Air Canada · TSX:AC
Air Canada — Global High Yield & Leveraged Finance Conference 2013
32 slides from Air Canada's conference presentation, Feb 25, 2013
Slide 1: Charting a Better Future
Charting a Better Future Global High Yield & Leveraged Finance Conference Miami Beach - February 25, 2013
Slide 2: Caution Regarding Forward-looking Information
Caution Regarding Forward-looking Information 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 regulator
Slide 3: Agenda
Agenda 4 About Air Canada 4 Leveraging Competitive Advantages 4 Building a Stronger Air Canada 4 Strong Financial Performance 4 Committed to Improving Profitability 3
Slide 4: About Air Canada
About Air Canada
Slide 5: Leading Share in All Markets
Leading Share in All Markets Domestic Transborder International accounts for accounts for accounts for 39% of 20% of 41% of passenger passenger passenger revenue revenue revenue LCC WJA 4% DAL Other Airlines 19% 6% WJA Other 35% 10% Airlines AMR 25% UAL Air Canada 10% 17% 37% Other Airlines Air Cana
Slide 6: Fleet Flexibility to Adjust to Market Demand
Fleet Flexibility to Adjust to Market Demand Planned Fleet Dec 2012 Dec 2013 Dec 2014 Dec 2015 Mainline Boeing 787 - 7 12 Boeing 777-300 12 16 17 17 Boeing 777-200 6 6 6 6 Boeing 767-300 30 27 22 17 Airbus A330-300 8 8 8 8 Airbus A321 10 10 10 10 Airbus A320 41 41 41 41 Airbus A319 38 30 13 9 EMBRAE
Slide 7: Air Canada Express – Important Part of N.A. Strategy
Air Canada Express – Important Part of N.A. Strategy provides feeder traffic to Air Canada's scheduled routes CRJ aircraft (49) Dash 8 aircraft (80) Beech aircraft (17) 50 seats – 75 seats (Includes 20 Q-400s) 18 seats 37 seats – 74 seats 4 Jazz fleet at 124 aircraft – Eight 50-seat CRJ 100s will be
Slide 8: Industry-Leading Products & Services
Industry-Leading Products & Services 4 Loyalty program 4 Star Alliance membership 4 Maple Leaf Lounges 4 Concierge program 4 Lie-flat beds in Executive First 4 Personal seat back entertainment at every seat 4 Mobile-friendly booking and check-in 4 Announced three classes of service (Economy, Premium
Slide 9: Other Award Winning Services Contribute to Profitability
Other Award Winning Services Contribute to Profitability Canada's largest provider One of Canada's leading of air cargo services tour operators Won 2012 "Carrier of the Won 2012 "Favourite Tour Year" award – in western, Operator" award at Baxter Eastern & central Canada – Travel Media's Agents' 9 Fo
Slide 10: 2012 Awards & Recognition
Business Traveler magazine – 4 Best North American Airline for 2012 Awards & Recognition 5th consecutive year International Travel 4 Best North American Airline Inflight Experience Executive Travel Magazine – 2012 4 Best Flight Experience to Canada Leading Edge Awards – 5th consecutive year Global T
Slide 11: Leveraging Competitive Advantages
Leveraging Competitive Advantages
Slide 12: Investing in New Aircraft, Products & Services
Investing in New Aircraft, Products & Services 4 Five new Boeing 777s are expected to be strategically deployed on select international markets 4 Boeing 787 Dreamliner aircraft, with expected delivery starting in 2014, will provide international expansion opportunities 4 New Boeing 777s and 787s wil
Slide 13: Targeting Enhanced Profitability Through Low-cost Leisure Airline
Targeting Enhanced Profitability Through Low-cost Leisure Airline Airbus A319 Boeing 767-300ER 4 Air Canada rouge™ will begin service with two Boeing 767 aircraft and two Airbus A319 aircraft (to be transferred from Air Canada's mainline fleet in 2013) with a transfer of an additional six Airbus A31
Slide 14: Building on a Powerful Global Network
Building on a Powerful Global Network Air Canada Routes – Winter 2012-13 178 Direct Destinations: 4 59 in Canada 4 55 in the U.S. 4 64 internationally 4 15th Largest Airline in the World 4 351 aircraft 4 >1,500 daily flights 4 ~35M passengers carried 14
Slide 15: Enhancing Market Presence Through Star Alliance & Joint Venture
Enhancing Market Presence Through Star Alliance™ & Joint Venture Star Alliance – 6th time winner Best Airline Alliance in the 2012 Skytrax World Airline Awards™ 4 27 Members 4 4,570 Aircraft 4 194 Countries Served 4 21,900 Daily Departures 4 1,329 Airports 4 >1000 Lounges 15 15 4 >670M Passengers/ye
Slide 16: Building a Stronger Air Canada
Building a Stronger Air Canada
Slide 17: Improving Profitability by Focusing on Four Key Priorities
