HALIFAX, May 10 /CNW/ - Today, Jazz Air Income Fund (TSX: JAZ.UN) ("Jazz
Air Fund") announced the first quarter 2007 results, with a net income of
$35.3 million - an improvement of 5.5% over the same quarter in 2006. These
results were generated under a Capacity Purchase Agreement (CPA) with Air
Canada that became effective January 1, 2006. Jazz Air Fund has 100%
beneficial ownership interest in Jazz Air LP ("Air Canada Jazz").Q1 2007 HIGHLIGHTS
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- Operating revenue of $364.2 million, up 13.8%.
- EBITDAR(1) of $76.2 million, up 6.6%.
- Operating income of $36.3 million, up 2.8%.
- Net income of $35.3 million, up 5.5%.
- Distributable cash(1) of $30.3 million."I'm pleased with our financial and operational performance for the first
quarter of 2007," said Joseph Randell, President and Chief Executive Officer
of Air Canada Jazz. "We continue to build upon the strong results achieved in
our first year as a public entity and to invest in our people and our
business. Specifically, our near-term goals are to over achieve the new cash
distribution level established in January, 2007, and to create value for our
unitholders."
Financial Performance
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For the first quarter of 2007, operating revenue was $364.2 million,
compared to $320.0 million in the same period of 2006, representing an
increase of $44.2 million or 13.8%. The increase in operating revenue is
attributable to an increase of nine aircraft in service at Jazz, a 12.1%
increase in the Block Hours flown and a $20.9 million increase in pass-through
costs. For the three-month period ended March 31, 2007, performance incentives
payable by Air Canada to Air Canada Jazz under the CPA amounted to
$3.1 million or 1.4% of Jazz's Scheduled Flights Revenue as compared to
$4.0 million or 2.0% for the same period in 2006.
Year over year for the first quarter, other revenue decreased from
$2.4 million to $2.3 million ($0.3 million of which relates to operations
covered under the CPA). Other revenue is derived from charter flights,
maintenance, repair and overhaul (MRO) operation and other sources of revenue
such as groundhandling services and flight simulator training. Jazz continues
to focus on developing its other revenue and believes that it is well equipped
to expand its charter operations.
In line with the growth in revenue, total operating expenses increased by
$43.2 million or 15.2% compared to the first quarter of 2006. Pass-through
fuel expense increased by $11.6 million or 19.7% due to an increase of
$1.3 million in the price of fuel and a $10.3 million increase in fuel usage
which corresponds to the 12.1% increase in Block Hours flown. Aircraft rent
increased by approximately $2.8 million or 8.7% over the previous first
quarter mainly due to an increase of nine jet aircraft (7 CRJ-100s and
2 CRJ- 200s) from the same period in 2006 which accounted for approximately
$2.6 million of the variance. In addition, a higher foreign exchange rate
accounted for $0.2 million related mainly to the CRJ leases. Capacity, as
measured by available seat miles (ASM), increased by 13.1%. Controllable Costs
per Available Seat Mile did not change in the first quarter of 2007 from the
first quarter of 2006.
For the first quarter of 2007, EBITDAR was $76.2 million compared to
$71.5 million in the first quarter 2006, an increase of $4.7 million or 6.6%.
This improvement was achieved through increased capacity. The operating income
of $36.3 million represents an improvement of $1.0 million or 2.8%. In the
quarter, estimated distributable cash was $30.3 million.
In the first quarter of 2007, non-operating expenses amounted to
$1.0 million, a decrease of $0.9 million from 2006. The cost savings are
mainly due to the restructuring of long-term debt of Air Canada Jazz that
occurred in connection with the initial public offering of Jazz Air Fund and
increased interest income from short-term investments.
Net income for the first quarter was $35.3 million compared to
$33.5 million recorded in the first quarter last year, an improvement of
$1.8 million or 5.5%.
Air Canada Jazz's and Jazz Air Fund's unaudited interim consolidated
financial statements for the period ended March 31, 2007, and accompanying
Management's Discussion and Analysis (MD&A) are available on Air Canada Jazz's
website www.flyjazz.ca and at www.sedar.com. A copy may also be obtained on
request by contacting Air Canada Jazz's Investor Relations at:
investorsinfo @flyjazz.ca or (902) 873-5000.
Recent Events
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People
For the period ended March 31, 2007, Jazz had an average of 4,351 full
time equivalent (FTE) employees compared to an average of 3,944 FTE employees
in 2006. This reflects a 10.3% increase over the same period of 2006.
Management carefully monitors growth and these employment increases are
considered appropriate with capacity growth of 13.1% as measured by ASMs,
resulting in a 2.5% improvement in ASMs per employee compared to the prior
year.
Wage Reviews with Canadian Air Line Dispatchers Association
The Canadian Airline Dispatchers Association (CALDA), which represents
52 dispatchers, has been in wage review discussions with Air Canada Jazz, and
both parties have agreed to revert to binding arbitration. Hearing dates are
set for May 11 and 12, 2007. There are no outstanding collective agreement
wage reviews.
