Quite An Achievement


Air Canada has reported record full year earnings — before interest, taxes, depreciation, amortization and impairment, and aircraft rent (EBITDAR) — of $1.433 billion (or $1.515 billion including the impact of benefit plan amendments) compared to EBITDAR of $1.320 billion (or $1.447 billion including the impact of benefit plan amendments) in 2012, an increase of $113 million (or $68 million including the impact of benefit plan amendments).

Operating income of $619 million increased $177 million from 2012. On a GAAP basis, in 2013, net income was $10 million or $0.02 per diluted share compared to a net loss of $136 million or $0.51 per diluted share in 2012. On an adjusted basis, net income was $340 million or $1.20 per diluted share, a record for Air Canada, compared to net income of $55 million or $0.20 per diluted share in 2012, an improvement of $285 million or $1.00 per diluted share.

Air Canada’s president and CEO, Calin Rovinescu said: “I am extremely pleased to report Air Canada’s best full year financial performance in the Corporation’s history. Adjusted net income for the year was a record $340 million and represents a six-fold increase from 2012. These results underscore the significant operating leverage opportunity that we have.”

Rovinescu continued: “We achieved this increase in adjusted net income based on total revenue growth of 2.2% for the year and on a decrease in unit costs of 1.5%. Very good progress was made last year in executing on our transformation strategy and this was recognized by the investment community with a tripling of our share price in 2013. I would like to thank Air Canada’s 27,000 employees for their part in helping to achieve the significant accomplishments of 2013 and enabling us to begin the new year on a solid strategic foundation.”

Air Canada’s boss also pointed out that: “Our performance in 2013, especially the last three quarters where adjusted net income improved each quarter versus the prior year, establishes a strong foundation for continued success in 2014. We started 2014 facing challenges of extreme weather conditions at our Canadian hubs and a falling Canadian dollar. As we forecasted weakness in the Canadian dollar as part of our annual budgeting process, although not at its current level, we had a head start looking at ways to mitigate the exposure, such as through additional cost reduction and new revenue enhancement initiatives.”

Rovinescu concluded: “We also have over $1 billion in U.S. dollar revenues, a currency hedge position and U.S. cash reserves that will absorb some of the exposure. Additionally, historically, the price of crude oil and the Canadian dollar have shown some correlation, where decreases in the value of the Canadian dollar have been associated, to an extent, with decreases in the cost of fuel. However, given severe weather conditions, the weaker Canadian dollar and the impact of increased capacity in certain markets, we expect our first quarter EBITDAR to be below last year’s level by $15 to $30 million. We are confident in our ability to mitigate the financial impact of these factors over the 2014 fiscal year.”

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