Improving Profitability by Focusing on Four Key Priorities 4 Pursuing revenue enhancements and transforming costs to enhance competitiveness 4 Expanding internationally and increasing connecting traffic through international gateways 4 Engaging with customers, with a particular emphasis on premium c
Slide 18: Cost Transformation and Revenue Enhancement
Cost Transformation and Revenue Enhancement 4 Concluded collective agreements with all major Canadian unions which included modifications to the defined benefit pension plans (remain subject to regulatory approval) 4 Concluded and finalizing new agreements with aircraft maintenance service providers
Slide 19: Pension Update
Pension Update 4 Estimated pension solvency deficit of $4.2B at January 1, 2012 4 In light of Air Canada 2009 pension regulations, valuations do not increase required past service cost funding obligations until 2014 – fixed payment of $225 million in 2013 4 Entered into discussions with the federal
Slide 20: Leveraging Opportunities for Revenue Growth
Leveraging Opportunities for Revenue Growth 4 Growing ancillary revenues through various passenger- related fees including: – Paid upgrades – Baggage fees – Seat selection fees 4 Improved net Aeroplan revenue – Reduced Aeroplan frequent flyer accumulation fees to 50% on Tango service for internation
Slide 21: Expanding Internationally and Increasing Traffic Through World Class Hubs
Expanding Internationally and Increasing Traffic Through World Class Hubs Vancouver Calgary Toronto Montreal 4 Increasing global connecting traffic via Canada – continued strength of sixth freedom traffic through Toronto Pearson in 2012 – up over 20% from 2011 4 Announced plans for a major internati
Slide 22: Focusing on Premium Passengers & Products
Focusing on Premium Passengers & Products P-RASM Premium P-RASM 30 20 Y-O-Y % Change 10 4.2% 0 1.8% -10 -20 -30 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009/2008 2010/2009 2011/2010 2012/2011 22
Slide 23: Enhancing Culture to Increase Competitiveness
Enhancing Culture to Increase Competitiveness 4 Promoting – Entrepreneurship – Engagement – Empowerment – Earnings for performance 4 Emphasis on cost containment is forging a more entrepreneurial culture 4 Implementing a talent management plan to focus on defining and developing key behaviours for e
Slide 24: Strong Financial Performance
Strong Financial Performance
Slide 25: Improved Fourth Quarter & Full Year 2012 Results
Improved Fourth Quarter & Full Year 2012 Results Fourth Quarter Full Year 2012 2012 4 Adjusted EBITDAR(1) of $284M – 4 Adjusted EBITDAR(1) of $1,327M – up $122M up $85M 4 Adjusted EBITDAR(1) Margin of 4 Adjusted EBITDAR(1) Margin of 10.0% - up 4.0 pp 10.9% - up 0.2 pp 4 Passenger load factor of 81.2
Slide 26: Maintaining Strong Liquidity Position
Maintaining Strong Liquidity Position C$ billions 2.4 $2.2 $2.1 2.2 $2.0 2.0 1.8 1.6 $1.4 $1.2 1.4 1.2 $1.0 1.0 0.8 0.6 0.4 0.2 0.0 2007 2008 2009 2010 2011 2012 % of trailing 12-month 12% 9% 14% 20% 18% 17% operating revenues Note: Liquidity is comprised of unrestricted cash, cash equivalents and s
Slide 27: Improving Strength of Balance Sheet
Improving Strength of Balance Sheet Adjusted net debt down $1.5 billion $6,000 from 2009 $5,768 $5,500 Millions $5,000 $4,874 $4,500 $4,576 $4,281 $4,000 Dec 31 Dec 31 Dec 31 Dec 31 2009 2010 2011 2012 27
Slide 28: 2013 Outlook
2013 Outlook* Outlook 4 Available seat miles (system)………………… Increase 1.5 to 3.0% 4 Available seat miles (Canada)……………….. Increase 0 to 1.5% 4 Adjusted CASM**……………………………………. Decrease 0 to 1.0% Major Assumptions 4 Canadian dollar per U.S. dollar………………. $1.00 4 Fuel price – cents per litre……………………… 89
Slide 29: Committed to Improving Profitability
Committed to Improving Profitability
Slide 30: Committed to Improving Profitability
Committed to Improving Profitability 4 Leverage and expand international network by capitalizing on competitive advantages – widely-recognized brand – extensive global network – loyalty program (Aeroplan) – competitive products and services – geographically well-positioned hubs – introduction of new
Slide 31: Committed to Improving Profitability
Committed to Improving Profitability 4 Increase sixth freedom traffic from the U.S. to connect through the airline’s hub airports in Canada to onward international flights 4 Promote premium class cabin and broaden the airline’s access to corporate customers by focusing on small and medium size enter
Slide 32: Go Far… Go Often…
Go Far… Go Often…
Air Canada — Global High Yield & Leveraged Finance Conference 2013 on 6ix