AIR CANADA REPORTS INTERIM RESULTS FOR TWO MONTHS ENDED AUGUST 31, 1999
HIGHLIGHTS
- Operating income of $176 million, up 11 per cent.
- Operating margin of 14.7 per cent, up 1 percentage point.
- Net earnings of $81 million, up 23 per cent.
- Operating expense increased by 2 per cent.
- Passenger revenue up 3 per cent.
- Passenger yield per revenue passenger mile up 5 per cent.
- Passenger revenue per available seat mile up 8 per cent.
- Capacity reduced by 5 per cent.
- Cash, cash equivalents and unused lines of credit $1.3 billion.
MONTREAL, Sept. 17 /CNW/ - Air Canada today reported operating income of
$176 million for the two month period ended August 31, 1999, which represents
an $18 million improvement over the same period in 1998. Earnings were $81
million or $0.42 per share, fully diluted, compared to $66 million or $0.35
per share in the prior year.
''We are reporting the Corporation's financial results for the two months
ending August 31 in order to provide our shareholders with the timely
information they will need to make well-informed decisions on any proposal
that comes forward regarding industry restructuring,'' said Robert A. Milton,
President and Chief Executive Officer. ''For the eight month period ending
August 31, the airline has recorded its best ever operating income result. We
are confident our shareholders will benefit from this added knowledge that the
Corporation's performance continues to improve significantly, year over year,
in key areas including maintenance and distribution costs.''
SUMMARY OF FINANCIAL RESULTS
Total operating revenues for the two months increased by $41 million or 4
per cent compared to the same period in 1998, despite a reduction in available
seat miles (ASM's) of 5 per cent. The Corporation continued its industry
leading performance of recent quarters in terms of both passenger yield and
revenue per available seat mile improvements. Growth in these two critical
measures was 5 per cent and 8 per cent respectively compared to the same two
months in 1998.
Operating expenses rose $23 million or 2 per cent, while the increase in
the corporation's unconsolidated unit cost per ASM (net of cargo and other
non-ASM revenue) was 5 per cent. Excluding growth in airport and navigation
charges, unit cost per ASM increased only 3 per cent.
''We're encouraged by our improvement in operating income during the
period, which increased $18 million resulting in an operating margin of 14.7
per cent, up 1 percentage point. We will continue to focus on reducing our
unit cost growth through our on-going corporate-wide initiatives to enhance
shareholder value,'' said Milton.
The Corporation continues to maintain a strong liquidity position with
cash and cash equivalents amounting to $741 million at August 31, 1999 along
with unused lines of credit totalling $569 million.
YEAR TO DATE
For the eight month period ended August 31st, 1999, the Corporation
recorded operating income of $344 million, $34 million better than 1998.
Earnings were $157 million or $0.82 per share, fully diluted, compared to
income of $131 million or $0.71 per share in 1998. Excluding gains on the sale
of investments and other assets in both years and on debt purchase in 1999,
earnings improved by $14 million or $0.06 per share.
