- Record operating revenues of $19.131
billion
- Operating income of $1.650
billion
- EBITDA of $3.636 billion and
EBITDA margin of 19 per cent
- Record unrestricted liquidity of $7.380
billion and leverage ratio of 0.8
MONTREAL, Feb. 18, 2020 /CNW Telbec/ - Air Canada
today reported 2019 EBITDA(1) (earnings before interest,
taxes, depreciation, amortization and impairment) of $3.636 billion compared to 2018 EBITDA of
$3.213 billion, an increase of
$423 million or 13 per cent. The
airline reported operating income of $1.650
billion in 2019 compared to operating income of $1.496 billion in 2018.
"I am very pleased to report strong fourth quarter and full year
results for 2019, a year in which we generated record revenues in
excess of $19 billion and reached
record levels of unrestricted liquidity, despite the loss to Air
Canada of approximately 25 per cent of our narrow-body fleet for
most of the year following the worldwide grounding of the Boeing
737 MAX. These results underscore the airline's ability to overcome
major challenges as well as the deep commitment of Air Canada's
37,000 strong team, which took care of our customers under
extremely complicated operational circumstances. With this
backdrop, I am especially proud that we were able to deliver on the
outlook we provided for key financial metrics for the year. Our
discipline was rewarded by an 87 per cent return on our shares in
2019, which, when added to our returns over the previous nine
years, made Air Canada the top performing stock on the TSX for the
past decade with a 3,575 per cent return," said Calin Rovinescu,
President and Chief Executive Officer of Air Canada.
"The agility and consistency that we displayed in 2019 gives me
confidence that we will successfully execute on the several key
opportunities now before us. This includes the launch of our new
loyalty program later this year, which we expect will be the best
airline loyalty program in the world. We also look forward to
completing our proposed merger with Transat A.T., which was
approved by nearly 95 per cent of Transat shareholders last summer
and now remains subject to applicable regulatory approvals. This is
a wholly Canadian solution that will secure jobs and result in more
travel options and benefits for both airlines' customers and other
stakeholders.
"We start 2020 with uncertainty from the on-going Boeing 737 MAX
grounding and the constraints it imposes, as well as emerging
economic and geopolitical risks and route suspensions resulting
from the COVID-19 virus. However, our strong balance sheet,
globe-spanning network that diversifies our revenue sources, brand
strength as North America's Best
Airline as rated by Skytrax, young fleet, dedicated and talented
employees and nimble management team equip us to respond
effectively to any challenges that come our way. Our dedicated
and professional team is highly motivated to deliver service
excellence to our loyal customer base, and I thank both groups for
contributing to our strong 2019 results in the face of adversity,"
said Mr. Rovinescu.
Full Year 2019 Income Statement
Highlights
Air Canada began
consolidating Aeroplan's financial results on the date of the
acquisition of Aeroplan, January 10,
2019.
In 2019, on a capacity increase of 1.8 per cent, record system
passenger revenues of $17.232 billion
increased $1.071 billion or 6.6 per
cent from 2018. The increase in system passenger revenues was
driven by a yield improvement of 4.6 per cent and traffic growth of
1.9 per cent. System yield improved due to the constrained capacity
resulting from the grounding of the Boeing 737 MAX aircraft as well
as a generally improved pricing environment, mainly in North
America. The yield increase also included additional revenues
from Aeroplan flight redemptions and other revenues subsequent to
the Aeroplan acquisition.
In 2019, operating expenses of $17.481
billion increased $974 million
or 6 per cent from 2018. Air Canada's cost per available seat
mile (CASM) increased 4.1 per cent from 2018. The airline's
adjusted CASM(1) increased 6.1 per cent from
2018. These increases reflected, in large part, the impact of
the Boeing 737 MAX aircraft grounding, which resulted in a system
ASM increase of 1.8 per cent versus planned system ASM growth of
approximately 4.8 per cent, in addition to higher costs associated
with replacement aircraft, and on-going operating expenses,
including depreciation and pilot wages that continued to be
incurred in relation to the Boeing 737 MAX aircraft despite their
grounding. Given that the Aeroplan loyalty business was not
consolidated in Air Canada's financial results in 2018, for a more
meaningful comparison of the cost performance of the on-going
airline business, Air Canada's adjusted CASM for the fourth quarter
and full year 2019 excludes the operating expenses of Aeroplan. Air
Canada estimates that, had it
operated the 36 Boeing MAX aircraft as originally planned during
2019, adjusted CASM would have reflected an increase of
approximately 2.5 per cent when compared to 2018.