Quarterly Investor Conference Call / Audio Webcast
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Air Canada Jazz will hold an analyst call at 12:30 p.m. ET on Thursday,
May 10, 2007, to discuss the first quarter results of Jazz Air Fund and Jazz
Air LP. The call may be accessed by dialing 1-800-588-4490 (toll free) or
(416) 644-3426 within the Toronto area. The call will be simultaneously audio
webcast
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1835020
The conference call webcast will be archived on Air Canada Jazz's
Investor Relations website at www.flyjazz.ca. A playback of the call can also
be accessed until midnight ET, Tuesday, May 22, 2007, by
dialing 1-877-289-8525 (toll free) or (416)-640-1917 within the Toronto area
and passcode 21228296#.
(1)Non-GAAP Financial Measures
EBITDAR
EBITDAR (earnings before interest, taxes, depreciation, amortization and
obsolescence and aircraft rent) is a non-GAAP financial measure commonly used
in the airline industry to view operating results before aircraft rent and
ownership costs, including the impact of foreign exchange on monetary items as
these costs can vary significantly among airlines due to differences in the
way airlines finance their aircraft and asset acquisitions. EBITDAR is not a
recognized measure for financial statement presentation under GAAP, does not
have a standardized meaning and is therefore not comparable to similar
measures presented by other public entities. Readers should refer to Air
Canada Jazz's and Jazz Air Fund's Management Discussion and Analysis for a
reconciliation of EBITDAR to operating income (loss).
DISTRIBUTABLE CASH
Cash available for distributions or distributable cash is a non-GAAP
measure generally used by Canadian open-ended trusts as an indication of
financial performance. It should not been seen as a measurement of liquidity
or a substitute for comparable metrics prepared in accordance with GAAP. Cash
available for distributions may differ from similar calculations as reported
by other entities and, accordingly, may not be comparable to cash available
for distributions as reported by such entities. Readers should refer to Air
Canada Jazz's and Jazz Air Fund's Management Discussion and Analysis for a
reconciliation of distributable cash to cash provided by operating activities.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
---------------------------------------------
Certain statements in this news release may contain statements which are
forward-looking statements. These forward-looking statements are identified by
the use of terms and phrases such as "anticipate", "believe", "could",
"estimate", "expect", "intend", "may", "plan", "predict", "project", "will",
"would", and similar terms and phrases, including references to assumptions.
Such statements may involve but are not limited to comments with respect to
strategies, expectations, planned operations or future actions.
Forward-looking statements, by their nature, are based on assumptions and are
subject to important risks and uncertainties. Any forecasts or forward-looking
predictions or statements cannot be relied upon due to, amongst other things,
changing external events and general uncertainties of the business. Such
statements involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements to differ
materially from those expressed in the forward-looking statements. Results
indicated in forward-looking statements may differ materially from actual
results for a number of reasons, including without limitation, general
industry, market and economic conditions, war, terrorist attacks, changes in
demand due to the seasonal nature of the business, the ability to reduce
operating costs and employee counts, employee relations, labour negotiations
or disputes, restructuring, pension issues, energy prices, currency exchange
and interest rates, changes in laws, adverse regulatory developments or
proceedings, pending and future litigation and actions by third parties, as
well as the factors identified throughout Jazz Air Fund's filings with
securities regulators in Canada and in particular those identified in the Risk
Factors section of Air Canada Jazz's and Jazz Air Fund's annual MD&A dated
February 7, 2007.The forward-looking statements contained in this discussion
represent Air Canada Jazz's expectations as of May 9, 2007, and are subject to
change after such date. However, Air Canada Jazz disclaims any intention or
obligation to update or revise any forward-looking statements whether as a
result of new information, future events or otherwise except as required under
applicable law.
About Jazz Air Income Fund
Jazz Air Income Fund is an unincorporated, open-ended trust established
under the laws of the Province of Ontario, created to indirectly acquire and
hold an interest in the outstanding limited partnership units of Jazz Air LP.
About Jazz Air LP
Jazz Air LP (Air Canada Jazz) is the second largest airline in Canada
based on fleet size and the number of routes operated. Air Canada Jazz
operates more flights and flies to more Canadian destinations than any other
Canadian carrier. Air Canada Jazz forms an integral part of Air Canada's
domestic and transborder market presence and strategy.
Air Canada Jazz and Air Canada are parties to a Capacity Purchase
Agreement (CPA) pursuant to which Air Canada currently purchases substantially
all of Air Canada Jazz's fleet capacity based on predetermined rates. Air
Canada Jazz provides all crews, airframe maintenance and, in some cases,
airport operations. In turn, Air Canada determines routes and controls
scheduling, ticket prices, product distribution, seat inventories, marketing
and advertising for these flights.
Air Canada Jazz is not a typical airline. Currently, over 99% of Air
Canada Jazz's revenues are derived from the CPA. Air Canada Jazz is isolated
from most of the risks typically associated with airlines such as fuel and
navigation costs since these costs are passed-through to Air Canada.
Under the CPA with Air Canada, Air Canada Jazz provides service to and
from lower density markets as well as higher density markets at off-peak times
throughout Canada and to and from certain destinations in the United States.
As of May 1, 2007, Air Canada Jazz operated scheduled passenger service on
behalf of Air Canada with approximately 827 departures per weekday to 56
destinations in Canada and 28 destinations in the United States with a fleet
of 135 aircraft.
Air Canada Jazz is the focal point of Air Canada's regional passenger
strategy. Air Canada Jazz and Air Canada have linked their regional and
mainline networks in order to serve connecting passengers more efficiently and
to provide valuable feed traffic to Air Canada's mainline routes.
