Air Canada · TSX:AC
Air Canada — Shareholder Meeting (2013)
42 slides from Air Canada's shareholder meeting presentation, 2013
Slide 1: 2013 Annual Meeting of Shareholders
2013 Annual Meeting of Shareholders 1
Slide 2: 2012 Global Airline Industry
2012 GLOBAL AIRLINE INDUSTRY $1.2B decrease from 2011 1.2% paper-thin net profit $7.6B margin $4 average airlines 2012 earning per passenger Industry profit Profit margins 2013: 1.8% “jump”
Slide 3: Business remains tough, competitive, vulnerable
2012 GLOBAL AIRLINE INDUSTRY Business To succeed: Control costs remains ! Compete aggressively tough, ! ! Develop and execute competitive, strategic vision vulnerable ! Remain nimble
Slide 4: Air Canada 2012 Results
AIR CANADA 2012 Results $12.1B Operating revenue up 4% 5.2% Passenger revenue $131M growth 2012 3.2% RASM growth Full year 82.7% Record load factor net profit EBITDAR more than $1.3B
Slide 5: Air Canada 2012 Results: Liquidity
AIR CANADA 2012 Results LIQUIDITY More than $2B Paid down $295M in debt In cash and Twice the liquidity of short-term deposits four years ago
Slide 6: Air Canada 2012 Results
AIR CANADA 2012 Results Profit 76% Revenue 2012 Customer demand Share price up Balance sheet
Slide 7: Air Canada – An Industry Leader
AIR CANADA – AN INDUSTRY LEADER
Slide 8: 4th year in a row!
AIR CANADA – AN INDUSTRY LEADER 2013 4th year in a row!
Slide 9: Our Priorities
OUR PRIORITIES COST INTERNATIONAL CUSTOMER CULTURE REDUCTION GROWTH ENGAGEMENT CHANGE AND TRANSFORMATION
Slide 10: Cost Transformation: Achieved annual cost savings
OUR PRIORITIES: COST TRANSFORMATION Excess of Efficiencies: $530M ! Lower fuel consumption ! Better turnaround times Achieved annual cost ! Reduction of credit card savings fees ! Rigorous RFP process CTP part of ! Enhance product and Air Canada DNA and transitions service innovations to Business Tr
Slide 11: Flexibility
OUR PRIORITIES: COST TRANSFORMATION Reduced CASM through changes Flexibility including: ! Collective agreement changes ! New work rules ! Launch of Air Canada rouge ! Expanded use of 75-seat aircraft at regional carriers ! High-density Boeing 777s and Boeing 787s
Slide 12: Regional markets
OUR PRIORITIES: COST TRANSFORMATION Regional ! Transfer 75-seat Embraer jets to Sky Regional markets ! Deployment of cost-effective Q400s in Western Canada
Slide 13: Pensions
OUR PRIORITIES: COST TRANSFORMATION Pensions ! Introduced Defined Contribution and Hybrid DC/DB plans ! Benefit changes would result in approximately $1.1B reduction in solvency liabilities based on January 1, 2012 actuarial valuations (subject to OSFI approval) ! Reduced solvency deficit due to str
Slide 14: New MRO agreements
OUR PRIORITIES: COST TRANSFORMATION New MRO ! Aveos not competitive Expect substantial agreements ! improvements in turnaround times and costs ! Expect maintenance costs will decline by 7% from 2011 levels
Slide 15: Fleet flexibility
OUR PRIORITIES: COST TRANSFORMATION Fleet ! Introducing five B777s in July flexibility ! Feature Premium Economy ! Will operate with 21% unit cost advantage ! Ideal for leisure markets
Slide 16: Fleet flexibility
OUR PRIORITIES: COST TRANSFORMATION Fleet ! Boeing 787s first quarter 2014 flexibility ! Expect 29% CASM reduction • Improved fuel efficiency • Lower maintenance costs • Increased seats
Slide 17: Government
OUR PRIORITIES: COST TRANSFORMATION Government ! Reduce rates, charges and assessments for entire industry ! Ensure a level playing field ! Better access to Billy Bishop
Slide 18: Revenue initiatives
OUR PRIORITIES: COST TRANSFORMATION Revenue ! Growing ancillary revenues Improving net Aeroplan initiatives ! revenues ! Loyalty program for small Record businesses operating revenue ! Introduction of new Increase of Revenue Management $500M System
Slide 19: International growth
OUR PRIORITIES: INTERNATIONAL POWERHOUSE International ! System ASM capacity to increase 9 to 11% in 2014 growth Assumes 2-3% GDP growth for 2014. As reported June 10, 2013.