_________________________________________________________________________
HIGHLIGHTS
______________________________
Periods ended August 31
______________________________
Two Months Eight Months
______________________________
1999 1998 1999 1998
_________________________________________________________________________
Financial (dollars in millions except per share figures)
_________________________________________________________________________
Operating Revenue 1,194 1,153 4,254 4,103
Operating Income 176 158 344 310
Income before Income Taxes 144 119 275 217
Income for the Period 81 66 157 131
Operating Margin 14.7% 13.7% 8.1% 7.6%
EBITDAR (1) 315 288 879 806
EBITDAR Margin (2) 26.4% 25.0% 20.7% 19.6%
Cash and Cash Equivalents 741 660 741 660
Cash flows from Operations 89 157 323 444
Weighted Average Common Shares Outstanding
- Basic 188.1 188.1 188.1 174.2
Weighted Average Common Shares Outstanding
- Fully Diluted 192.6 190.4 192.6 190.3
Earnings Per Share - Basic $0.43 $0.35 $0.83 $0.73
Earnings Per Share - Fully Diluted $0.42 $0.35 $0.82 $0.71
_________________________________________________________________________
Operating Statistics (not consolidated)
_________________________________________________________________________
Revenue Passenger Miles (millions) 5,114 5,259 16,216 16,484
Available Seat Miles (millions) 6,521 6,917 22,289 23,068
Passenger Load Factor 78.4% 76.0% 72.8% 71.5%
Passenger Revenue Yield
Per Revenue Passenger Mile (cents) 17.9 17.2 19.5 18.5
Passenger Revenue
Per Available Seat Mile (cents) 14.0 13.1 14.2 13.2
Operating Revenue Per
Available Seat Mile (cents) 16.5 15.2 17.0 15.8
Operating Expense
Per Available Seat Mile (cents) 13.9 13.0 15.6 14.6
Operating Expense
(net of cargo and other non-ASM revenue)
Per Available Seat Mile (cents) (3) 11.5 10.9 12.8 12.0
Average Number of Employees (thousands) 23.4 23.8 23.0 23.2
Available Seat Miles
Per Employee (thousands) 279 290 970 996
Operating Revenue Per Employee (thousands) $46 $44 $165 $158
Aircraft in Operating Fleet at period end 155 166 155 166
Average Aircraft Utilization
(hours per day) (4) 11.4 10.9 10.8 10.5
Average Aircraft Flight Length (miles) 1,078 1,034 1,006 951
Fuel Price Per Litre (cents) (5) 24.9 25.2 23.0 25.7
Fuel Litres (millions) 435 467 1,496 1,583
_________________________________________________________________________
Operating Statistics (consolidated)
_________________________________________________________________________
Revenue Passenger Miles (millions) 5,376 5,487 17,115 17,289
Available Seat Miles (millions) 6,958 7,318 23,910 24,599
Passenger Load Factor 77.3% 75.0% 71.6% 70.3%
Passenger Revenue Yield Per
Revenue Passenger Mile (cents) 19.2 18.3 21.1 19.9
(1) Earnings (operating income) before interest, taxes, depreciation,
amortization and aircraft rent.
(2) EBITDAR expressed as a percentage of operating revenue.
(3) Represents the net cost of the passenger transportation business,
after deducting the revenue impact of cargo and other non-ASM
businesses.
(4) Excludes maintenance down-time.
(5) Net of fuel hedging and includes all fuel handling expense.
_________________________________________________________________________
Price Range and Trading Volume of Air Canada Shares on Canadian Stock
Exchanges
_________________________________________________________________________
1999 High Low Volume
Common Shares:
July $6.95 $6.00 11,425,807
August $9.70 $6.45 44,234,893
Class A Non-Voting Shares:
July $5.95 $4.95 4,185,720
August $9.25 $5.45 13,400,513
_________________________________________________________________________
Price Range and Trading Volume of Air Canada Shares on the NASDAQ Stock
Market
_________________________________________________________________________
1999 High Low Volume
Class A Non-Voting Shares:
July $ 4.00 US $ 3.38 US 1,125,736
August $ 6.16 US $ 3.63 US 2,882,586
Consolidated Statement of Operations and Retained Earnings
(in millions except per share figures)
(unaudited)
Two Months Ended Eight Months Ended
August 31 August 31
___________________________________
1999 1998 1999 1998
________ _______ ________ _______
Operating revenues
Passenger $1,035 $1,005 $3,619 $3,443
Cargo 65 62 242 249
Other 94 86 393 411
________ _______ ________ _______
1,194 1,153 4,254 4,103
________ _______ ________ _______
Operating expenses
Salaries and wages 256 238 973 912
Benefits 26 34 142 148
Aircraft fuel 119 128 382 449
Depreciation, amortization
and obsolescence 52 51 198 191
Commissions 75 87 283 311
Food, beverages and supplies 51 52 173 172
Aircraft maintenance,
materials and supplies 43 43 209 212
Airport and navigation fees 93 79 326 250
Aircraft rent 87 79 337 305
Customer maintenance materials 12 8 60 54
Other 204 196 827 789
