.3% Excluding Fuel – Fav FX, Capacity Growth & CTP Initiatives Largest Contributing Factors % Change Y-O-Y 5% 0% -5% -10% -15% Q4'09 Q1'10 Q2'10 Q3'10 Cost per ASM Cost per ASM excluding fuel 21
Slide 22: Further Information
Further Information For further information on Air Canada's public disclosure file, including Air Canada's Third Quarter 2010 MD&A dated November 4, 2010 and Air Canada's Annual Information Form, consult Air Canada's website at aircanada.com or SEDAR at www.sedar.com 22
Slide 23: Slide 23