Chorus Aviation Inc. (ticker: CHR_A.TO, exchange: Toronto Stock Exchange (.TO))
News Release -
Jazz Air Income Fund announces second quarter 2008 financial resultsHALIFAX, Aug. 6, 2008 (Canada NewsWire via COMTEX News Network) -- Today, the second quarter 2008 results of Jazz Air Income Fund (TSX: JAZ.UN) and Jazz Air LP ("Jazz") were announced.
Q2 2008 HIGHLIGHTS
- Operating revenue of $409.8 million, up 9.2%.
- Performance incentives of $4.0 million, down 13%.
- Operating income of $28.8 million, down 27.8%.
- Net income of $27.4 million, down 32.4%.
- Controllable Cost per Available Seat Mile, up 9.6 %.
- Distributable cash(1) of $30.1 million, down 26.8%.
"We've performed well this quarter despite significant weather-related challenges in central Canada and the US eastern seaboard from an operational point of view. Our employees continue to deliver a safe and reliable service as evidenced by our achievement of 73% of the performance incentives available under the CPA," said Joseph Randell, President and Chief Executive Officer of Jazz. "Consistent with the guidance we provided earlier this year, we've completed both the planned outsourced work and excess overtime charges related to heavy maintenance. These costs are reflected in this quarter's results."
Financial Performance - Second Quarter 2008
For the second quarter of 2008, operating revenue was $409.8 million, compared to $375.3 million in the same period of 2007, representing an increase of $34.5 million or 9.2%. The increase in operating revenue was attributable to an increase of 0.5% in the Block Hours flown and a 23.3% increase in pass-through costs under the Capacity Purchase Agreement (CPA) with Air Canada. For the three-month period ended June 30, 2008, performance incentives payable by Air Canada to Jazz under the CPA amounted to $4.0 million or 1.7% of Jazz's Scheduled Flights Revenue as compared to $4.6 million or 2.0% for the same period in 2007. This translates to 73% of the incentives available under the CPA for the quarter versus an 86% attainment in 2007. Incentives earned in the second quarter of 2008 were lower primarily due to the consequential impact of inclement weather conditions which led to lower on-time performance than 2007. Year-over-year, for the second quarter, other revenue sources increased from $2.3 million to $3.1 million.
Total operating expenses increased from $335.4 million in the second quarter of 2007 to $381.0 million for the same period in 2008, an increase of $45.6 million or 13.6 %. Pass-through costs represented $32.5 million or 71.3% of the total increase in operating costs, rising primarily as a result of the continuing rise in fuel prices. Controllable Costs represented $13.1 million or 28.7% of the total increase in operating costs, rising primarily as a result of increased costs related to aircraft maintenance, depreciation, salaries, wages and benefits and other expenses.
For the second quarter of 2008, EBITDA(1) was $36.9 million compared to $45.6 million in the second quarter 2007, a decrease of $8.7 million or 19.0%. Operating income of $28.8 million represents an $11.1 million or 27.8% decrease from the same period last year.
Controllable Costs per Available Seat Mile, excluding fuel, for the three month period ended June 30, 2008, increased by 7.5% over the same period in 2007. During the quarter, the Controllable Costs related to the CPA were affected by increased heavy maintenance related costs and training expenses.
Distributable cash was $30.1 million down $11.0 million or 26.8% from the second quarter of 2007.
The Controllable Adjusted Actual Margin established under the CPA for the second quarter of 2008 was 10.53%, which is under the CPA target of 14.09% by 356 basis points or the equivalent of approximately $8.2 million. This compares to the second quarter of 2007 margin of 14.89% which was better than the target of 14.09% by 80 basis points or the equivalent of approximately $1.8 million.
In the second quarter of 2008, non-operating expense amounted to $1.4 million, an increase of $2.1 million from the second quarter 2007. The change is mainly attributable to increased net interest expense resulting from lower interest income, and a foreign exchange loss compared to a gain in 2007 due to the strengthening Canadian dollar against the US dollar.
Net income for the second quarter of 2008 was $27.4 million compared to $40.6 million recorded in the second quarter last year, a decrease of $13.2 million or 32.4%.
Jazz Air LP and Jazz Air Income Fund's unaudited consolidated financial statements for the three month period ended June 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: email@example.com or (902) 873-5094.
Quarterly Investor Conference Call / Audio Webcast
Jazz will hold an analyst call at 12:30 p.m. ET on Thursday, August 7, 2008 to discuss the second quarter results of Jazz Air Income Fund and Jazz Air LP. The call may be accessed by dialing 1-800-590-1817 or (416) 644-3424 for the Toronto area. The call will be simultaneously audio webcast via: www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2338600 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, August 14, 2008, by dialing (416) 640-1917 or toll-free 1- 877-289-8525, and passcode - 21278245No. (pound key).
(1)Non-GAAP Financial Measures
EBITDA (earnings before interest, taxes, depreciation, amortization and obsolescence) is a non-GAAP financial measure commonly used in all 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 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, and interim MD&A dated August 6, 2008. The forward-looking statements contained in this discussion represent Jazz's expectations as of August 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.
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.
SOURCE: JAZZ AIR INCOME FUND
SOURCE: AIR CANADA JAZZ
Media Contacts: Debra Williams, (519) 659-5696 London; Analyst Contact: Nathalie
Megann, (902) 873-5094; www.flyjazz.ca