Air Canada's full year 2019
EBITDA margin of 19.0 per cent met the target margin of
approximately 19.0 per cent projected in Air Canada's news release
dated October 29, 2019. Air
Canada estimates that its 2019
EBITDA margin would have been approximately 30 basis points higher
at 19.3 per cent, when excluding two fourth quarter one-time items,
each of which similarly contributed to this impact: (a) a
one-time negative impact on revenue arising from Air Canada's
transition, in mid-November, to a new passenger service system, and
(b) higher than expected stock-based and other compensation
expenses resulting from an increase in Air Canada's share
price and from higher accruals in respect of employee profit
sharing programs.
Full year 2019 net income amounted to $1.476 billion or $5.44 per diluted share compared to 2018 net
income of $37 million or $0.13 per diluted share. The year 2019
included foreign exchange gains of $499
million while 2018 included foreign exchange losses of
$578 million. Air Canada recorded a loss on disposal of assets
of $188 million in 2018. Air
Canada reported adjusted net income(1) of
$917 million or $3.37 per diluted share in 2019 compared to
adjusted net income of $738 million
or $2.67 per diluted share in
2018.
Fourth Quarter 2019 Income Statement
Highlights
In the fourth quarter of 2019, Air Canada reported EBITDA of
$665 million compared to fourth
quarter 2018 EBITDA of $619 million,
an increase of $46 million or 7 per
cent. As discussed above, the fourth quarter of 2019 was
impacted by two one-time items which had the effect of reducing
EBITDA by approximately $60 million.
The airline reported fourth quarter 2019 operating income of
$145 million compared to fourth
quarter 2018 operating income of $179
million.
In the fourth quarter of 2019, on a capacity increase of 3.3 per
cent, record system passenger revenues of $3.975 billion increased $199 million or 5.3 per cent from the fourth
quarter of 2018. The increase in system passenger revenues
was driven by traffic growth of 2.9 per cent and a yield
improvement of 2.3 per cent. The yield improvement in the
fourth quarter of 2019, particularly in North America, was in part due to the
constrained capacity resulting from the grounding of the Boeing 737
MAX aircraft. The yield growth also reflected additional
revenue from Aeroplan flight redemptions and other revenues.
In the fourth quarter of 2019, operating expenses of
$4.284 billion increased $236 million or 6 per cent from the fourth
quarter of 2018. Air Canada's CASM increased 2.5 per cent from
the fourth quarter of 2018. The airline's adjusted
CASM increased 5.5 per cent over the fourth quarter of
2018. These increases reflected, in large part, the impact of
the Boeing 737 MAX aircraft grounding which resulted in a system
ASM increase of 3.3 per cent versus planned system ASM growth of
approximately 4.6 per cent. The grounding also resulted in
higher operating costs driven by the factors discussed in "Full
Year 2019 Income Statement Highlights" above.
Record fourth quarter 2019 net income amounted to $152 million or $0.56 per diluted share compared to a fourth
quarter 2018 net loss of $360 million
or $1.33 per diluted share. The
fourth quarter of 2019 included foreign exchange gains of
$92 million while the fourth quarter
of 2018 included foreign exchange losses of $444 million. Air Canada reported adjusted net
income(1) of $47
million or $0.17 per diluted
share in the fourth quarter of 2019 compared to adjusted net income
of $55 million or $0.20 per diluted share in the fourth quarter of
2018.
Financial and Capital Management Highlights
At December 31, 2019, unrestricted
liquidity (cash, cash equivalents and short and long-term
investments, and undrawn lines of credit) amounted to a record
$7.380 billion (December 31, 2018 – $5.725
billion).
