HALIFAX, Feb. 6 /CNW/ - Today, the fourth quarter and year end 2007
results of Jazz Air Income Fund (TSX: JAZ.UN) and Jazz Air LP ("Jazz") were
announced.
Q4 2007 HIGHLIGHTS
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- Operating revenue of $372.1 million, up 5.8%.
- Operating income of $36.0 million, up 10.1%.
- Net income of $35.1 million, up 9.9%.
- Distributable cash(1) of $33.1 million, up 9.2%.
Year end 2007 HIGHLIGHTS
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- Operating revenue of $1,495.4 million, up 8.3%.
- Operating income of $153.2 million, up 6.5%.
- Net income of $150.7 million, up 7.6%.
- Distributable cash(1) of $151.3 million, up 10.8%.
"The year 2007 marked many accomplishments and events for Jazz, including
positive financial results, strong operational performance and a significant
change in ownership structure," said Joseph Randell, President and Chief
Executive Officer of Jazz. "I am very pleased with the improvements we made in
all areas over 2006 - which in itself was also a good year for Jazz. We've met
our target cash distribution levels for the year and are confident this trend
will continue into 2008."
Financial Performance - Fourth Quarter 2007
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For the fourth quarter of 2007, operating revenue was $372.1 million,
compared to $351.9 million in the same period of 2006, representing an
increase of $20.3 million or 5.8%. The increase in operating revenue is
attributable to an increase of 3.7% in the Block Hours flown and a
$17.7 million increase in pass-through costs. For the three-month period ended
December 31, 2007, performance incentives payable by Air Canada to Jazz under
the CPA amounted to $4.0 million or 1.8% of Jazz's Scheduled Flights Revenue
as compared to $3.1 million or 1.4% for the same period in 2006. Incentives
earned in this quarter were higher due to fewer controllable flight
cancellations as a result of technology and process improvements.
Year-over-year for the fourth quarter, other revenue sources increased from
$1.3 million to $1.4 million.
In line with the growth in revenue, total operating expenses increased
from $319.1 million in the fourth quarter of 2006 to $336.1 million for the
same period in 2007, an increase of $16.9 million or 5.3%. This translated
into a unit cost increase on a CASM basis of 2.3%. Fuel saw the largest dollar
increase which amounted to $14.2 million and was driven mostly as a result of
jet fuel price increases. CASM, excluding fuel, was down 1.8% for the period,
and when isolated to Controllable Cost, was down 3.2%. Part of the decrease in
controllable CASM was a result of the impact of the lower US dollar exchange
rate in aircraft rent offset by maintenance costs.
For the fourth quarter of 2007, EBITDAR(1) was $71.6 million compared to
$71.7 million in the fourth quarter 2006, a decrease of $0.1 million or 0.1%.
The operating income of $36.0 million represents an improvement of
$3.3 million or 10.1% over the same period last year. Distributable cash was
$33.1 million up 9.2% from the fourth quarter of 2006.
The Controllable Adjusted Actual Margin for the fourth quarter of 2007
was 14.15%, which is over the target of 14.09% by 6 basis points or
approximately $0.1 million. This compares to the fourth quarter of 2006 margin
of 13.0% which was approximately $2.4 million less than the target of 14.09%.
Overall during the fourth quarter, the CPA Scheduled Flights Revenue
decreased on an Available Seat Mile (ASM) basis by 2.2% while Controllable
Costs decreased by 3.2%. The reduction in revenue on an ASM basis is primarily
a result of fixed revenue fees being unitized over more ASMs as generated by
the regional jet fleet and lower US exchange rates on aircraft leases. The
decrease in Controllable Cost on an ASM basis is a result of lower aircraft
rent units costs as a result of lower US exchange rates, offset by an increase
in maintenance unit cost due to the majority of new CRJs coming off warranty
in 2007, the heavy check cycle on the CRJ705 fleet, heavy maintenance work on
the Dash 8 fleet, and general price level increases on certain annual service
contracts.
Net income for the fourth quarter was $35.1 million compared to
$31.9 million recorded in the fourth quarter last year, an improvement of
$3.2 million or 9.9%.
Financial Performance - Year end 2007
-------------------------------------
For the year end of 2007, operating revenue was $1,495.4 million,
compared to $1,381.2 million in the same period of 2006, representing an
increase of $114.2 million or 8.3%. The increase in operating revenue is
attributable to an increase in the number of aircraft operated by Jazz, an
8.3% increase in the Block Hours flown, as well as a $58.6 million increase in
pass-through costs. For the year ended December 31, 2007, Jazz earned 78% of
the incentives available under the CPA. Performance incentives payable by Air
Canada to Jazz under the CPA amounted to $16.7 million or 1.8% of Jazz's
Scheduled Flights Revenue as compared to $13.5 million or 1.6% for year end
2006. Year-over-year, other revenue sources increased from $7.0 million to
$8.3 million.