Slide 20: New routes
OUR PRIORITIES: INTERNATIONAL POWERHOUSE New routes ! Istanbul ! New Toronto-Seoul service ! Calgary-Tokyo daily service ! Air Canada rouge adds Edinburgh and Venice, Dublin year-round beginning in 2014 Seoul
Slide 21: International growth
OUR PRIORITIES: INTERNATIONAL POWERHOUSE International growth ! Adding 7 flights a week to Beijing ! 11 daily departures to Asia, 43,000+ seats/week crossing the Pacific ! Capital investment of about $1.5B
Slide 22: Toronto Hub
OUR PRIORITIES: INTERNATIONAL POWERHOUSE Toronto Hub ! Shortest elapsed travel time compared to New York or Chicago ! New baggage process facilitates U.S. customs ! 21% increase year over year in international connecting traffic ! Increase market share to 1.5%
Slide 23: Offering customers more
OUR PRIORITIES: INTERNATIONAL POWERHOUSE ! Continued development of commercial alliances ! A++ New Code share Offering agreements customers over 1,300 airports
Slide 24: Air Canada rouge
OUR PRIORITIES: INTERNATIONAL POWERHOUSE Air Canada ! Boeing 767s transfer to Air Canada rouge rouge ! Operate in July to Europe and Caribbean ! 23 routes from four Canadian cities by end of 2013 ! Expand to 50 aircraft by end of 2015
Slide 25: Air Canada rouge
OUR PRIORITIES: INTERNATIONAL POWERHOUSE Air Canada ! Lower cost structure • Flexible work rules rouge • Higher-density configuration • Lower overhead costs ! Integrated with ACV to create more compelling leisure group
Slide 26: Substantial investment in product since 2006
OUR PRIORITIES: ENGAGING OUR CUSTOMERS Substantial ! Doubled movie content on investment in free on-board product since entertainment system ! Refurbished Maple 2006 puts us Leaf Lounges ahead of ! Revamped loyalty competition program as Altitude ! Won numerous industry awards
Slide 27: On Time Performance
OUR PRIORITIES: ENGAGING OUR CUSTOMERS On Time ! Centre of Excellence Team Performance ! 30% improvement in the first quarter 2013 ! Achieving savings on delay costs
Slide 28: Culture Change
OUR PRIORITIES: CULTURE CHANGE
Slide 29: Renewed focus on constructive and transparent dialogue
OUR PRIORITIES: CULTURE CHANGE Renewed focus on ! Talent management and training constructive and transparent ! Employees better understand competitive dialogue landscape
Slide 30: Corporate Sustainability Reporting (CSR)
CORPORATE SUSTAINABILITY REPORTING (CSR)
Slide 31: Four key areas
CSR Four key areas Safety Environment Employees Community
Slide 32: Safety
OUR PRIORITIES: ENGAGING OUR CUSTOMERS Safety ! Successfully concluded 5th IATA Operational Safety Audit ! Top 2% in industry
Slide 33: CSR – Safety
CSR – SAFETY Implementation of Safety Information Management System (SIMS)
Slide 34: CSR – Environment
CSR – ENVIRONMENT 33% CO2 emissions reduced by 318,000 tonnes between improvement 2006-2011 since 1990
Slide 35: First biofuel flight
CSR – ENVIRONMENT First biofuel ! “Perfect Flight” flight ! 42% reduction in emissions
Slide 36: CSR – Employees
CSR – EMPLOYEES New ! HR Connex communication ! Town halls tools ! Open and frank discussion
Slide 37: CSR – Community: Air Canada Foundation
CSR – COMMUNITY Air Canada ! Assists individuals, groups and causes Foundation
Slide 38: Air Canada Foundation
CSR – COMMUNITY Air Canada ! Raised $540,000 Foundation ! Donated 13M Aeroplan Miles to pediatric hospitals ! Support valued at close to $4M
Slide 39: Conclusion: Upside
CONCLUSION Upside ! Liquidity levels ! International growth potential ! Improved borrowing capability and credit rating ! New fleet ! Industry-leading products ! Global franchise
Slide 40: Conclusion
CONCLUSION ! Target to increase Return on Invested Capital to 10-13% in 2015 ! Goal to lower unit cost by 15% over medium term
Slide 41: Going Forward
GOING FORWARD Sustainable, ! Attain targeted return on invested capital profitable airline ! Reward shareholders into the future
Slide 42: Thank You
GS THANK YOU he)