At December 31, 2019, net debt of
$2.841 billion decreased $2.373 billion from December 31, 2018, reflecting an increase in
cash, cash equivalents and short and long-term investment balances
of $1.694 billion and a decrease in
long-term debt and lease liabilities (including current portion) of
$679 million. At December 31, 2019, Air Canada's leverage ratio
was 0.8, in line with the leverage ratio not exceeding 1.0
projected in Air Canada's news release dated October 29, 2019. This compares to a
leverage ratio of 1.6 at December 31,
2018.
In 2019, net cash flows from operating activities of
$5.712 billion increased $2.242 billion from 2018. In 2019, free cash
flow(1) of $2.075 billion
increased $748 million from 2018 and
was higher than the free cash flow of between $1.3 billion and $1.5
billion projected in Air Canada's new release dated
October 29, 2019. The higher
than expected free cash flow was due to a combination of factors,
including higher cash from operations, a lower than projected level
of capital expenditures due to certain projects being deferred to
2020, and to an initial settlement payment from Boeing as further
described below.
For the 12 months ended December 31,
2019, return on invested capital (ROIC(1)) was
15.5 per cent, in line with the ROIC of between 15.5 per cent and
16.0 per cent projected in Air Canada's news release dated
October 29, 2019. Air Canada's
ROIC at December 31, 2019 was
significantly higher than Air Canada's weighted average cost of
capital of 7.0 per cent.
Air Canada has been in
discussions with Boeing and is seeking to settle the terms of an
arrangement in relation to the grounding of the Boeing 737 MAX
aircraft. Until such time as an arrangement is finalized,
information regarding the outstanding purchase commitments for
aircraft is subject to change. An initial settlement payment
contemplated by the arrangement was made to Air Canada during the
fourth quarter of 2019, with any further amounts subject to
finalization of the arrangement. The compensation is accounted for
as an adjustment to the purchase price of current and future
deliveries and will flow through Air Canada's consolidated
statement of operations as reduced depreciation expense over the
life of the aircraft, and as a reduction to additions to property
and equipment on the consolidated statement of cash flow.
Normal Course Issuer Bid
In 2019, Air Canada purchased, for cancellation, a total of
9,082,487 shares at an average cost of $41.64 per share for aggregate consideration of
$378 million. At December 31, 2019, a total of 17,877,551 shares
remained available for repurchase under Air Canada's issuer bid
which is scheduled to expire May 30,
2020.
Outlook
In addition to the Additional Guidance and Major Assumptions
noted below, Air Canada's 2020 first quarter and full year outlook
in relation to both EBITDA and ASM capacity growth assumes that Air
Canada's mainland China and
Hong Kong services will be fully
recovered by the third quarter of 2020 and that the Boeing 737 MAX
aircraft will gradually return to service commencing late in the
third quarter of 2020.
First Quarter 2020
As noted above, the Boeing 737 MAX aircraft will not fly during
the first quarter of 2020, as compared to 24 Boeing 737 MAX
aircraft operating for the majority of the first quarter of
2019. In addition, due to the impact of recent service
suspensions to mainland China and
from Toronto to Hong Kong, combined with a higher proportion
of projected annual operating expense increases in both aircraft
maintenance and employee benefits in the first quarter of 2020 (as
described below), Air Canada expects first quarter 2020 EBITDA to
be approximately $200 million lower
than the first quarter of 2019.
Full Year 2020
For the full year 2020, Air Canada projects an EBITDA margin of
approximately 19 per cent, which would result in a small increase
in EBITDA versus the reported EBITDA of $3.636 billion in 2019.
For the full year 2020, Air Canada expects ASM capacity to
increase 1 to 2 per cent when compared to the full year 2019.
Additional Guidance
For the full year 2020:
Aircraft Maintenance Expense
Air Canada expects aircraft
maintenance expense to increase by approximately $150 million from the full year 2019, with
one-third of the increase expected to be incurred in the first
quarter of 2020. The projected increase includes the impact
of additional Airbus A330 aircraft in the operating fleet (which
are under power-by-the-hour arrangements) and a higher volume of
engine maintenance activity year-over-year.
Employee Benefits Expense
Air Canada expects employee
benefits expense to increase by approximately $105 million from the full year 2019, with
one-third of the increase expected to be incurred in the first
quarter of 2020. The projected increase is mainly driven by
lower discount rates related to pension and post-employment
benefits.
