Air Canada reports a first quarter net loss of approximately C$260 million

Air Canada (Montreal) today provided preliminary results for the first quarter of 2013:

Adjusted net loss of approximately $143 million versus an adjusted net loss of $162 million in the first quarter of 2012
Net loss of approximately $260 million versus a net loss of $274 million in the first quarter of 2012
Operating loss of approximately $106 million versus an operating loss of $91 million in the first quarter of 2012
EBITDAR (earnings before interest, taxes, depreciation, amortization and impairment, and aircraft rent) of approximately $145 million versus $174 million in the first quarter of 2012

In the first quarter of 2013, Air Canada’s financial results were negatively impacted by an estimated $10 million due to flight cancellations caused by severe weather conditions and operational challenges at the airline’s major Canadian airport hubs, as well as aircraft deicing service delays at Toronto Pearson International Airport. A higher proportion of leisure passengers versus business passengers, in part due to a shift of the Easter holiday, and an unfavourable foreign currency impact on passenger revenues also contributed to the lower operating results year-over-year. In addition, Air Canada expects to record an impairment charge of $24 million related to Airbus A340-300 aircraft (none of which are operated by Air Canada) which is reflected in Air Canada’s preliminary operating loss and net loss results.

Air Canada estimates that its passenger revenue per available seat mile (“RASM”) in the first quarter of 2013, on a system-wide basis, increased by approximately 1.1 per cent as compared to the first quarter of 2012, due to passenger load factor improvements partly offset by lower yields. Air Canada also estimates that, in the first quarter of 2013, its adjusted cost per available seat mile (“adjusted CASM”), which excludes fuel expense, the cost of ground packages at Air Canada Vacations and unusual items (such as impairment charges) increased approximately 1.4 per cent compared to the first quarter of 2012, a more favourable outcome than the range of the 3 to 4 per cent increase previously projected in its February 7, 2013 news release. The result was better than forecasted due largely to Air Canada having recorded favourable accrual adjustments of $15 million which had not been previously projected, and to timing of certain maintenance events.

Adjusted net debt is estimated to be $3,987 million at March 31, 2013, a decrease of $246 million from March 31, 2012, with cash and short-term investments estimated to represent 17 per cent of 12-month trailing operating revenues at the end of the first quarter of 2013.

Air Canada’s system capacity, as measured by available seat miles (“ASMs”), in the first quarter of 2013 was 1.1 per cent lower than the first quarter of 2012, within the range of the 0 to 1.5 per cent decrease previously projected in its February 7, 2013 news release.

All figures reported above with respect to the first quarter of 2013 are preliminary, have not been reviewed by Air Canada’s auditors and are subject to change as Air Canada’s first quarter 2013 financial results are finalized. The outlook and preliminary estimates provided in this news release constitute forward-looking statements within the meaning of applicable securities laws, are based on a number of assumptions and are subject to a number of risks and uncertainties.

Air Canada continues to expect full year 2013 system ASM capacity to increase in the range of 1.5 to 2.5 per cent when compared to the full year 2012. Air Canada also continues to expect its full year 2013 domestic capacity to increase in the range of 0.5 to 1.5 per cent from the full year 2012. Taking into account the better than expected adjusted CASM result in the first quarter of 2013, Air Canada now expects its full year 2013 adjusted CASM to decrease in the range of 0.5 to 1.5 per cent from the full year 2012 (as opposed to the 0 to 1.0 per cent decrease projected in Air Canada’s February 7, 2013 news release).

Air Canada’s above-mentioned outlook assumes Canadian GDP growth of 1.25 to 1.75 per cent for 2013. In addition, Air Canada expects that the Canadian dollar will trade, on average, at C$1.02 per U.S. dollar for the full year 2013 and that the price of jet fuel will average 86 cents per litre for the full year 2013.

Air Canada: