ACE Aviation's full news release:
Aviation Holdings inc. reports third quarter operating income of $320 million and net income of $270 million
- Net income of $270 million.
- Operating income of $320 million in the third quarter of 2005.
- Despite a fuel expense increase of $213 million or 46 per cent, an
improvement of $77 million compared to the $243 million in operating
income before reorganization and restructuring items achieved in the
third quarter of 2004.
- Operating revenues up $337 million or 14 per cent reflecting passenger
revenue increases in all markets.
- EBITDAR for the quarter of $550 million, an improvement of $36 million
from the 2004 quarter.
- Excluding fuel expense, unit cost was reduced by 3 per cent.
- System passenger load factor up 2.0 percentage points to 82.4 per cent,
a record for any quarter in the Corporation's history.
- North America's most profitable carrier in the third quarter.
MONTREAL, Nov. 2 /CNW
Telbec/ - ACE
Aviation Holdings Inc. (ACE
today operating income of $320 million for the third quarter of 2005, an
increase of $77 million from the operating income before reorganization and
restructuring items of $243 million recorded in the third quarter of 2004.
EBITDAR(1) of $550 million was achieved in the third quarter of 2005, an
improvement of $36 million over the 2004 quarter. Operating revenues were up
$337 million or 14 per cent reflecting passenger revenue increases in all
markets. Passenger traffic, as measured by revenue passenger miles (RPMs),
increased 9 per cent on a capacity increase of 6 per cent, as measured by
available seat miles (ASMs), resulting in a passenger load factor improvement
of 2.0 percentage points. On the same basis of presentation as in the third
quarter of 2004, passenger revenue per available seat mile (RASM) was up 5 per
cent reflecting the improvement in the passenger load factor combined with the
3 per cent improvement in passenger yield, as measured by passenger revenue
per revenue passenger mile.
Operating expenses increased $260 million or 12 per cent over the third
quarter of 2004 and included a fuel expense increase of $213 million or 46 per
cent versus the 2004 quarter on a capacity increase of 6 per cent. Excluding
fuel expense, unit cost was reduced by 3 per cent from the third quarter of
Net income for the third quarter of 2005 was $270 million and included a
provision for income taxes of $128 million. This compared to a net loss of
$81 million which included reorganization and restructuring items of
$313 million recorded in the third quarter of 2004 and an income tax provision
of only $1 million.
"Since the formation of ACE
thirteen months ago we have reported improved
operating results in successive quarters year over year and I am pleased to
again report a significant improvement in operating results for the
Corporation in the third quarter," said Robert Milton, Chairman, President and
CEO of ACE
Aviation Holdings Inc.
"Our ongoing efforts to reposition this company are clearly paying off.
These results for the third quarter, traditionally our best, are the strongest
results reported by any North American carrier for the period and reflect our
ability to now achieve North American industry leading levels of profitability
versus low cost carriers as well as legacy carriers. However, in the face of
record fuel prices and ever-increasing airport and air navigation fees, we
must renew our focus on reducing costs while ensuring we retain the highest
levels of safety and remain the airline of choice for consumers. In addition
to my appreciation for the unrelenting efforts of our employees, on behalf of
all of us at ACE
, I would like to thank our customers for their tremendous
support in enabling us to achieve eighteen straight months of record load
"We remain confident that, barring any further unforeseen events, ACE
financial results for the full year will be amongst the strongest in the
Fleet and network enhancements
Since the commencement of the third quarter, Air Canada has added 14
aircraft to its fleet: one Airbus A340-300 aircraft, two Boeing 767-300
aircraft and the first 11 of 15 EMBRAER 175 aircraft on order. The remaining
four EMBRAER 175 aircraft on order will be in operation by January 2006. The
airline will begin taking delivery of 45 EMBRAER 190 aircraft in November
Air Canada Jazz continued taking delivery of 75-seat CRJ-705 aircraft in
the quarter, following the arrival of the first of 15 aircraft in May.
Fourteen CRJ-705s are currently in operation and the remaining aircraft will
be in service in November 2005. Jazz also entered into a four year lease
agreement with GECAS for an additional 8 recent production CRJ-200 aircraft.
By mid-2006, the Jazz fleet will be at 133 aircraft including 73 Bombardier
Regional Jet aircraft.
The introduction of these next-generation, fuel efficient jet aircraft
has allowed Air Canada and Jazz to better match capacity to market demand
thereby allowing the airline to maintain its strategy of disciplined capacity
growth and pursue new opportunities in markets best suited for these sizes of
aircraft. With the arrival of these new aircraft, Air Canada has introduced
Executive Class and in-flight enhancements on key U.S. transborder routes
serving Washington D.C. Reagan National, Philadelphia, Atlanta, Dallas and
Houston, as well as on Montreal-Winnipeg and Ottawa-Winnipeg routes. New next-
generation jet aircraft were also deployed on Toronto-Boston and Toronto-
Newark routes, resulting in increased service with Executive Class. The
deployment of new CRJ-705s has introduced Executive Class service on the
Toronto-Houston route, and has resulted in increased flights on the Calgary-
Houston, Toronto-Saskatoon and Toronto-Regina routes. Customers have responded
very favourably to the introduction of these two new aircraft types.