Depreciation and Amortization
Air Canada expects depreciation
and amortization expense to increase by approximately $35 million from the full year 2019. The
projected increase primarily reflects aircraft
acquisitions.
Major Assumptions
In addition to the above assumptions relating to the return to
service of Air Canada's Boeing 737 MAX aircraft and the recovery of
Air Canada's mainland China and
Hong Kong services, Air Canada is
making the following assumptions in preparing and making
forward-looking statements. As part of its 2020 assumptions,
Air Canada assumes:
- Modest Canadian GDP growth for the first quarter and full year
2020.
- That the Canadian dollar will trade, on average, at
C$1.33 per U.S. dollar in the first
quarter and for full year 2020.
- That the price of jet fuel will average 71 CAD cents per litre in the first quarter and
74 CAD cents for the full year
2020.
- That six of 12 undelivered Boeing 737 MAX aircraft originally
scheduled for delivery in 2019 will be delivered in 2020 with the
remaining six delivered in 2021, and that 14 undelivered Boeing 737
MAX aircraft originally scheduled for delivery in 2020 will be
delivered in 2021.
The assumptions related to the Boeing 737 MAX aircraft and the
recovery of the mainland China and
Hong Kong businesses also apply to
the 2021 financial guidance discussed below.
Investor Day Targets
The financial guidance provided in Air Canada's news release
dated February 28, 2019 for 2021 with
respect to annual EBITDA margin and annual ROIC, as well as the
cumulative free cash flow over the 2019-2021 period, remains in
place. The targets are as follows:
- Annual EBITDA margin of 19 to 22 percent
- Annual ROIC of 16 to 20 percent
- Cumulative free cash flow of $4.0
billion to $4.5 billion over
the 2019 to 2021 period
(As noted above, Air Canada generated free cash flow of
$2.075 billion in 2019.)
It is premature to assess what the impact of Air Canada's
planned acquisition of Transat A.T. would be, and it is therefore
not factored into Air Canada's guidance.
The outlook provided constitutes forward-looking statements
within the meaning of applicable securities laws and is based on a
number of assumptions (including those provided above) and subject
to a number of risks. Please see the section below entitled
"Caution Regarding Forward-Looking Information".
(1) Non-GAAP Measures
Below is a description of certain non-GAAP financial measures
used by Air Canada to provide readers with additional information
on its financial and operating performance. Such measures are not
recognized measures for financial statement presentation under
GAAP, do not have standardized meanings, may not be comparable to
similar measures presented by other entities and should not be
considered a substitute for, or superior to, GAAP results. Readers
are advised to review the section entitled Non-GAAP Financial
Measures in Air Canada's 2019 MD&A for a further discussion of
such non-GAAP measures and a reconciliation of such measures to
Canadian GAAP.
- Adjusted net income (loss) and adjusted earnings (loss) per
share – diluted are used by Air Canada as a means to assess the
overall financial performance of its business without the after-tax
effects of foreign exchange gains or losses, net financing expense
relating to employee benefits, gains or losses on financial
instruments recorded at fair value, gains or losses on sale and
leaseback of assets, gains or losses on debt settlements and
modifications, gains or losses on disposal of assets, and special
items as these items may distort the analysis of certain business
trends and render comparative analysis to other airlines less
meaningful.
- Adjusted pre-tax income (loss) is used by Air Canada to assess
the overall pre-tax financial performance of its business without
the effects of foreign exchange gains or losses, net financing
expense relating to employee benefits, gains or losses on financial
instruments recorded at fair value, gains or losses on sale and
leaseback of assets, gains or losses on debt settlements and
modifications, gains or losses on disposal of assets, and special
items as these items may distort the analysis of certain business
trends and render comparative analysis to other airlines less
meaningful. Air Canada uses
adjusted pre-tax income (loss) before interest to determine return
on invested capital.
- EBITDA (earnings before interest, taxes, depreciation and
amortization) is commonly used in the airline industry and is used
by Air Canada as a means to view operating results before interest,
taxes, depreciation and amortization as these costs can vary
significantly among airlines due to differences in the way airlines
finance their aircraft and other assets. Air Canada excludes special items from EBITDA as
these items may distort the analysis of certain business trends and
render comparative analysis to other airlines less meaningful.