________ _______ ________ _______
1,018 995 3,910 3,793
________ _______ ________ _______
Operating income 176 158 344 310
________ _______ ________ _______
Non-operating income (expense)
Interest income 9 6 29 25
Interest expense (43) (44) (155) (158)
Interest capitalized 3 3 15 15
Amortization of deferred foreign exchange(5) (6) (21) (17)
Gain on sale of investments (note 3) 0 0 43 34
Gain on sale of other assets 0 1 0 4
Other 4 1 20 4
________ _______ ________ _______
(32) (39) (69) (93)
________ _______ ________ _______
Income before income taxes 144 119 275 217
Provision for income tax (63) (53) (128) (96)
Recovery of prior years income tax
benefits previously not recorded 0 0 10 10
________ _______ ________ _______
Income for the period $81 $66 157 131
Retained earnings, beginning of period 152 171
Charge relating to convertible debentures (net of tax) 0 (3)
________ _______
Retained earnings, end of period $309 $299
Earnings per share
- Basic $0.43 $0.35 $0.83 $0.73
________ _______ ________ _______
________ _______ ________ _______
- Fully diluted $0.42 $0.35 $0.82 $0.71
________ _______ ________ _______
________ _______ ________ _______
Consolidated Statement of Cash Flow
(in millions except per share figures)
(unaudited)
Two Months Ended Eight Months Ended
August 31 August 31
___________________________________
1999 1998 1999 1998
________ _______ ________ _______
Cash flows from (used for)
Operating
Income for the period $81 $66 $157 $131
Adjustments to reconcile to
net cash provided by operations
Depreciation, amortization
and obsolescence 52 51 198 191
Gain on sale of investments (note 3) 0 0 (43) (34)
Gain on sale of other assets 0 (1) 0 (4)
Deferred income taxes 62 52 113 80
Deferred pension expense (4) 6 4 23
Amortization of deferred foreign exchange 5 6 21 17
Amortization of deferred gains (3) (3) (11) (11)
(Increase) decrease
in accounts receivable (43) 7 (126) 26
(Increase) decrease in spare parts,
materials and supplies 5 (1) 9 (19)
Increase in accounts payable
and accrued liabilities 21 57 26 130
Increase (decrease) in advance
ticket sales (103) (69) 55 9
Aircraft lease payments (in excess of)
less than rent expense 12 (12) (66) (37)
Other 4 (2) (14) (58)
________ _______ ________ _______
89 157 323 444
________ _______ ________ _______
Financing
Issue of common shares 0 0 0 1
Reduction of long-term debt (14) (12) (68) (47)
Long-term borrowings 0 1 171 179
Other (11) (11) (7) (10)
________ _______ ________ _______
(25) (22) 96 123
________ _______ ________ _______
Investing
Proceeds from sale and
leaseback of assets 86 0 86 0
Proceeds from sale of investments
& other assets 1 3 50 58
Additions to property and equipment
(net of recovered progress payments) (123) (36) (186) (623)
Investments and advances 1 0 6 8
________ _______ ________ _______
(35) (33) (44) (557)
________ _______ ________ _______
Increase in cash and cash equivalents 29 102 375 10
Cash and cash equivalents,
beginning of period 712 558 366 650
________ _______ ________ _______
Cash and cash equivalents, end of period $741 $660 $741 $660
Cash flow per share from operations
- Basic $0.47 $0.84 $1.71 $2.55
________ _______ ________ _______
________ _______ ________ _______
- Fully diluted $0.46 $0.83 $1.68 $2.37
________ _______ ________ _______
________ _______ ________ _______
Consolidated Statement of Financial Position
(in millions)
(unaudited)
August 31 December 31
________________________
1999 1998
___________ ___________
ASSETS
Current
Cash and cash equivalents $741 $366
Accounts receivable 531 405
Spare parts, materials and supplies 241 258
Prepaid expenses 24 21
Deferred income taxes 44 42
___________ ___________
1,581 1,092
Property and equipment 3,176 3,243
Deferred charges 1,747 1,722
Investments and other assets (note 3) 361 365
___________ ___________
$6,865 $6,422
LIABILITIES
Current
Accounts payable and accrued liabilities $866 $840
Advance ticket sales 415 360
Current portion of long-term debt 75 79
___________ ___________
1,356 1,279
Long-term and subordinated perpetual debt (note 2) 2,950 2,917
Other long-term liabilities 298 265
Deferred credits 647 504
___________ ___________
5,251 4,965
___________ ___________
SHAREHOLDERS' EQUITY
Share capital 1,305 1,305
Retained earnings 309 152
___________ ___________
1,614 1,457
___________ ___________
$6,865 $6,422
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
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TWO MONTHS ENDED AUGUST 31, 1999
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1. ACCOUNTING PRINCIPLES AND PRACTICES
The unaudited consolidated interim financial statements are based upon
accounting principles consistent with those used and described in the
annual financial statements.
