ACE Aviation Holdings Inc

ACE Aviation — Q1 2005 Earnings Presentation

26 slides from ACE Aviation's earnings presentation, May 13, 2005

  1. Slide 1: First Quarter 2005

    First Quarter 2005 Preliminary & Unaudited May 13, 2005

  2. Slide 2: Table of Contents

    Table of Contents • Highlights • Operating Statistics • Revenue Highlights • Expense Highlights • Balance Sheet

  3. Slide 3: ACE Operating Results Improve By $135 Million

    ACE Operating Results Improve By $135 Million Consolidated Change (millions) Q1 2005 Q1 2004 Fav./(Unfav.) Oper. Revenue $ 2,177 $2,121 $ 56 Oper. Expense 2,187 2,266 79 Oper. Income (10) (145) 135 Non-oper. Income (Expense) (66) (43) (23) Inc. (Loss) Before Reorg., FX & Tax (76) (188) 112 Reorganiz

  4. Slide 4: Q1 Net Interest Expense Up $17 Mln Due to Lease Reclassification

    Q1 Net Int. Exp. Up $17 Mln Due Reclass. of Some Oper. Leases as Capital Leases Plus Vie's Change (millions) Q1 2005 Fav./(Unfav.) Net Interest Inc. (Exp.) $ (60) $ (17) Gain (Loss) on Sale 0 3 Other Non-Operating Inc. (Exp.) (6) (9) Total Non-Operating Inc. (Exp.) $ (66) $ (23)

  5. Slide 5: ACE's Close to Breakeven Q1 Operating Results Beats North American Legacy Carriers

    ACE's Close to Breakeven Q1 Operating Results Beats North American Legacy Carriers % Operating Margin 10 5 0 -5 -10 -15 -20 -25 * st t* an et we st Ws * e stJ eri c sk a A ir we nt.* l ta* Blu u th E We r AC Nth US Am Am Al a J et Co De So * Adjusted for non recurring & special items

  6. Slide 6: ACE's Q1 EBITDAR Margin of 9.2% Also Beats Legacy Carriers

    ACE's Q1 EBITDAR Margin of 9.2% Also Beats Legacy Carriers % EBITDAR Margin 20 15 10 5 0 -5 * an et st st st * e eri c sk a A ir we stJ rW nt.* l ta* Blu we E Nth Am Am Sth We Al a US J et AC Co De * Adjusted for non recurring & special items

  7. Slide 7: Q1 2005 Actual vs Prior Year

    Q1 2005 Actual vs Prior Year (1) Mainline Operations ASMs RPMs PLF Yield RASM Rev Canada 4.6% 1.6% 4.8 PP 4.8% 1.4% 3.3% US Transborder 10.5% 0.3% 7.7 PP 8.5% 1.9% 8.7% Atlantic 2.6% 3.7% 4.9 PP 3.8% 10.5% 7.7% Pacific 5.1% 7.7% 2.0 PP 5.5% 8.1% 13.6% SPac/LA/Carib 13.2% 17.6% 3.0 PP 4.2% 0.4% 12.7%

  8. Slide 8: Continued North Amer. Capacity Reduction – Int'l Expansion Driven by Latin America and Pacific

    Continued North Amer. Capacity Reduction – Int'l Expansion Driven by Latin America and Pacific (Y-O-Y Changes in Mainline Capacity) % Change in ASMs 30% 20% 10% 0% -10% -20% Canada U.S. Oth. Int'l Total Q1 2004/2003 Q2 2004/2003 Q3 2004/2003 Q4 2004/2003 Q1 2005/2004

  9. Slide 9: Domestic Traffic Continues to Grow Despite Capacity Reduction

    Dom. Traffic Continues to Grow Despite Capacity Reduction. International Remains Very Strong (Y-O-Y Changes in Mainline Traffic) % Change in RPMs 40% 30% 20% 10% 0% -10% -20% Canada U.S. Oth. Int'l Total Q1 2004/2003 Q2 2004/2003 Q3 2004/2003 Q4 2004/2003 Q1 2005/2004

  10. Slide 10: Weak North America Yields Pull Down System Average

    Weak North America Yields Pull Down System Average (Y-O-Y Changes in Mainline Passenger Yield) % Change in Yield 10% 5% 0% -5% -10% -15% Canada U.S. Oth. Int'l Total Q1 2004/2003 Q2 2004/2003 Q3 2004/2003 Q4 2004/2003 Q1 2005/2004

  11. Slide 11: RASMs in All Markets Are Up as Much Higher Load Factors Push Up Unit Revenue

    RASMs in All Markets Are Up as Much Higher Load Factors Push Up Unit Revenue (Y-O-Y Changes in Mainline Revenue per ASM) % Change in RASM 15% 10% 5% 0% -5% -10% -15% Canada U.S. Oth. Int'l Total Q1 2004/2003 Q2 2004/2003 Q3 2004/2003 Q4 2004/2003 Q1 2005/2004

  12. Slide 12: Strong International Revenue More Than Offset Transborder Decline

    Strong Intn'l Rev. More Than Offset Transborder Decline and Lower Mainline Dom. (reflects shift to Jazz) (Y-O-Y Changes in Mainline Passenger Revenue) % Change in Revenue 40% 30% 20% 10% 0% -10% -20% -30% Canada U.S. Oth. Int'l Total Q1 2004/2003 Q2 2004/2003 Q3 2004/2003 Q4 2004/2003 Q1 2005/2004

