Air Canada 2012 Annual Report Download - page 4

2012 Air Canada Annual Report
4
MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
ore than three years ago we developed a plan to
transform Air Canada by identifying key corporate
priorities and committing ourselves to their
relentless pursuit. Each year since has brought
progress, but 2012 saw some of our most significant advances
to date. These accomplishments have added substantial
momentum to our efforts and reaffirmed that we have the right
plan to help us reach our objective of sustained profitability.
We generated record operating revenues of $12.1 billion, an
increase of $508 million. System passenger revenue alone
increased 5.2 per cent from 2011 on capacity growth of only
1.2 per cent, reflecting a traffic increase of 2.6 per cent and yield
growth of 1.8 per cent. Such results, along with our record
average load factor of 82.7 per cent for 2012, denote effective
capacity management using essentially the same fleet as in the
previous year, with traffic growth surpassing capacity increases
in every major market. Full year cargo revenue of $488 million
increased 1.5 per cent from 2011.
The clearest sign that our strategy has succeeded to date is that
on a GAAP basis Air Canada reported full year net profit of
$131 million or $0.45 per diluted share in 2012, compared to a
net loss of $249 million or $0.92 per diluted share in 2011, a
bottom line turnaround of $380 million. This is the first year
since 2007 that we have reported annual net income. On an
adjusted basis, removing the effect of foreign exchange and
certain items that are not indicative of on-going results, net
income was $53 million or $0.19 per diluted share, compared to
a net loss of $122 million or $0.44 per diluted share in the
previous year.
For the full year, including the impact of benefit plan
amendments, EBITDAR amounted to $1.45 billion or an
improvement of $209 million from 2011. Excluding the impact
of benefit plan amendments, EBITDAR totaled $1.33 billion,
exceeding full year 2011 EBITDAR by $85 million.
Our strong performance was reflected in other important
metrics. We ended the year with cash and investments
exceeding $2 billion, or 17 per cent of annual operating revenue.
Concurrently, we reduced our adjusted net debt by $295 million.
Our share price increased 76 per cent during the year, handily
outpacing the 33 per cent gain of the NYSE Arca Global Airline
Index. Most importantly, we carried nearly 35 million customers
safely during 2012. Indeed, our airline’s relentless focus on
safety was underscored by the result of “no findings” in our
biannual IATA Operational Safety Audit, putting Air Canada
among the top two per cent of world airlines.
Our solid financial results do not however tell the whole story as
Air Canada won numerous service awards and accolades in 2012.
For the third consecutive year Skytrax named Air Canada the
Best International Airline in North America in its World Airline
Awards based on a survey of 18 million global travelers. We
were the favoured airline of nearly 80 per cent of respondents in
the annual Ipsos Reid survey of Canadian business travelers –
the fourth year in a row our rating increased in this survey.
Further, for the fourth consecutive year the U.S. magazine
Global Traveler named Air Canada Best Airline in North America
and for the fifth year readers of Business Traveler deemed us
Best North American Airline for International Travel and Best
North American Airline In-flight Experience. In early 2013, Air
Canada was granted four-star status in the Skytrax Airline Star
Ranking – the only North American network carrier to earn this
distinction.
Taken together our financial results and numerous service
awards reveal a vibrant airline that is nimble and responsive to
industry dynamics. This was all the more meaningful in 2012 as
the year also marked our 75th anniversary. Highlights included
the first Boeing 787 Dreamliner visit to Canada, vintage uniform
fashion shows, celebrations for employees around the globe,
commemorative stamps and books and an exhibit at the Canada
Aviation and Space Museum. These events not only celebrated
this milestone anniversary but also asserted that Air Canada is
Canada’s flag carrier, with a rich history of innovation and a
reputation for reliability, comfort and safety.
Yet to ensure Air Canada thrives for another 75 years we must
continue our transformation. The four corporate priorities we
integrated into our DNA over three years ago have succeeded in
their first goal of stabilizing the company and now we are
driving the changes required for sustained profitability.
The first priority is engaging our customers with an emphasis on
premium passengers. That we are succeeding is attested to not
only by our many customer-oriented awards but also by the
fact premium traffic growth of 2.7 per cent in 2012 exceeded
the rate of overall traffic growth. Through the year we also
finalized several initiatives now rolling out that will appeal to
our customers. This includes the rebranding of our Top Tier
program as Altitude, which allows us to more appropriately
recognize and reward our most loyal customers and we are
pressing forward with new Customer Relationship Management
initiatives.
Moreover, we announced the introduction of a Premium
Economy cabin on our five Boeing 777-300ER aircraft entering
the fleet over the next year, giving customers more options for
enhanced comfort on long-haul flights. Further broadening
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