Air Canada 2008 Annual Report Download - page 18

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2008 Air Canada Annual Report
18
The system ASM capacity decrease of 7.8% in the fourth quarter of 2008 compared to the fourth quarter of 2007 was in
line with the 7.0% to 8.0% ASM capacity reduction projected in the Corporation’s news release dated November 7, 2008.
Domestic passenger revenues decreased 1.2% from the fourth quarter of 2007
Domestic passenger revenues of $960 million in the fourth quarter of 2008 decreased $12 million or 1.2% from the fourth
quarter of 2007 due to a decline in demand. A higher yield in the fourth quarter of 2008 was more than offset by a decrease
in traffic. Factors contributing to the year-over-year change in fourth quarter domestic passenger revenues included:
• Inthefourthquarterof2008,yieldincreased2.2%fromthefourthquarterof2007largelyduetoincreasedfares.
• AweakerCanadiandollarinthefourthquarterof2008,whichincreasestheCanadiandollarvalueofsalesinforeign
countries, had a positive impact on foreign currency denominated revenues, accounting for an increase of $6 million
to fourth quarter 2008 domestic passenger revenues compared to the fourth quarter of 2007.
• Inthefourthquarterof2008,trafcdecreased3.3%onacapacityreductionof4.3%resultinginapassengerload
factor improvement of 0.9 percentage points from the fourth quarter of 2007. Capacity decreases were reflected on
all services and were achieved mostly through the reduction of frequencies on existing routes.
• Inthefourthquarterof2008,RASMincreased3.2%fromthefourthquarterof2007duetotheyieldimprovement
and, to a lesser extent, the passenger load factor improvement.
UStransborderpassengerrevenuesdecreased7.7%fromthefourthquarterof2007
US transborder passenger revenues of $421 million in the fourth quarter of 2008 decreased $35 million or 7.7% from
the fourth quarter of 2007 due to a decline in traffic. A higher yield in the fourth quarter of 2008 compared to the fourth
quarter of 2007 was more than offset by a decrease in traffic. Factors contributing to the year-over-year change in fourth
quarter US transborder passenger revenues included:
• Inthefourthquarterof2008,yieldimproved5.9%fromthefourthquarterof2007largelyduetoafavourable
foreign exchange impact but also due to increased fares. Capacity reductions, which mostly impacted longer-haul
and more leisure-oriented lower-yielding routes, also resulted in an overall higher average yield in the US market
compared to the fourth quarter of 2007.
• AweakerCanadiandollarinthefourthquarterof2008,whichincreasestheCanadiandollarvalueofsalesinforeign
countries, had a positive impact on foreign currency denominated revenues, accounting for an increase of $11
million to fourth quarter 2008 US transborder passenger revenues compared to the fourth quarter of 2007.
• Inthefourthquarterof2008,capacitywasreducedby15.0%fromthefourthquarterof2007.Capacitydecreases
were achieved mainly through the increased use of smaller aircraft in the fleet. In anticipation of the leisure
discretionary traffic being impacted by the softening economy and increased fares, Air Canada reduced capacity on
routes to California, Las Vegas and Florida. In addition, there was a capacity reduction on the Hawaii service as a
result of the introduction of a non-stop service from Vancouver to Sydney which was previously operated as a one-
stop via Hawaii. The Vancouver – Sydney route is recorded in other passenger revenues.
• Inthefourthquarterof2008,trafcdecreased12.8%onacapacityreductionof15.0%resultinginapassenger
load factor improvement of 2.0 percentage points from the fourth quarter of 2007. Premium cabin traffic decreased
which the Corporation attributes, in large part, to the softening economy and a reduction in business travel expenses.
• Inthefourthquarterof2008,RASMincreased8.6%fromthefourthquarterof2007duetotheyieldimprovement
and the passenger load factor improvement.
Atlantic passenger revenues increased 5.3% from the fourth quarter of 2007
Atlantic passenger revenues of $394 million in the fourth quarter of 2008 increased $20 million or 5.3% from the fourth
quarter of 2007 due to significant yield growth which more than offset a decrease in traffic. Factors contributing to the
year-over-year change in fourth quarter Atlantic passenger revenues included:
• Inthefourthquarterof2008,yieldimproved9.5%fromthefourthquarterof2007,reectingyieldimprovements
on all Atlantic services. The overall Atlantic yield improvement over the fourth quarter of 2007 was due to a
combination of increased fares and fuel surcharges and an improvement in fare mix in the economy cabin. Several
initiatives were put in place to retain traffic in the premium cabin which had a negative impact on the premium cabin
yield.
• AweakerCanadiandollarinthefourthquarterof2008,whichincreasestheCanadiandollarvalueofsalesinforeign
countries, had a positive impact on foreign currency denominated revenues, accounting for an increase of $7 million
to fourth quarter 2008 Atlantic passenger revenues compared to the fourth quarter of 2007.