Monthly Archives: October 2018

Watermakers Air becomes Makers Air today

Watermakers Air, the leading private flight charter based out of Fort Lauderdale, also with scheduled service to the Bahamian Islands, will debut a new name and brand at the start of the 2018 Fort Lauderdale International Boat Show, which will take place this upcoming October 31st through November 4th.

The boutique airline is proud to announce they will now be known as Makers Air. The name change comes at the heels of the launch of a new brand look that reflects their unparalleled personalized service and prestige.

“With Watermakers Air we set out to create an island airline that provided top level service to more remote Bahamian destinations and eliminated the challenges of commercial flying. Now, with Makers Air, we’ve taken our brand promise to the next level by creating a tailored passenger experience that is focused on customer service and connecting our clients with the Out Islands of The Bahamas,” stated David Hocher, Makers Air’s Owner and CEO.

Makers Air

About Makers Air

Makers Air, based out of Fort Lauderdale Executive airport, is a charter operator with scheduled service to the Bahamian Islands. As a family-owned business founded in 1999, this boutique airline provides a personalized and upscale alternative to commercial flying. Offering multiple daily flights at competitive prices, Makers Air connects passengers to many of the most pristine and hard to reach destinations in the Bahamas. Makers Air delivers an experience made for the journey seeker, air travel that is both effortless and exciting.

Route Map:

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Nolinor’s new Boeing 737-300 in the “Laval Rocket” scheme

Nolinor Aviation is proud to announce that it will be the official carrier of the Rocket de Laval for the coming year. The Montreal Canadiens Affiliated Hockey League club will enjoy the comfort of a Boeing 737-300 specially configured to accommodate sports teams that carry all the equipment needed for games.

The 737-300 is dedicated to the hockey club and is personalized in the colors of the Rocket de Laval and will be available to the players and all staff of the team for their travel to Cleveland, Charlotte and Winnipeg.

Photo: Nolinor Aviation.

Air Botswana celebrates its 30th anniversary with a new livery

Airline Color Scheme - Introduced 2018

Air Botswana (Pty) Limited signed a firm order for two new ATR 72-600s. The company has taken the opportunity of the new aircraft to introduce a new livery as it celebrates 30 years of flying.

The first ATR 72-600 has been painted at Toulouse pending delivery.

The pictured F-WWEE (msn 1433) will become A2-ABK on delivery.

Top Copyright Photo: Air Botswana ATR 72-212A (ATR 72-600) F-WWEE (A2-ABK) (msn 1433) TLS (Paul Bannwarth). Image: 944207.

Air Botswana aircraft slide show:

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Finnair to add three new leisure routes for next summer: Porto, Bologna and Bordeaux

Finnair Airbus A319-112 OH-LVD (msn 1352) (Oneworld) BRU (Ton Jochems). Image: 936986.

Finnair has made this announcement:

Further strengthening its summer holiday offering for leisure customers, Finnair will open three new routes to Bologna, Bordeaux and Porto for the peak summer season in 2019. In addition, capacity will also be added to popular summer destinations.

Finnair will fly up to three weekly flights to Bologna, Italy, between April 10 and October 18, 2019.

Finnair will fly up to two weekly flights to Bordeaux, France, between May 11 and September 14, 2019.

Finnair will fly two weekly flights to Porto, Portugal, between June 21 and August 12, 2019.

All three new routes will be operated with an Airbus A319 aircraft.

Finnair will also add capacity to some of its popular leisure destinations. During the peak summer season, an additional weekly frequency will be added to Alanya-Gazipasa, Palma de Mallorca, Split and Tel Aviv.

In addition, Finnair will also fly an additional triangle flight on Wednesdays between Helsinki, Ivalo and Kittilä from April 24 to October 23, 2019.

Top Copyright Photo (all others by Finnair): Finnair Airbus A319-112 OH-LVD (msn 1352) (Oneworld) BRU (Ton Jochems). Image: 936986.

Finnair aircraft slide show:

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Philippine Airlines launches its nonstop New York route

First flight June 7, 2018, first Philippines Airbus A350-900

On October 29, 2018, Philippine Airlines marked another milestone in aviation history as the first airline to fly nonstop service to New York from the Philippines.

A brand-new PAL Airbus A350-900 commenced the historic flight when it departed as flight PR126 from Manila’s Ninoy Aquino International Airport for a 16-hour nonstop journey across the North Polar regions, to land at New York’s John F. Kennedy International Airport on the evening of the same day.