  13. Slide 13: Canada – Q1 RASM Up on 4.8 PP Load Factor Improvement

    Canada* – Q1 RASM Up on 4.8 PP Load Factor Improvement Following Capacity Reduction Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 5 10 0 5 -5 0 -10 -5 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 2005 2004 2005 % Change Yield P-RASM % Change 10 15 5 10 0 5 -5 0 -5 -10 -10 -15 -15 Q1 Q2 Q3 Q4 Q1 Q

  14. Slide 14: US Transborder – 10.8% Capacity Cut Drives Load Factor and RASM Up

    US Transborder* – 10.8% Capacity Cut Drives Load Factor and RASM Up Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 10 8 6 0 4 2 -10 0 -20 -2 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 2005 2004 2005 % Change Yield % Change P-RASM 5 5 0 0 -5 -5 -10 -10 -15 -15 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 2

  15. Slide 15: Atlantic – Strong Pricing & Increased Demand Pushes RASM Up 10.5%

    Atlantic* – Strong Pricing & Increased Demand Pushes RASM Up 10.5% Y-O-Y Change Capacity (ASM) % Change PP Change Load Factor 5 6 4 0 2 0 -5 -2 -4 -10 -6 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 2005 2004 2005 Yield P-RASM % Change % Change 15 15 10 10 5 5 0 0 -5 -5 -10 -10 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2

  16. Slide 16: Pacific – Strong Pricing Also Pushes Pacific RASM Up

    Pacific* – Strong Pricing Also Pushes Pacific RASM Up Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 120 20 80 15 40 10 0 5 -40 0 -80 -5 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 2005 2004 2005 % Change Yield % Change P-RASM 15 30 10 20 5 10 0 0 -5 -10 -10 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 200

  17. Slide 17: Caribbean, Latin America & Australia – Higher Load Factor Pushes RASM Up

    Caribbean, Latin America & Australia* – Higher Load Factor Pushes RASM Up Y-O-Y Change Capacity (ASM) Load Factor % Change PP Change 60 6 4 40 2 20 0 0 -2 -20 -4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 2005 2004 2005 Yield P-RASM % Change % Change 5 10 0 5 -5 0 -10 -5 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 2

  18. Slide 18: Total – Strong Traffic on Reduced Capacity Pushes Up Load Factor and RASM

    Total* – Strong Traffic on Reduced Capacity Pushes Up Load Factor and RASM Y-O-Y Change % Change Capacity (ASM) PP Change Load Factor 15 6 10 4 5 2 0 0 -5 -10 -2 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2004 2005 2004 2005 Yield P-RASM % Change % Change CASM RASM 5 10 5 0 0 -5 -5 -10 -15 -10 -20 Q1 Q2 Q3 Q4 Q1

  19. Slide 19: Average Salary Down 5.6%, Employee Levels Down 1,293 or 4.4%

    Average Salary Down 5.6%, Employee Levels Down 1,293 or 4.4% (Y-O-Y Change – Average Salaries* & Employees*) % Change Y-O-Y 5% 0% -5% -10% -15% -20% Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Average Salaries Employees *Mainline excluding Jazz

  20. Slide 20: Mainline Cost Per Litre Up 24.7% While Fuel Productivity Declined 1.0%

    Mainline Cost Per Litre Up 24.7% While Fuel Productivity Declined 1.0% (Fuel Productivity* & Unit Cost*) % Change Y-O-Y 60% 50% 40% 30% 20% 10% 0% -10% Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Fuel Productivity (ASMs/Lt) Fuel Cost (Cdn cts/Lt) *Mainline excluding Jazz

  21. Slide 21: Higher Terminal Handling Charges, Credit Card Fees Push Up Other Category

    Higher Terminal Handling Charges, Credit Card Fees & Non-air Redemption Exp. Push Up "Other" Cat. % Change Y-O-Y 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% r es . Ba t. IT i ss t uel Ma en fits Fe . c m& mm W / pre Ms Ms R F er ne od e er O th A/C A/C Mtc S& RP Co AS De Co Us Be Fo *Mainline e

  22. Slide 22: Net Unit Cost Down 1.6% in Spite of High Fuel Prices

    Net Unit Cost Down 1.6% in Spite of High Fuel Prices, Down 8.3% Excluding Fuel (Cost Per ASM*) % Change Y-O-Y 5% 0% -5% -10% -15% -20% Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 *Mainline, adjusted for non-ASM revenue

  23. Slide 23: High Fuel Prices Offset Improvements in S,W & B and Other Expenses

    High Fuel Prices Offset Improvements in S,W & B and "Other" Expenses 10% 5% 0% -5% -10% Labour Fuel Other Effect of Unit cost & Benefits non-ASM decrease revenue net of non- ASM revenue Mainline

  24. Slide 24: Balance Sheet - Good Liquidity, Consolidation of Variable Interest Entities Pushes Debt Up

    Balance Sheet* - Good Liquidity, Consolidation of Variable Interest Entities Pushes Debt Up (ACE Aviation Holdings - Consolidated) Mar 31/05 Dec 31/04 % $ mlns $ mlns Change • Cash $ 1,713 $ 1,632 +5% • Current Assets $ 2,865 $ 2,695 +6% • Property & Equip. $ 5,056 $ 3,696 +37% • Current Liabilities

  25. Slide 25: 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. The results indicated in these statements could differ materially from actual results for a number of reasons, including w

  26. Slide 26: [AIR CANADA he)

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ACE Aviation Holdings (Air Canada) — Q1 2005 Earnings Presentation on 6ix