In the meantime, existing aircraft are being redeployed to introduce new
routes and enhance service on existing routes. Air Canada Jazz has converted
more than 10 existing routes (of over 1.5 hours duration) from Dash-8
turboprop to 50-seat CRJ jet service offering customers enhanced comfort and
faster travel times. Beyond greater convenience for customers, the conversion
of these longer distance turbo-prop routes to higher speed, and more
productive CRJ jet aircraft have the benefit of keeping costs of operation
competitive with the turbo-props they replace.
New routes introduced include: Hamilton-Montreal, Hamilton-Ottawa,
Vancouver-Las Vegas, Calgary-Las Vegas, Edmonton-Regina and Edmonton-
Saskatoon. The remaining EMBRAER 175 and CRJ-705 deliveries will allow further
route expansion in the coming months including the start-up of service between
Vancouver-San Diego, Abbotsford-Toronto, Abbotsford-Calgary, Calgary-Newark
Expansion of Toronto Hub as gateway to Asia
Air Canada continued to grow its non-stop services between its main hub
in Toronto and Asia in the quarter with the addition of Toronto-Seoul non-stop
summer service. From Toronto, Air Canada now operates non-stop flights to Hong
Kong, Tokyo and Beijing and the carrier plans to introduce non-stop service to
Shanghai in 2006 as well as re-introduce Toronto-Seoul non-stop services.
Between its Toronto and Vancouver gateways, Air Canada has one of the most
extensive transpacific networks in operation, with up to 12 non-stop flights
per day in each direction between Canada and seven destinations in Asia.
Starting November 1, long haul international flights have been relocated to
Pearson's Terminal 1 adjacent to Air Canada's domestic operations eliminating
the need for ground transportation to and from the airport's Infield Terminal.
The carrier also operates all-cargo services between Toronto and Shanghai
five times per week.
Update on the initial public offering of Jazz Air Limited Partnership
On August 4, 2005, ACE
announced its intention to proceed with an initial
public offering of Jazz Air Limited Partnership ("Jazz") through an income
trust structure, with ACE
retaining a majority interest in Jazz. ACE
pursuing an initial public offering as a means to maximize the value of its
investment in Jazz for the benefit of ACE
shareholders. A preliminary
prospectus in respect of the offering was expected to be filed in the third
quarter of 2005.
On September 30, 2005, the Corporation provided an update on its
intention to proceed with an initial public offering of Jazz stating that the
preparatory work to file a preliminary prospectus had been completed, and the
document was ready for submission. However, given conditions in the income
trust market subsequent to the launch by the Department of Finance of
consultations on the economic and fiscal implications of publicly listed flow-
through entities (FTEs), including income trusts, and the decision by the
Minister of National Revenue to postpone providing advance rulings respecting
FTE structures, ACE
management felt it appropriate to refrain from proceeding
with the filing. ACE
will proceed with a Jazz offering as market conditions
Investment - US Airways
During the quarter, ACE
completed its acquisition for $87 million
(US$75 million) of approximately 7 per cent of the newly created US Airways,
resulting from the merger of US Airways and America West airlines. The market
has responded favourably to the formation of this carrier and the value of
's investment in the carrier has appreciated by approximately 67 per cent
or $US50 million as of the close of trading on November 1, 2005.
Air Canada and ACTS continue to develop their commercial relationships
with US Airways. Thus far, ACTS has signed five-year contracts covering a
range of activities including heavy maintenance of US Airways' Airbus A330
fleet, landing gear overhaul and work on a variety of engine and flight
control components. These contracts will provide approximately $50 million in
annual revenues to ACTS. Ongoing discussions continue between US Airways and
ACTS on further contracts covering a wide variety of maintenance work. The
dollar value and scope of contracts entered into is anticipated to grow
In the area of airport services, meaningful cost reductions are expected
as Air Canada and US Airways finalize agreements providing for Air Canada's
relocation to more attractive airport facilities than currently utilized in a
number of U.S. cities.
's Interim Unaudited Third Quarter 2005 Consolidated Financial
Statements and Management's Discussion and Analysis (MD&A) are available on
's and Air Canada's website www.aircanada.com
and at SEDAR.com on
November 2, 2005. A copy may also be obtained on request by contacting ACE
Shareholder Relations at (514) 205-7856.
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