From October 29 to November 3, 2018 PAL will operate a four times weekly service (Monday / Tuesday / Thursday / Saturday) from Manila to New York.

PR126 departs from Manila at 8:10 PM and arrives in New York JFK at 11:15 PM (local time) on the same day. By November 5, Manila departure will shift to 9:00 PM and arrival in New York JFK remains at 11:15 PM. Starting on December 6, 2018, PAL will start serving the MNL-JFK route five times weekly with the introduction of the 5th frequency (every Wednesday).

From October 30 to November 5, PAL will serve the New York to Manila route four times weekly (Tuesday/ Wednesday / Friday / Sunday).

PR127 will leave New York JFK at 1:45 AM (local time) and touch down in Manila is at 6:25 AM the following day. By November 7, arrival in Manila will be at 7:25 AM (note: departure from New York remains at 1:45 AM local time.)

PAL will operate the 5th frequency (every Thursday) out of New York starting December 13.

All PAL flights to New York will depart from NAIA Terminal 2. PAL flights from New York will arrive at NAIA Terminal 1. However, PAL flights to and from Canada, i.e. Vancouver and Toronto, will use NAIA Terminal 1 as their point of departure and arrival in Manila.


Above Photo: PAL. Leading the Flight: PAL A350 Chief Pilot Captain Emmanuel ‘Butch’ Generoso (second from the left) and Captain Jose David (left).

Top Copyright Photo: Philippines (Philippine Airlines) Airbus A350-941 F-WZNA (RP-C3501) (msn 221) TLS (Eurospot). Image: 942285.

PAL aircraft slide show:

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Ethiopian flight from Addis Ababa to Los Angeles to transit via Lome

Named "Walia Ibex"

Ethiopian Airlines has announced that it has changed the ultra-long haul route from Addis Ababa to Los Angeles to transit through Lome, Togo as of December 17, 2018 and will start new route from Addis Ababa to Dublin via Madrid as of December 15, 2018.

The new route will be the only and first of its kind to connect West Africa with the West Coast of the USA with a direct flight.

The new route to LAX via LFW will be operated as per below schedule:

 

page1image39311376

Flight

page1image62763776

Eff Date

Frequency

Dept Apt

Dept Time

page1image62763008 page1image62762816

Arvl Apt

Arvl Time

fleet

page1image39315184

ET 0504

page1image62522688

17-Dec- 18

MON,WED,SAT

ADD

8:20

page1image62536512 page1image62523456

LFW

11:10

ET 788

…….

LFW

page1image39318208page1image62598400

12:25

LAX

19:35

page1image62592064

ET 788

page1image62571456

ET 0505

17-Dec- 18

MON,WED,SAT

LAX

21:35

LFW

19:35

ET 788

…….

page1image39292864page1image62805824

LFW

20:50

ADD

page1image62867520

5:40

page1image62390272

ET 788

And the new route to DUB via MAD will be operated as per below schedule:

Flight

Eff Date

Frequency

Dept Apt

Dept Time

Arvl Apt

Arrv Time

page1image39300592

fleet

ET 0712

15-Dec-18

.2.4.6.

ADD

23:50

MAD

5:20

ET 788

…….

MAD

6:20

DUB

8:00

ET 788

ET 0713

16-Dec-18

..3.5.7

DUB

16:45

MAD

20:30

ET 788

…….

MAD

21:30

ADD

7:00

ET 788

Top Copyright Photo: Ethiopian Airlines Boeing 787-8 Dreamliner ET-AOT (msn 34748) LAX (Michael B. Ing). Image: 940816.

Ethiopian aircraft slide show:

Routes in Africa:

Air Canada reports third quarter 2018 results

Air Canada today reported third quarter 2018 EBITDAR(1) (earnings before interest, taxes, depreciation, amortization, impairment and aircraft rent) of $1.265 billion compared to third quarter 2017 EBITDAR of $1.360 billion.  Air Canada reported operating income of $840 million compared to operating income of $976 million in last year’s quarter.  The airline reported third quarter adjusted pre-tax income(1) of $793 million compared to adjusted pre-tax income of $922 million in the prior year’s quarter.  On a GAAP basis, in the third quarter of 2018, Air Canada reported income before income taxes of $876 million compared to income before income taxes of $965 million in the third quarter of 2017.