- Adjusted CASM is used by Air Canada as a means to assess the
operating and cost performance of its on-going airline business
without the effects of aircraft fuel expense, the cost of ground
packages at Air Canada Vacations®, the operating costs of Aeroplan
during its initial year of acquisition, and special items as these
items may distort the analysis of certain business trends and
render comparative analysis to other airlines less meaningful. In
calculating adjusted CASM, aircraft fuel expense is excluded from
operating expense results as it fluctuates widely depending on many
factors, including international market conditions, geopolitical
events, jet fuel refining costs and Canada/U.S. currency exchange rates. Air
Canada also incurs expenses
related to ground packages at Air Canada Vacations which some
airlines, without comparable tour operator businesses, may not
incur. In addition, these costs do not generate ASMs and therefore
excluding these costs from operating expense results provides for a
more meaningful comparison across periods when such costs may
vary.
Excluding aircraft fuel expense, the cost of ground packages at Air
Canada Vacations and special items from operating expenses
generally allows for a more meaningful analysis of Air Canada's
operating expense performance and a more meaningful comparison to
that of other airlines.
Following the completion of Air Canada's acquisition of Aeroplan on
January 10, 2019, Air Canada began
consolidating Aeroplan's results. Given that the Aeroplan
loyalty business was not consolidated in Air Canada's financial
results in 2018, for a more meaningful comparison of the cost
performance of the on-going airline business, Air Canada's adjusted
CASM for 2019 excludes the operating expenses of Aeroplan.
- "Leverage ratio" refers to net debt to trailing 12-month EBITDA
leverage ratio and is commonly used in the airline industry and is
used by Air Canada as a means to measure financial leverage.
Leverage ratio is calculated by dividing net debt by trailing
12-month EBITDA (excluding special items). As mentioned above, Air
Canada excludes special items from EBITDA results (which are used
to determine leverage ratio) as these items may distort the
analysis of certain business trends and render comparative analysis
to other airlines less meaningful.
- Free cash flow is commonly used in the airline industry and is
used by Air Canada as an indicator of the financial strength and
performance of its business, indicating the amount of cash Air
Canada is able to generate from operations and after capital
expenditures. Free cash flow is calculated as net cash flows from
operating activities minus additions to property, equipment and
intangible assets, and is net of proceeds from sale and leaseback
transactions. Free cash flow in 2019 also excludes the one-time
proceeds related to the Aeroplan acquisition.
- Return on invested capital (ROIC) is used by Air Canada as a
means to assess the efficiency with which it allocates its capital
to generate returns. ROIC is based on adjusted pre-tax income
(loss), excluding interest expense. Invested capital includes
average year-over-year long-term debt, average year-over-year lease
obligations, average year-over-year shareholders' equity, net of
excess cash. Air Canada defines
excess cash as total cash and investments in excess of the minimum
cash required to support operations. This measure of liquidity
includes cash, cash equivalents, short-term investments, short-term
restricted cash and long-term investments. Air Canada uses 20 per cent of trailing 12 months
operating revenue as its estimate of the minimum cash required to
support on-going business operations. This estimate of minimum cash
provides adequate coverage for advance ticket sales and to meet Air
Canada's liquidity needs. Air Canada calculates invested capital based on a
book value-based method of calculating ROIC, as described above.
Refer to the definition of adjusted pre-tax income (loss) for a
discussion as to why Air Canada uses adjusted pre-tax income (loss)
to assess the overall pre-tax financial performance of its
business.
Air Canada's 2019 Consolidated
Financial Statements and Notes and its 2019 Management's Discussion
and Analysis of Results of Operations and Financial Condition are
available on Air Canada's website at aircanada.com and will
be filed on SEDAR at www.sedar.com.
For further information on Air Canada's public disclosure file,
including Air Canada's Annual Information Form dated March 25, 2019, consult SEDAR at
www.sedar.com.
Fourth Quarter Analyst Conference Call
Air Canada will host its
quarterly analysts' call today, February 18,
2020 at 08:30 E.T. Calin Rovinescu, President and Chief
Executive Officer, Michael Rousseau,
Deputy Chief Executive Officer and Chief Financial Officer, and
Lucie Guillemette, Executive Vice
President and Chief Commercial Officer, will be available for
analysts' questions. Immediately following the analysts'
Q&A session, Mr. Rousseau and Pierre
Houle, Managing Director and Treasurer, will be available to
answer questions from term loan B lenders and holders of Air
Canada's bonds.
