Air Canada · TSX:AC
Air Canada — Shareholder Meeting (2012)
63 slides from Air Canada's shareholder meeting presentation, 2012
Slide 1: Annual and Special Meeting of Shareholders 2012
2012 Annual and Special Meeting of Shareholders
Slide 2: Slide 2
Slide 3: Air Canada global destinations
SHANGHAT . HONG KONG ‘SYDNEY® . CARACAS, BDGOTA® uma® SKOPAULO® SANTIAGO » BUENOS AIRES AIR CANADA @
Slide 4: aircanada.com @) i=] aircanada.com @)
aircanada.com @) i=] aircanada.com @)
Slide 5: Duncan Dee
• Duncan Dee – Executive Vice President & Chief Operating Officer
Slide 6: Benjamin Smith
• Benjamin Smith – Executive Vice President & Chief Commercial Officer
Slide 7: Kevin Howlett
• Kevin Howlett – Senior Vice President, Employee Relations
Slide 8: David Legge
• David Legge – Senior Vice President, Operations
Slide 9: Susan Welscheid
• Susan Welscheid – Senior Vice President, Customer Service
Slide 10: Zeina Gedeon
• Zeina Gedeon – President & CEO, Air Canada Vacations
Slide 11: Priscille Leblanc
• Priscille Leblanc – Vice President, Corporate Communications
Slide 12: Annual and Special Meeting of Shareholders
2012 Annual and Special Meeting of Shareholders
Slide 13: 2011 Global Industry Results
2011 Global Industry Results • Global airline profits $7.9 billion in 2011 – Down from $15.8 billion in 2010 – Represents 2.7% margin
Slide 14: 2011 Financial Results
2011 Financial Results • Air Canada not immune Engaging our Customers Cost Transformation • Maintained our focus on corporate priorities International Culture Powerhouse Change
Slide 15: 2011 Financial Results: Performance
2011 Financial Results PERFORMANCE • EBITDAR – $1.2 billion • Operating income – $179 million • Net loss – $249 million
Slide 16: 2011 Financial Results: Fuel
2011 Financial Results PERFORMANCE: FUEL • $723 million or 27% increase in fuel expense • $3.37 billion for last year
Slide 17: 2011 Results: Strong Revenue
2011 Results: Strong Revenue SUCCESSES • Record operating $10.8B $11.6B revenue $9.74B 2009 2010 2011
Slide 18: 2011 Results: Strong Revenue
2011 Results: Strong Revenue SUCCESSES • System-wide passenger revenue – up 8.3% • Traffic – up 4.5% • Yield – up 3.3%
Slide 19: 2011 Results: Strong Revenue
2011 Results: Strong Revenue SUCCESSES Growth • Transborder revenue: in every up 14.8% market – Sixth Freedom traffic between U.S. and international destinations doubled through Toronto- Pearson since 2009
Slide 20: 2011 Results: Strong Revenue
2011 Results: Strong Revenue SUCCESSES • Cargo revenue: up 3.3% – 5% improvement in yield
Slide 21: 2011 Results: Strong Revenue
2011 Results: Strong Revenue SUCCESSES • Ancillary revenue per passenger: up 18% – baggage fee adjustments – cancellation and change fees – seat selection and upgrade revenues
Slide 22: 2011 Results: Capacity Management
2011 Results: Strong Revenue CAPACITY MANAGEMENT • Disciplined approach to capacity management – Annual passenger load factor: 81.6%
Slide 23: Solid Cost Performance
Solid Cost Performance COST TRANSFORMATION PROGRAM (CTP) • Delivered $530M on CTP Program
Slide 24: Solid Cost Performance
Solid Cost Performance COST TRANSFORMATION PROGRAM (CTP) No wage • 120 initiatives: reductions or layoffs! – Crew pairing protocols – Revised RFP processes – New supplier contracts – Renegotiated agreement – Fuel efficiency program
Slide 25: Solid Cost Performance
Solid Cost Performance COST TRANSFORMATION PROGRAM (CTP) • Year-over-year reduction in unit costs of 2.9%* *Excluding fuel expense and the cost of ground packages at Air Canada Vacations
Slide 26: Debt Reduction
Debt Reduction COST TRANSFORMATION PROGRAM (CTP) • $1.2B reduction in debt since 2010 • Q1-2012 adjusted net debt reduced by $201 million
Slide 27: Liquidity – end of 2011
Liquidity – end of 2011 • $2.1 billion – 18% of 2011 operating revenues – Exceeds targets of 15% of 12-month trailing revenue
Slide 28: Pension
Pension • 26,000 employees supporting 29,000 retirees • Total obligations of $15.5 billion • Funded ratio of 72% • Plans returned 6.8% in 2011 • Solvency deficit $4.4 billion
Slide 29: Pension
Pension • Fixed solvency payments until end of 2013 • $175 million in deficit funding payments in 2012 • Collective agreements • Hybrid Defined Contribution plans for new hires
Slide 30: Customer Service
Customer Service INDUSTRY AWARDS – 2011 • SkyTrax – “Best International Airline in North America” second year
Slide 31: Customer Service
Customer Service INDUSTRY AWARDS – 2011 • Business Traveler magazine – “Best In-Flight Services in North America” second year – “Best North American Airline for International Travel” fourth year
Slide 32: Customer Service
Customer Service INDUSTRY AWARDS – 2011 • Global Traveler magazine – “Best Airline in North America” third year
