Chorus Aviation Inc. (ticker: CHR_A.TO, exchange: Toronto Stock Exchange (.TO))
News Release -
Jazz Air Income Fund announces third quarter 2007 financial results - Net income of $39.7 million, up 1.5%HALIFAX, Nov. 7, 2007 (Canada NewsWire via COMTEX News Network) -- Today, Jazz Air Income Fund (TSX: JAZ.UN) ("Jazz Air Fund") announced the third quarter 2007 results of Jazz Air LP, with a net income of $39.7 million - an improvement of 1.5% 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 ("Jazz").
Q3 2007 HIGHLIGHTS
- Operating revenue of $383.8 million, up 3.9%.
- EBITDAR(1) of $78.2 million, down 1.4%.
- Operating income of $40.9 million, up 4.2%.
- Net income of $39.7 million, up 1.5%.
- Distributable cash(1) of $43.5 million, up 26.5%.
"I am pleased with our results for the third quarter of 2007," said Joseph Randell, President and Chief Executive Officer of Jazz. "Our operational performance this quarter was excellent, especially in light of the fact that the third quarter is traditionally one with many operational challenges for the industry. Our employees were prepared for these events and delivered a very safe, reliable and comfortable operation for our passengers as evidenced by achieving $5.0 million in performance incentives in the quarter."
For the third quarter of 2007, operating revenue was $383.8 million, compared to $369.3 million in the same period of 2006, representing an increase of $14.5 million or 3.9%. The increase in operating revenue is attributable to an increase of 5.3% in the Block Hours flown and a $3.0 million increase in pass-through costs. For the three-month period ended September 30, 2007, performance incentives payable by Air Canada to Jazz under the CPA amounted to $5.0 million or 2.1% of Jazz's Scheduled Flights Revenue as compared to $1.6 million or 0.7% for the same period in 2006. Year over year for the third quarter, other revenue sources increased from $2.0 million to $2.7 million.
In line with the growth in revenue, total operating expenses increased from $330.0 million in the third quarter of 2006 to $342.9 million for the same period in 2007, an increase of $12.9 million or 3.9%. Salaries, wages and benefits, depreciation, airport and navigation fees and aircraft maintenance increased by $16.4 million resulting in unit cost increases of 6.2%, quarter over quarter, as measured by Cost per Available Seat Mile (CASM). These unit cost increases are reflective of the change in fleet mix as a majority of the quarter over quarter increase in Block Hours is attributable to the regional jet fleet. The maintenance unit cost increase was driven by heavy maintenance work on the Dash 8 fleet, the heavy check cycle on the CRJ705 fleet, as well as the majority of the new CRJs were under warranty in 2006. Airport and navigational fees are pass-through costs. These unit cost increases were more than offset by a decrease in all other areas on a unit basis, resulting in an overall net decrease of 0.8% as measured by CASM.
For the third quarter of 2007, EBITDAR was $78.2 million compared to $79.3 million in the third quarter 2006, a decrease of $1.1 million or 1.4%. The operating income of $40.9 million represents an improvement of $1.7 million or 4.2% over the same period last year. Distributable cash was $43.5 million up $9.1 million or 26.5% from the third quarter of 2006.
The Controllable Adjusted Actual Margin for the third quarter of 2007 was 14.93%, which is over the target of 14.09% by 84 basis points or approximately $2.0 million. This compares to the third quarter of 2006 margin of 16.59% which was approximately $5.6 million better than the target of 14.09%.
Overall during the third quarter, the CPA Scheduled Flights Revenue decreased on an Available Seat Mile (ASM) basis by 1.3% while Controllable Costs increased by 0.5%. 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 increase in Controllable Cost on an ASM basis is a result of salary and wage increases from additional Full Time Equivalent (FTE) employees used to support the ongoing fleet requirements and unionized wage and scale increases as a result of collective agreement provisions, increased maintenance costs associated with the heavy check cycle on the CRJ705 fleet and increased heavy maintenance work on the Dash 8 fleet, and general price level increases on certain annual service contracts.
Net income for the third quarter was $39.7 million compared to $39.1 million recorded in the third quarter last year, an improvement of $0.6 million or 1.5%.
Jazz's and Jazz Air Fund's unaudited interim consolidated financial statements for the period ended September 30, 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: firstname.lastname@example.org or (902) 873-5000.
On October 22, 2007, pursuant to a secondary offering, ACE Aviation Holdings Inc. sold 35.5 million units of Jazz Air Income Fund, thus reducing its ownership level to 20.1%.
Quarterly Investor Conference Call / Audio Webcast
Jazz will hold an analyst call at 12:30 p.m. ET on Thursday, November 8, 2007, to discuss the third quarter results of Jazz Air Fund and Jazz Air LP. The call may be accessed by dialing 1-800 594-3790 (toll free) or (416) 644-3424) within the Toronto area. The call will be simultaneously audio webcast via: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2048200
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 15, 2007, by dialing 1-877-289-8525 (toll free) or (416) 640-1917 within the Toronto area and passcode 21250255#.
(1)Non-GAAP Financial Measures
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 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 throughout Jazz Air Fund's filings with securities regulators in Canada and in particular those identified in the Risk Factors section of Jazz's and Jazz Air Fund's annual MD&A dated February 7, 2007 and in Jazz's and Jazz Air Fund's MD&A dated November 7, 2007. The forward-looking statements contained in this discussion represent Jazz's expectations as of November 7, 2007, 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 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 (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.
SOURCE: JAZZ AIR INCOME FUND
SOURCE: AIR CANADA JAZZ
Media Contacts: Manon Stuart, (902) 873-5054 Halifax;
Debra Williams, (519) 659-5696