Media and the public may access this call on a listen-in
basis. Details are as follows:
Dial 416-340-2219 or 1-800-377-0758
Live audio
webcast: https://edge.media-server.com/mmc/p/h3hedwvi
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This news release includes forward-looking statements within
the meaning of applicable securities laws. Forward-looking
statements relate to analyses and other information that are based
on forecasts of future results and estimates of amounts not yet
determinable. These statements may involve, but are not
limited to, comments relating to guidance, strategies,
expectations, planned operations or future actions. Forward-looking
statements are identified using terms and phrases such as
"preliminary", "anticipate", "believe", "could", "estimate",
"expect", "intend", "may", "plan", "predict", "project", "will",
"would", and similar terms and phrases, including references to
assumptions.
Forward-looking statements, by their nature, are based on
assumptions, including those described herein and are subject to
important risks and uncertainties. Forward-looking
statements cannot be relied upon due to, amongst other things,
changing external events and general uncertainties of the
business. Actual results may differ materially
from results indicated in forward-looking statements due to a
number of factors, including without limitation, our ability to
successfully achieve or sustain positive net profitability,
economic and geopolitical conditions, the timing and conditions of
the return to service of Boeing 737 MAX aircraft in our fleet
(including the introduction of those on order and the management of
our fleet and operations until their return to service or
introduction), industry and market conditions and the demand
environment, competition, energy prices, our dependence on
technology, our ability to successfully implement appropriate
strategic and other important initiatives (including our ability to
reduce operating costs), cybersecurity risks, war, terrorist acts,
epidemic diseases, our dependence on key suppliers,
casualty losses, changes in laws, regulatory developments or
proceedings, our ability to successfully launch and operate our new
loyalty program, climate change and environmental factors
(including weather systems and other natural phenomena and factors
arising from man-made sources), interruptions of service, our
dependence on regional and other carriers, our ability to
preserve and grow our brand, employee and labour relations and
costs, our dependence on Star
Alliance and joint ventures, limitations due to restrictive
covenants, our ability to pay our indebtedness and maintain
liquidity, pending and future litigation and actions by third
parties, currency exchange, pension plans, our ability to attract
and retain required personnel, insurance issues and costs, as well
as the factors identified in Air Canada's public disclosure file available at
www.sedar.com and, in particular, those identified in section 20
"Risk Factors" of Air Canada's 2019 MD&A. Furthermore, the
acquisition of Transat A.T. Inc. is subject to regulatory approvals
and certain customary conditions, and there are no assurances that
the acquisition will be completed as described in Air Canada's 2019
MD&A or at all. The forward-looking statements contained or
incorporated by reference in this news release represent Air
Canada's expectations as of the date of this news release (or as of
the date they are otherwise stated to be made) and are subject to
change after such date. However, Air Canada disclaims any intention
or obligation to update or revise any forward-looking statements
whether because of new information, future events or otherwise,
except as required under applicable securities regulations.
About Air Canada
Air Canada is Canada's largest domestic and international
airline serving nearly 220 airports on six continents. Canada's flag carrier is among the 20 largest
airlines in the world and in 2019 served over 51 million customers.
Air Canada provides scheduled
passenger service directly to 62 airports in Canada, 53 in the
United States and 101 in Europe, the Middle
East, Africa, Asia, Australia, the Caribbean, Mexico, Central
America and South America.
Air Canada is a founding member of
Star Alliance, the world's most
comprehensive air transportation network serving 1,250 airports in
195 countries. Air Canada is the
only international network carrier in North America to receive a Four-Star ranking
according to independent U.K. research firm Skytrax, which also
named Air Canada the 2019 Best Airline in North America. For more information, please
visit: aircanada.com/media, follow @AirCanada
on Twitter and join Air Canada on
Facebook.
