HALIFAX, Nov. 5 /CNW/ - Today, the third quarter 2008 results of Jazz Air
Income Fund (TSX: JAZ.UN) and Jazz Air LP ("Jazz") were announced.
Q3 2008 HIGHLIGHTS
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- Operating revenue of $437.4 million, up 14.0%.
- Performance incentives of $4.1 million.
- Operating income of $45.4 million, up 10.9%.
- Distributable cash(1) of $44.3 million, up 1.8%.
- Net income of $42.3 million, up 6.4%.
"I am very pleased with our results this quarter, especially in light of
these difficult economic times," said Joseph Randell, President and Chief
Executive Officer of Jazz. "The Jazz team's delivery of excellent operational
performance, and focus on cost control have contributed to record profit
performance with an impressive $42.3 million in net income."
"We are running an efficient airline and have addressed the one-time
maintenance expenses which negatively affected our results in the first six
months of this year. Distributable cash increased by 1.8% in the quarter, and
demand remains high for our fuel-efficient Dash 8 aircraft as evidenced by our
increased charter activity. We remain focused on opportunities to diversify
our business and are cautiously optimistic about our future," concluded Mr.
Randell.
Financial Performance - Third Quarter 2008
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For the third quarter of 2008, operating revenue was $437.4 million,
compared to $383.8 million in the same period of 2007, representing an
increase of $53.7 million or 14.0%. The increase in operating revenue was
primarily attributable to a $45.5 million increase in pass-through costs under
the Capacity Purchase Agreement (CPA) with Air Canada. For the three-month
period ended September 30, 2008, performance incentives payable by Air Canada
to Jazz under the CPA amounted to $4.1 million or 1.7% of Jazz's Scheduled
Flights Revenue, as compared to $5.0 million or 2.1% for the same period in
2007. This translates to 73% of the incentives available under the CPA for the
quarter versus a 91% attainment in 2007. Incentives earned in the third
quarter of 2008 were lower primarily due to the consequential impact of
inclement weather conditions which led to lower on-time performance than 2007.
Quarter-over-quarter, other revenue (charter flights and other revenue
sources) increased from $2.7 million to $4.1 million.
Total operating expenses increased from $342.9 million in the third
quarter of 2007 to $392.1 million for the same period in 2008, an increase of
$49.2 million or 14.3%. Pass-through costs represented $45.5 million or 92.5%
of the total increase in operating costs, rising primarily as a result of the
continuing rise in fuel prices. Controllable Costs (includes costs related to
operations not covered under the CPA) represented $3.7 million or 7.5% of the
total increase in operating costs, rising primarily as a result of increased
costs related to depreciation, salaries, wages and benefits and other
expenses.
For the third quarter of 2008, EBITDA(1) was $52.8 million compared to
$47.4 million in the third quarter 2007, an increase of $5.4 million or 11.4%.
Operating income of $45.4 million represented a $4.5 million or 10.9% increase
from the same period last year.
Costs per Available Seat Mile, excluding fuel, for the three month period
ended September 30, 2008, increased by 3.9% over the same period in 2007.
Distributable cash was $44.3 million up $0.8 million or 1.8% from the
third quarter of 2007.
The Controllable Adjusted Actual Margin established under the CPA for the
third quarter of 2008 was 16.70%, which is greater than the CPA target of
14.09% by 261 basis points or the equivalent of approximately $6.3 million.
This compares to the third quarter of 2007 margin of 14.93% which was greater
than the target of 14.09% by 84 basis points or the equivalent of
approximately $2.0 million.
In the third quarter of 2008, non-operating expense amounted to $3.1
million, an increase of $1.9 million from the third quarter 2007. The change
is mainly attributable to increased net interest expense resulting from lower
interest income, and a foreign exchange loss arising as a result of the
reduction in value of the Canadian dollar relative to the US dollar.
Net income for the third quarter of 2008 was $42.3 million compared to
$39.7 million recorded in the third quarter last year, an increase of $2.5
million or 6.4%.
Jazz Air LP and Jazz Air Income Fund's unaudited interim consolidated
financial statements for the three month period ended September 30, 2008, 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) 873-5094.
Quarterly Investor Conference Call / Audio Webcast
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Jazz will hold an analyst call at 10:00 a.m. ET on Thursday, November 6,
2008 to discuss the third quarter results of Jazz Air Income Fund and Jazz Air
LP. The call may be accessed by dialing 1-800-731-5319 or (416) 644-3419 for
the Toronto area. The call will be simultaneously audio webcast via:
www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2434740 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, November 13, 2008, by dialing (416) 640-1917 or
toll-free 1-877-289-8525, and passcode - 21285482# (pound key).
(1)Non-GAAP Financial Measures
EBITDA
EBITDA (earnings before interest, taxes, depreciation, amortization and
obsolescence) is a non-GAAP financial measure commonly used in many industries
to view operating results before interest expense, interest income,
depreciation amortization, gains and losses on property and equipment and
other non-operating income and expense. EBITDA 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 Income Fund's Management
Discussion and Analysis for a reconciliation of EBITDA 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 Income Fund's Management Discussion and Analysis
for a reconciliation of cash flows from 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 relate to analyses and other information that are
based on forecasts of future results, estimates of amounts not yet
determinable and other uncertain events. Forward-looking statements, by their
nature, are based on assumptions, including those described below, 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, energy prices,
general industry, market and economic conditions, competition, insurance
issues and costs, supply issues, war, terrorist attacks, epidemic diseases,
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, 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 restated annual MD&A dated February 19, 2008, the
Annual Information Form dated March 28, 2008, and interim MD&A dated November
5, 2008. The forward-looking statements contained in this discussion represent
Jazz's expectations as of November 5, 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 reduces Jazz's financial and business risks, and provides a
stable foundation for day-to-day operations and future growth.