2. LONG - TERM BORROWINGS
In January, 1998, the Corporation issued unsecured Deutsche mark bonds in
the amount of DM 200 million (net proceeds $158 million CAD). The bonds
bear interest at 6.625% and mature in January, 2005.
In February, 1999, the Corporation issued unsecured debentures in the
amount of $175 million (net proceeds $171 million). The debentures bear
interest at 6.75% and mature in February, 2004.
In February, 1999, the Corporation purchased 3 billion JPY ($25 million
CAD) of its perpetual debt for $12 million and realized a gain of $13
million ($8 million after tax).
3. DIVESTITURES
In June, 1998, the Corporation sold its 100% interest in Galileo Canada
for proceeds of $50 million and a gain of $34 million ($23 million after
tax).
In February, 1999, the Corporation sold approximately 35% of its holding
in Equant N.V., previously known as SITA Telecommunications Holdings
N.V., which was carried at a nominal amount, for proceeds of $42 million
($29 million after tax).
4. SEGMENT INFORMATION
The Corporation operates in one business segment, air transportation and
related services. The services within that segment are as follows:
Two Months Ended Eight Months Ended
---------------- ------------------
August 31 August 31
--------- ---------
1999 1998 1999 1998
---- ---- ---- ----
Transportation Revenue:
Domestic
Air Canada: Passenger $346 $341 $1,280 $1,250
Cargo 15 15 60 59
Regional Airlines: Passenger 87 75 356 309
Cargo 2 3 9 11
- - - --
450 434 1,705 1,629
___ ___ _____ _____
Canada-US Transborder
Air Canada: Passenger 259 232 986 903
Cargo 6 6 23 25
Regional Airlines: Passenger 31 25 99 79
Cargo 0 0 0 0
- - - -
296 263 1,108 1,007
___ ___ _____ _____
Other International
Air Canada: Passenger 312 332 898 902
Cargo 42 38 150 154
__ __ ___ ___
354 370 1,048 1,056
___ ___ _____ _____
Total transportation revenue 1,100 1,067 3,861 3,692
Non-transportation revenue 94 86 393 411
__ __ ___ ___
Total revenues $1,194 $1,153 $4,254 $4,103
______ ______ ______ ______
______ ______ ______ ______
For passenger and cargo, the allocation to service is determined based on
flight destination. Non-transportation revenues are almost exclusively
attributable to Canada.
Property and Equipment:
Air Canada is a Canadian based domestic and international carrier and
while the Corporation's flight equipment is used on various routes
internationally, for purposes of segment reporting, the Corporation
attributes the location of flight equipment to Canada. As a consequence,
substantially all of the Corporation's property and equipment and
goodwill is related to operations in Canada.
5. Comparative Figures
Certain comparative figures have been reclassified to conform with the
financial statement presentation adopted in the current period.
Air Canada is a fully-privatized airline offering customers over 700
destinations in more than 110 countries.
-0- 09/17/1999 |