Internet: aircanada.com/media
Media Resources:
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HIGHLIGHTS
The financial and operating highlights for Air Canada for the
periods indicated are as follows:
|
|
|
(Canadian dollars
in millions, except where indicated)
|
Fourth
Quarter
|
Full
Year
|
2019
(1)
|
2018
|
$
Change
|
2019
(1)
|
2018
|
$
Change
|
Financial
Performance Metrics
|
Operating
revenues
|
|
4,429
|
|
4,227
|
|
202
|
|
19,131
|
|
18,003
|
|
1,128
|
Operating
income
|
|
145
|
|
179
|
|
(34)
|
|
1,650
|
|
1,496
|
|
154
|
Income (loss) before
income taxes
|
|
172
|
|
(391)
|
|
563
|
|
1,775
|
|
228
|
|
1,547
|
Net income
(loss)
|
|
152
|
|
(360)
|
|
512
|
|
1,476
|
|
37
|
|
1,439
|
Adjusted pre-tax
income (2)
|
|
66
|
|
68
|
|
(2)
|
|
1,273
|
|
1,036
|
|
237
|
Adjusted net income
(2)
|
|
47
|
|
55
|
|
(8)
|
|
917
|
|
738
|
|
179
|
Operating margin
%
|
|
3.3%
|
|
4.2%
|
|
(0.9) pp
|
|
8.6%
|
|
8.3%
|
|
0.3 pp
|
EBITDA
(2)
|
|
665
|
|
619
|
|
46
|
|
3,636
|
|
3,213
|
|
423
|
EBITDA margin %
(2)
|
|
15.0%
|
|
14.6%
|
|
0.4 pp
|
|
19.0%
|
|
17.8%
|
|
1.2 pp
|
Unrestricted
liquidity (3)
|
|
7,380
|
|
5,725
|
|
1,655
|
|
7,380
|
|
5,725
|
|
1,655
|
Net cash flows from
operating activities
|
|
677
|
|
548
|
|
129
|
|
5,712
|
|
3,470
|
|
2,242
|
Free cash flow
(2)
|
|
426
|
|
288
|
|
138
|
|
2,075
|
|
1,327
|
|
748
|
Net debt
(2)
|
|
2,841
|
|
5,214
|
|
(2,373)
|
|
2,841
|
|
5,214
|
|
(2,373)
|
Return on invested
capital ("ROIC") % (2)
|
|
15.5%
|
|
13.5%
|
|
2.0 pp
|
|
15.5%
|
|
13.5%
|
|
2.0 pp
|
Leverage ratio
(2)
|
|
0.8
|
|
1.6
|
|
(0.8)
|
|
0.8
|
|
1.6
|
|
(0.8)
|
Diluted earnings
(loss) per share
|
$
|
0.56
|
$
|
(1.33)
|
$
|
1.89
|
$
|
5.44
|
$
|
0.13
|
$
|
5.31
|
Adjusted earnings per
share – diluted (2)
|
$
|
0.17
|
$
|
0.20
|
$
|
(0.03)
|
$
|
3.37
|
$
|
2.67
|
$
|
0.70
|
Operating
Statistics (4)
|
|
|
|
|
%
Change
|
|
|
|
|
%
Change
|
Revenue passenger
miles ("RPM") (millions)
|
|
21,403
|
|
20,801
|
|
2.9
|
|
94,113
|
|
92,360
|
|
1.9
|
Available seat miles
("ASM") (millions)
|
|
26,431
|
|
25,597
|
|
3.3
|
|
112,814
|
|
110,866
|
|
1.8
|
Passenger load factor
%
|
|
81.0%
|
|
81.3%
|
|
(0.3)
pp
|
|
83.4%
|
|
83.3%
|
|
0.1 pp
|
Passenger revenue per
RPM ("Yield") (cents)
|
|
18.6
|
|
18.2
|
|
2.3
|
|
18.3
|
|
17.5
|
|
4.6
|
Passenger revenue per
ASM ("PRASM") (cents)
|
|
15.0
|
|
14.7
|
|
2.0
|
|
15.3
|
|
14.6
|
|
4.8
|
Operating revenue per
ASM (cents)
|
|
16.8
|
|
16.5
|
|
1.5
|
|
17.0
|
|
16.2
|
|
4.4
|
Operating expense per
ASM ("CASM") (cents)
|
|
16.2
|
|
15.8
|
|
2.5
|
|
15.5
|
|
14.9
|
|
4.1
|
Adjusted CASM (cents)
(2)
|
|
11.7
|
|
11.1
|
|
5.5
|
|
10.9
|
|
10.3
|
|
6.1
|
Average number of
full-time equivalent ("FTE")
employees (thousands)
(5)
|
|
33.3
|
|
30.5
|
|
9.2
|
|
32.9
|
|
29.9
|
|
10.1
|
Aircraft in operating
fleet at period-end (6)
|
|
403
|
|
400
|
|
0.8
|
|
403
|
|
400
|
|
0.8
|
Average fleet
utilization (hours per day)
|
|
10.1
|
|
9.7
|
|
3.8
|
|
10.6
|
|
10.4
|
