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Third Quarter 2002 October 25, 2002 Note to Internet viewers: Please use “NOTES PAGES” view to access all notes and text.

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Presentation on theme: "Third Quarter 2002 October 25, 2002 Note to Internet viewers: Please use “NOTES PAGES” view to access all notes and text."— Presentation transcript:

1 Third Quarter 2002 October 25, 2002 Note to Internet viewers: Please use “NOTES PAGES” view to access all notes and text.

2 Agenda - 3rd Quarter Highlights Economic Environment Operating Statistics Competitive Environment Revenue Highlights Income Highlights

3 3rd Quarter Results Air Canada records only profit among major international carriers in North America Operating results improve by $226 million or $63 million excluding the estimated impact of Sept. 11 on Q results Operations generate $89 million in cash Yield posts growth after six consecutive quarters of declines Increased productivity and lower unit costs continue to underlie higher profitability - Q also severely affected by Sept. 11 Aircraft flying hours reduced by 3.5% while available seat miles rose 2.5%

4 3rd Quarter Results Mainline scheduled load factor up 1.0 PP over adjusted Q Manpower level down 2,218 or 5.9% from Q Employee productivity up 4% over adjusted Q Fuel price per litre down 11% Net unit cost down 3.2% over adjusted Q3 2001

5 3rd Quarter Results Quarter end cash of $0.7 billion Cash and committed financing total $0.9 billion $346 million in long-term debt repaid Additionally, $142 million of Air Canada’s yen perpetual debt purchased for $50 million and gain of $92 million $143 million in sale/leaseback proceeds primarily from two CRJs and 11 engines

6 Q3 Stats At a Glance (Unadjusted Q3’01) Mainline Operations (Scheduled)

7 Q3 Stats At a Glance (Q3’01, adjusted for Sept. 11 impact) Mainline Operations (Scheduled)

8 Operating Income Improves By $226 Million

9 Operating Income Improves By $63 Million Over Q Results (Adjusted for impact of Sept. 11)

10 Q3 Net Interest Exp. Improves $14 Million

11 Disciplined Capacity Pushes Load Factor Up Mainline Operating Statistics (Scheduled) *Adjusted for Sept. 11

12 Disciplined Capacity Throughout but U.S. Reductions Accelerate (Y-O-Y Changes in Mainline Capacity) % Change in ASMs

13 Atlantic & Pacific Markets Maintain Strong Traffic Growth (Y-O-Y Changes in Mainline Traffic) % Change in RPMs

14 System Yield Stabilizes After Six Quarters Of Decline (Y-O-Y Changes in Mainline Passenger Yield) % Change in Yield

15 RASM Lifts On Very Strong Atlantic & Pacific Performance (Y-O-Y Changes in Mainline Revenue per ASM) % Change in RASM

16 Q3 Revenue Marginally Down As Weak U.S. Offsets Domestic & International Strength (Y-O-Y Changes in Mainline Passenger Revenue) % Change in Revenue

17 Increased Yield Lifts Domestic RASM (Adj. Q3’01) J&A’01 Q4’01 Q1’02 Q2’02 Q3’02 Capacity - Canada (Y-O-Y Changes in Capacity) % Change in ASMs Yield - Canada (Y-O-Y Changes in Passenger Yield) RASM - Canada (Y-O-Y Changes in Revenue per ASM) Load Factor- Canada (Y-O-Y Changes in Load Factor) % Change in RASM PP Change in Load Factor % Change in Yield J&A’01 Q4’01 Q1’02 Q2’02 Q3’02

18 U.S. RASM Down On Weak Pricing (Adj. Q3’01) J&A’01 Q4’01 Q1’02 Q2’02 Q3’02 Capacity - Transborder (Y-O-Y Changes in Capacity) % Change in ASMs Yield - Transborder (Y-O-Y Changes in Passenger Yield) RASM - Transborder (Y-O-Y Changes in Revenue per ASM) Load Factor- Transborder (Y-O-Y Changes in Load Factor) % Change in RASM PP Change in Load Factor % Change in Yield J&A’01 Q4’01 Q1’02 Q2’02 Q3’02

19 Other Int’l RASM Up On Higher Load Factor And Yield (Adj. Q3’01) J&A’01 Q4’01 Q1’02 Q2’02 Q3’02 Capacity - Other Int’l (Y-O-Y Changes in Capacity) % Change in ASMs Yield - Other Int’l (Y-O-Y Changes in Passenger Yield) RASM - Other Int’l (Y-O-Y Changes in Revenue per ASM) Load Factor- Other Int’l (Y-O-Y Changes in Load Factor) % Change in RASM PP Change in Load Factor % Change in Yield J&A’01 Q4’01 Q1’02 Q2’02 Q3’02

20 System RASM Up On Higher Load Factor And Stable Yield (Adj. Q3’01) J&A’01 Q4’01 Q1’02 Q2’02 Q3’02 Capacity - Total (Y-O-Y Changes in Capacity) % Change in ASMs Yield - Total (Y-O-Y Changes in Passenger Yield) RASM - Total (Y-O-Y Changes in Revenue per ASM) Load Factor- Total (Y-O-Y Changes in Load Factor) % Change in RASM PP Change in Load Factor % Change in Yield J&A’01 Q4’01 Q1’02 Q2’02 Q3’02

21 Declining Unit Cost Still Drives Increased Profits But Also Aided By Stronger RASM (Adj. Q3’01) J&A’01 Q4’01 Q1’02 Q2’02 Q3’02 Canada RASM % Change Y-O-Y Other Int’l RASM Total System USA RASM % Change Y-O-Y J&A’01 Q4’01 Q1’02 Q2’02 Q3’02

22 Air Canada Continues to Record The Best Traffic Results Of Any Major N.A. Carrier (Unadjusted Q3’01) (Y-O-Y Traffic Change) % Change in RPMs

23 Salaries & Wages: Manpower level down sharply; average salary & benefits cost up (Air Canada - Mainline) *Adjusted

24 Average Salary Up 6.6%, Employee Levels Down 5.9% (Y-O-Y Change - Total Salaries * & Employees*) *Mainline % Change Y-O-Y

25 Fuel: Price still sharply down (Air Canada - Mainline) *Adjusted

26 Mainline Cost Per Litre Down 11% While Productivity Up 4.4% (Fuel Productivity* & Unit Cost*) *Mainline % Change Y-O-Y

27 All Expense Categories Down except Aircraft Rent, User Fees and Other *Mainline, ‘01 adjusted for Sept. 11 % Change Y-O-Y Q3 2002/2001 RPMs ASMs COMM. FOOD & BAR A/C MTCE USER FEES A/C RENT OTHER DEP.

28 Q3 Net Unit Cost Down 3.2% (Cost Per ASM*) *Mainline, adjusted for non-ASM revenue, ‘01 adjusted for Sept. 11 % Change Y-O-Y

29 Fuel a Major Component Of Net CASM* Improvement Of 3.2% *Mainline LabourFuel Unit cost decrease net of non-ASM revenue Other Effect of non-ASM revenue

30 Air Canada Has Lowest Net Unit Cost Of N.A. Majors *Adjusted for non-ASM producing activity. ** Not adjusted for Sept. 11 (Unit Cost* per ASM - Q3‘02 & Q3‘01**) U.S. cents

31 Balance Sheet - Liquidity is Good (Air Canada - Consolidated) NM - not meaningful

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