In 2007, total operating expenses increased from $1,237.4 million in 2006
to $1,342.2 million, an increase of $104.8 million or 8.5%. This correlates
with an 8.3% increase in Block Hours flown and an 8.6% increase in ASMs for
the year. Correspondingly, the unit cost on a CASM basis was relatively
consistent year-over-year. Fuel saw the largest dollar increase which amounted
to $35.6 million as a result of the increased volume of flying, mostly with
regional jet equipment, and the price increase experienced in jet fuel. CASM,
excluding fuel, was down 1.2% and Controllable CASM was down 2.2% for the
year.
For the year end of 2007, EBITDAR was $304.5 million compared to
$299.0 million at the end of 2006, an increase of $5.5 million or 1.8%. The
operating income of $153.2 million represents an improvement of $9.4 million
or 6.5% over the same period last year. Distributable cash was $151.3 million
up 10.8% from 2006.
The Controllable Adjusted Actual Margin for 2007 was 14.54%, which is
over the target of 14.09% by 45 basis points or approximately $4.1 million.
This compares to the year end 2006 margin of 14.77% which was approximately
$5.8 million better than the target of 14.09%. The year ended margin during
2006 and the CPA revenue rates were developed on an annualized basis of
planned Controllable Costs. This had the effect of providing a relatively
higher margin in the first half of 2006 until Controllable Costs had actually
been incurred in support of the additional fleet.
Net income for year end 2007 was $150.7 million compared to
$140.0 million recorded for year end 2006, an improvement of $10.6 million or
7.6%.
Jazz Air LP and Jazz Air Income Fund's audited consolidated financial
statements for the year ended December 31, 2007, and accompanying Management's
Discussion and Analysis (MD&A) are available on Jazz's website www.flyjazz.ca
and at www.sedar.com. A copy may also be obtained on request by contacting
Jazz's Investor Relations at: investorsinfo@flyjazz.ca or (902) 873-5000.
Recent Events
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On January 24, 2008, ACE Aviation Holdings Inc. sold 13 million units of
Jazz Air Income Fund, thus reducing its ownership level to 9.5%.
Quarterly Investor Conference Call / Audio Webcast
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Jazz will hold an analyst call at 12:30 p.m. ET on Thursday, February 7,
2008 to discuss the fourth quarter and year end results of Jazz Air Income
Fund and Jazz Air LP. The call may be accessed by dialing 1-800-594-3790 or
(416) 644-3423 for the Toronto area. The call will be simultaneously audio
webcast via:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2147640 or
in the Investor Relations section of Jazz's website at www.flyjazz.ca. This is
a listen-in only audio webcast. Media Player or Real Player is required to
listen to the broadcast; please download well in advance of the call.
The conference call webcast will be archived on Jazz's Investor Relations
website at www.flyjazz.ca. A playback of the call can also be accessed until
midnight ET, Thursday, February 14, 2008, by dialing (416) 641-1917 or
toll-free 1-877-289-8525, and passcode - 21260766# (pound key).
(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 entities. Readers should refer to Jazz's and Jazz
Air Fund's Management Discussion and Analysis for a reconciliation of EBITDAR
to operating income (loss).
DISTRIBUTABLE CASH
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. Distributable cash may differ from similar
calculations as reported by other entities and, accordingly, may not be
comparable to distributable cash as reported by such entities. Readers should
refer to 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 in the Risk Factors section of Jazz Air LP's
and Jazz Air Income Fund's annual MD&A dated February 6, 2008. The
forward-looking statements contained in this discussion represent Jazz's
expectations as of February 6, 2008, and are subject to change after such
date. However, 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 securities
regulations.
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
Jazz is the second largest airline in Canada based on fleet size and the
number of routes operated. Jazz operates more flights and flies to more
Canadian destinations than any other Canadian carrier. Jazz forms an integral
part of Air Canada's domestic and transborder market presence and strategy.
Jazz is owned by Jazz Air Income Fund (TSX: JAZ.UN).
Jazz is not a typical airline. The airline has a commercial agreement
with Air Canada that is the core of its business. Under the Capacity Purchase
Agreement (CPA), Air Canada currently purchases substantially all of Jazz's
fleet capacity based on predetermined rates. The CPA provides commercial
flexibility, low trip costs and connecting network traffic to Air Canada.
Also, the CPA significantly reduces Jazz's financial and business risks, and
provides a stable foundation for day-to-day operations and future growth.