|
2.1
|
Seats dispatched
(thousands)
|
|
15,506
|
|
15,184
|
|
2.1
|
|
64,653
|
|
63,800
|
|
1.3
|
Aircraft frequencies
(thousands)
|
|
130.3
|
|
137.7
|
|
(5.4)
|
|
548.5
|
|
578.9
|
|
(5.3)
|
Average stage length
(miles) (7)
|
|
1,705
|
|
1,686
|
|
1.1
|
|
1,745
|
|
1,738
|
|
0.4
|
Fuel cost per litre
(cents)
|
|
75.0
|
|
84.3
|
|
(11.0)
|
|
76.1
|
|
80.4
|
|
(5.4)
|
Fuel litres
(thousands)
|
|
1,349,573
|
|
1,293,063
|
|
4.4
|
|
5,713,924
|
|
5,597,232
|
|
2.1
|
Revenue passengers
carried (thousands) (8)
|
|
12,048
|
|
11,909
|
|
1.2
|
|
51,543
|
|
50,904
|
|
1.3
|
|
|
(1)
|
Air Canada began
consolidating Aeroplan Inc.'s (formerly, Aimia Canada Inc,
"Aeroplan") financial results on January 10, 2019, the date of its
acquisition of Aeroplan. Refer to section 14 "Accounting Policies"
and section 15 "Critical Accounting Estimates and Judgements" of
Air Canada's 2019 MD&A for additional
information.
|
(2)
|
Adjusted pre-tax
income (loss), adjusted net income (loss), EBITDA (earnings before
interest, taxes, depreciation and amortization), EBITDA margin,
free cash flow, ROIC, leverage ratio, adjusted earnings (loss) per
share–diluted and adjusted CASM are each non-GAAP financial
measures and net debt is an additional GAAP measure. Refer to
section 22 of Air Canada's 2019 MD&A for descriptions of Air
Canada's non-GAAP financial measures and additional GAAP
measures.
|
(3)
|
Unrestricted
liquidity refers to the sum of cash, cash equivalents and short and
long-term investments, and the amount of available credit under Air
Canada's revolving credit facilities. At December 31, 2019,
unrestricted liquidity was comprised of cash, cash equivalents and
short-term investments of $5,889 million, long-term investments of
$512 million and undrawn lines of credit of $979 million. At
December 31, 2018, unrestricted liquidity was comprised of cash,
cash equivalents and short-term investments of $4,707 million and
undrawn lines of credit of $1,018 million.
|
(4)
|
Except for the
reference to average number of FTE employees, operating statistics
in this table include third party carriers operating under capacity
purchase agreements with Air Canada.
|
(5)
|
Reflects FTE
employees at Air Canada and its subsidiaries. Excludes FTE
employees at third party carriers operating under capacity purchase
agreements with Air Canada.
|
(6)
|
At December 31,
2019, the number of aircraft in Air Canada's operating fleet
included 24 Boeing 737 MAX aircraft which are grounded and excluded
aircraft under wet lease arrangements. Refer to section 9 "Fleet"
of Air Canada's 2019 MD&A for additional
information.
|
(7)
|
Average stage
length is calculated by dividing the total number of available seat
miles by the total number of seats dispatched.
|
(8)
|
Revenue passengers
are counted on a flight number basis (rather than by
journey/itinerary or by leg) which is consistent with the IATA
definition of revenue passengers carried.
|
SOURCE Air Canada