“I am extremely pleased with both our unit revenue performance and our adjusted CASM(1) results for our all-important third quarter.  Quarterly operating revenue grew 11 per cent, exceeding $5 billion for the first time in our history, and our year-over-year PRASM performance was among the best in the North American airline industry.  Strong revenue and cost management substantially offset the challenges we faced in the quarter, principally the significant increase in fuel prices.  Once again, the strength of our brand and of our people shone through in the quarter,” said Calin Rovinescu, President and Chief Executive of Air Canada.

“Going forward, we expect our revenue momentum to continue in the fourth quarter and into next year.  Indeed, with the trends we are seeing now, we expect our PRASM performance, both in the domestic market and throughout the network, to continue to improve in the final quarter of 2018,” said Mr. Rovinescu.

“Complementing our record revenue generation was a disciplined and efficient approach to costs. Adjusted CASM rose 1.1 per cent from the third quarter of the prior year, well below the 2 to 3 per cent increase projected for the period with our second quarter results in July. Largely driven by higher fuel prices, Air Canada’s CASM increased 9.8 per cent from the third quarter of 2017.  Cost control will remain central to our strategy and we have already identified or realized two-thirds of the $250 millioncost transformation program initiated early this year. Furthermore, we reached record unrestricted liquidity of $5.3 billion and achieved a leverage ratio(1) of 2.0.

“Our business model is creating substantial value.  We have a powerful and comprehensive network with three strong global hubs.  We have a compelling product and customer offering.  In July, Air Canada was named the Best Airline in North Americafor the second consecutive year and for the seventh time in nine years by Skytrax, which has also reaffirmed Air Canada’s rating as North America’s only four-star international network carrier.

“I thank our 30,000 employees for their hard work in taking care of our customers during a challenging but satisfying summer. We set a new, single-day record for passengers carried of more than 178,000 in August.  Finally, I also thank our customers for their continued loyalty. It is our unwavering commitment to continue improving and providing superior, award-winning service as we transport them safely to their destinations,” concluded Mr. Rovinescu.

Acquisition of Aimia’s Aeroplan Loyalty Business

On August 21, 2018, Air Canada, The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Visa Canada Corporation (collectively, “the Consortium”) and Aimia Inc. (“Aimia”) announced that they had entered into an agreement in principle for the acquisition of Aimia’s Aeroplan loyalty business.  The transaction is subject to the satisfactory conclusion of definitive transaction documents, Aimia shareholder approval, and certain other conditions, including due diligence, receipt of customary regulatory approvals and completion by the Consortium of credit card loyalty program and network agreements for future participation in Air Canada’s new loyalty program.  The transaction is expected to be completed by the end of 2018.

Third Quarter Income Statement Highlights

In the third quarter of 2018, on capacity growth of 6.7 per cent, record system passenger revenues of $5.018 billion increased $504 million or 11.2 per cent from the third quarter of 2017.  The increase in system passenger revenues was driven by traffic growth of 7.5 per cent and a yield improvement of 3.4 per cent, despite an increase in average stage length of 1.3 per cent which had the effect of reducing system yield by 0.7 percentage points. On a stage-length adjusted basis, system yield increased 4.1 per cent year-over-year.  Passenger revenue per available seat mile (PRASM) increased 4.2 per cent over the same quarter in 2017, or 4.9 per cent on a stage length adjusted basis.

In the business cabin, system passenger revenues increased $98 million or 13.0 per cent from the third quarter of 2017 on traffic and yield growth of 8.9 per cent and 3.7 per cent, respectively.

In the third quarter of 2018, operating expenses of $4.575 billion increased $671 million or 17 per cent from the same quarter in 2017, mainly driven by higher fuel prices year-over-year and by the increase in capacity.

Air Canada’s cost per available seat mile (CASM) increased 9.8 per cent from the third quarter of 2017.  The airline’s adjusted CASM increased 1.1 per cent from the prior year’s quarter, better than the 2.0 to 3.0 per cent increase projected in Air Canada’s news release dated July 27, 2018.  Air Canada’s better than expected adjusted CASM performance was largely driven by lower than forecasted Regional airlines expense, the impact of cost reduction initiatives related to Air Canada’s cost transformation program, and other operating expense reductions.  The lower Regional airlines expense was primarily due to certain engine maintenance events being recorded as capitalized maintenance versus operating expense in the third quarter of 2018, as well as timing of maintenance activities related to the Air Canada Express fleet.