Slide 33: Customer Service
Customer Service INDUSTRY AWARDS – 2011 • Ipsos Reid Business Traveller Survey – “Canada’s Favourite Airline for Business Travel”
Slide 34: Engaging our Customers
Engaging International Cost Culture our Customers Powerhouse Transformation Change
Slide 35: Four Priorities: Engaging Our Customers
Four Priorities 1. ENGAGING OUR CUSTOMERS • Maintained improved levels of customer satisfaction • Call Centres – added resources – quicker response times
Slide 36: Four Priorities: Engaging Our Customers
Four Priorities 1. ENGAGING OUR CUSTOMERS • Airports – Baggage handling: best on record, 42% improvement since 2008
Slide 37: Four Priorities: Engaging Our Customers
Four Priorities 1. ENGAGING OUR CUSTOMERS • On-board – meal services • nutritious alternatives – Entertainment system reliability
Slide 38: Four Priorities: Engaging Our Customers
Four Priorities 1. ENGAGING OUR CUSTOMERS • Operations Centre – New Customer Journey Management system
Slide 39: Four Priorities: Engaging Our Customers
Four Priorities 1. ENGAGING OUR CUSTOMERS • Ongoing improvements – Upgrade in-flight entertainment system – 2x more movies – 600 hours of entertainment
Slide 40: Four Priorities: Engaging Our Customers
Four Priorities 1. ENGAGING OUR CUSTOMERS • Streamlined baggage process – Toronto hub – Smooth transit for connecting customers and their baggage
Slide 41: Four Priorities: Engaging Our Customers
Four Priorities 1. ENGAGING OUR CUSTOMERS • Social Media – 200% more Facebook followers – 400% more Twitter activity – Air Canada community: gofar.aircanada.com
Slide 42: Four Priorities: Engaging Our Customers
Four Priorities 1. ENGAGING OUR CUSTOMERS • Premium Passengers – Close to 34% increase in premium cabin passenger revenue over 2009 – up 8.3% in 2011
Slide 43: Four Priorities: Engaging Our Customers
Four Priorities 1. ENGAGING OUR CUSTOMERS • Premium Passengers – New: • VIP program • eUpgrades • New or upgraded lounges
Slide 44: Four Priorities: International Powerhouse
Four Priorities 2. INTERNATIONAL POWERHOUSE Geographic advantage 54% share of passenger traffic
Slide 45: Four Priorities: International Powerhouse
Four Priorities 2. INTERNATIONAL POWERHOUSE 110% growth in connecting traffic since 2009
Slide 46: Four Priorities: International Powerhouse
Four Priorities 2. INTERNATIONAL POWERHOUSE • Increased international capacity by 6.6% – Improved aircraft utilization – Strategic deployment – New destinations and new routes
Slide 47: Four Priorities: International Powerhouse
Four Priorities 2. INTERNATIONAL POWERHOUSE
Slide 48: Four Priorities: Cost Transformation
Four Priorities 3. COST TRANSFORMATION requires change • Rise of Low Cost Carriers – Capturing market share from legacy airlines
Slide 49: Four Priorities: Cost Transformation
Four Priorities 3. COST TRANSFORMATION • LCC Business Models – Defend against mainline erosion – Exploit new market opportunities
Slide 50: Four Priorities: Culture Change
Four Priorities 4. CULTURE CHANGE • Entrepreneurship • Empowerment • Sharing best practices • Over-delivering on CTP • Industry honours • “Above and beyond”
Slide 51: Four Priorities: Culture Change
Four Priorities 4. CULTURE CHANGE
Slide 52: Four Priorities: Collective Agreements
Four Priorities 4. CULTURE CHANGE • Collective Agreements Employees Company Fair settlement Efficiency Well-rewarded Productivity Flexibility
Slide 53: Four Priorities: Collective Agreements
Four priorities 4. CULTURE CHANGE • Collective Agreements in place with 3/5 main labour groups
Slide 54: Aveos Closure
Aveos Closure
Slide 55: Corporate Social Responsibility
Corporate Social Responsibility • First Sustainability Report
Slide 56: Corporate Social Responsibility: Safety
Corporate Social Responsibility CITIZENS OF THE WORLD: 1-SAFETY
Slide 57: Corporate Social Responsibility: Employees
Corporate Social Responsibility CITIZENS OF THE WORLD: 2-EMPLOYEES
Slide 58: Corporate Social Responsibility: Environment
Corporate Social Responsibility CITIZENS OF THE WORLD: 3-ENVIRONMENT
Slide 59: Corporate Social Responsibility: Environment
Corporate Social Responsibility CITIZENS OF THE WORLD: 3-ENVIRONMENT • Saved more than 25 million litres of fuel • 30% more fuel efficient since 1990 • First biofuel flight
Slide 60: Corporate Social Responsibility: Communities
Corporate Social Responsibility CITIZENS OF THE WORLD: 4-COMMUNITIES
Slide 61: Corporate Social Responsibility: Communities
Corporate Social Responsibility CITIZENS OF THE WORLD: 4-COMMUNITIES
Slide 62: Conclusion
Conclusion • Resilient brand • Industry awards • High load factors • Strong EBITDAR • Liquidity growing • Net debt declining • Costs lowered
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