Air Canada reported adjusted net income(1) of $561 million or $2.03 per diluted share in the third quarter of 2018 compared to adjusted net income of $922 million or $3.33 per diluted share in third quarter of 2017.  On a GAAP basis, the airline reported third quarter 2018 net income of $645 million or $2.34 per diluted share compared to third quarter 2017 net income of $1.723 billion or $6.22 per diluted share. The net income in the third quarter of 2017 included an income tax recovery of $758 million.

Financial and Capital Management Highlights

At September 30, 2018, unrestricted liquidity (cash, short-term investments and undrawn lines of credit) amounted to $5.309 billion, the highest level in Air Canada’s history (December 31, 2017$4.181 billion).

At September 30, 2018, adjusted net debt of $5.620 billion decreased $496 million from December 31, 2017.  In the nine months ended September 30, 2018, increases in long-term debt and finance lease balances of $559 million and capitalized operating lease balances of $63 million were more than offset by an increase in cash and short-term investment balances of $1,118 million.  At September 30, 2018, Air Canada’s leverage ratio was 2.0 versus a ratio of 2.1 at December 31, 2017.

Net cash flows from operating activities of $371 million in the third quarter of 2018 decreased $122 million compared to the third quarter of 2017.  Free cash flow(1) of $470 million in the third quarter of 2018 represented an increase of $146 millionfrom the third quarter of 2017.  Third quarter 2018 free cash flow included net proceeds of $293 million from the sale of 25 Embraer 190 aircraft.

For the 12 months ended September 30, 2018, return on invested capital (ROIC(1)) was 12.7 per cent, significantly higher than Air Canada’s weighted average cost of capital of 7.4 per cent.

2017 Investor Day Targets and Current Outlook

At its September 2017 Investor Day, Air Canada provided guidance on key financial metrics:

  • Annual EBITDAR margin (EBITDAR as a percentage of operating revenue) of 17-20 per cent in 2018, 2019 and 2020:
    As disclosed in its news release dated July 27, 2018, Air Canada continues to expect to achieve an annual EBITDAR margin of approximately 16 per cent for the full year 2018.  This decrease in projected EBITDAR margin takes into account a significantly higher fuel price per litre than that assumed in Air Canada’s Investor Day news release dated September 19, 2017.  As additional mitigation measures take effect, including further pricing and productivity improvements and the airline’s $250 million Cost Transformation Program due for completion in 2019, Air Canada is confident that its EBITDAR margin and ROIC will normalize by year-end and that it will realize these Investor Day targets post-2018.

    • As mentioned above, Air Canada continues to expect to achieve an annual EBITDAR margin of 17-20 per cent in 2019 and 2020.
  • Annual ROIC of 13-16 per cent in 2018, 2019 and 2020:
    As disclosed in its news release dated July 27, 2018, Air Canada continues to expect its annual ROIC to be approximately 12 per cent in 2018.  This decrease in projected annual ROIC reflects Air Canada’s expectation of a lower level of adjusted net income than previously anticipated.

    • As mentioned above, Air Canada continues to expect to achieve an annual ROIC of 13-16 per cent in 2019 and 2020.
  • Cumulative free cash flow of $2.0 billion to $3.0 billion over the 2018-2020 period.
    • Air Canada continues to expect to achieve this target.
  • A leverage ratio not exceeding 1.2 by the end of 2020 (measured by adjusted net debt over trailing 12-month EBITDAR):
    • Air Canada continues to expect to achieve this target.

Full Year 2018 Free Cash Flow

Air Canada now expects positive free cash flow in the range of $500 million to $600 million in 2018, as opposed to the range of $350 million to $500 million projected in Air Canada’s news release dated July 27, 2018, largely due to higher than expected cash from operations, including working capital.

Fourth Quarter and Full Year 2018 Adjusted CASM

For the fourth quarter of 2018, Air Canada expects adjusted CASM (which excludes fuel expense, the cost of ground packages at Air Canada Vacations and special items) to increase 1.5 to 2.5 per cent when compared to the fourth quarter of 2017.

Air Canada now expects full year 2018 adjusted CASM to range between no increase to an increase of 0.75 per cent when compared to the full year 2017, instead of the range of a decrease of 0.5 per cent to an increase of 1.0 per cent projected in Air Canada’s July 27, 2018 news release.  Approximately 0.75 percentage points of this range are driven by non-recurring costs for branding initiatives and new uniforms, customer service and technology investments, accelerated depreciation and sale-leaseback rent expense for Embraer 190 aircraft, and 2018 start-up costs of approximately $10 million related to Air Canada’s new loyalty program scheduled to launch in 2020.

Additional Guidance

For the full year 2018:

Depreciation, Amortization and Impairment Expense

Air Canada continues to expect depreciation, amortization and impairment expense to increase by approximately $125 millionfrom the full year 2017.

Employee Benefits Expense

Air Canada continues to expect employee benefits expense to increase by approximately $75 million from the full year 2017.

Aircraft Maintenance Expense

Air Canada now expects aircraft maintenance expense to increase by approximately $95 million from the full year 2017, as opposed to the increase of $90 million projected in Air Canada’s news release dated July 27, 2018.

2018 Outlook – Major Assumptions:  Assumptions were made by Air Canada in preparing and making forward-looking statements. As part of its assumptions, Air Canada assumes continued relatively modest Canadian GDP growth for the fourth quarter and full year 2018. Air Canada also expects that the Canadian dollar will trade, on average, at C$1.30 per U.S. dollar in the fourth quarter and at C$1.29 per U.S. dollar for the full year 2018 and that the price of jet fuel will average 86 CAD cents per litre in the fourth quarter and 81 CAD cents per litre for the full year 2018.

The following table summarizes the above-mentioned outlook for the fourth quarter and the full year 2018 and related major assumptions:

 

Full Year 2018

EBITDAR Margin

Approximately 16%

ROIC

Approximately 12%

Free Cash Flow

$500 – $600 million

Fourth Quarter 2018 versus

Fourth Quarter 2017

Full Year 2018 versus

Full Year 2017

Adjusted CASM

Increase of 1.5% to 2.5%

Range between no increase to an
increase of 0.75%

Depreciation, Amortization and
Impairment Expense

Increase by $125 million

Employee Benefits Expense

Increase by $75 million

Aircraft Maintenance Expense

Increase by $95 million

Major Assumptions

Fourth Quarter 2018

Full Year 2018

Canadian GDP

Relatively modest growth

Relatively modest growth

Canadian dollar per U.S. dollar

1.30

1.29

Jet fuel price – CAD cents per litre

86

81

 

The outlook provided constitutes forward-looking statements within the meaning of applicable securities laws and is based on a number of additional assumptions and subject to a number of risks.  Please see section below entitled “Caution Regarding Forward-Looking Information”.

(1) Non-GAAP Measures

Below is a description of certain non-GAAP measures used by Air Canada in an effort 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 Third Quarter 2018 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 income (expense) relating to employee benefits, mark-to-market adjustments on derivatives and other financial instruments recorded at fair value, gain 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.  Starting as of and including the fourth quarter of 2017, adjusted net income (loss) is determined net of tax.
  • 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 income (expense) relating to employee benefits, mark-to-market adjustments on derivatives and other financial instruments recorded at fair value, gain 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.
  • EBITDAR is commonly used in the airline industry and is used by Air Canada as a means to view operating results before interest, taxes, depreciation, amortization, impairment and aircraft rent 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 EBITDAR 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 ongoing airline business without the effects of fuel expense, the cost of ground packages at Air Canada Vacations® and special items, as such expenses may distort the analysis of certain business trends and render comparative analysis to other airlines less meaningful.  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.
  • “Leverage ratio” refers to adjusted net debt to trailing 12-month EBITDAR 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 adjusted net debt by trailing 12-month EBITDAR (excluding special items). As mentioned above, Air Canada excludes special items from EBITDAR 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-leaseback transactions.
  • 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. Return is based on adjusted pre-tax income (or loss, as applicable), excluding interest expense and implicit interest on operating leases. Invested capital includes average year-over-year long-term debt, average year-over-year finance lease obligations, average year-over-year shareholders’ equity, net of excess cash not required to run its core business operations, and the value of capitalized operating leases (the latter calculated by multiplying annualized aircraft rent by 7).  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 Third Quarter 2018 Interim Unaudited Consolidated Financial Statements and Notes and its Third Quarter 2018 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.

Photo: Air Canada.