Air Canada 2013 Annual Report Download - page 17

2013 Management’s Discussion and Analysis
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5. OVERVIEW
In 2013, Air Canada generated adjusted net income of $340 million, the highest in Air Canada’s history and an improvement
of $285 million from 2012. Refer to section 20 “Non-GAAP Financial Measures” of this MD&A for additional information. On a
GAAP basis, Air Canada reported net income of $10 million or $0.02 per diluted share compared to a net loss of $136 million
or $0.51 per diluted share in 2012, an improvement of $146 million or $0.53 per diluted share.
Full Year 2013 Financial Summary
The following provides an overview of Air Canada’s results of operations and financial position for the full year 2013
compared to the full year 2012.
• Operating revenues of $12,382 million, an increase of $268 million or 2% from 2012.
• Passenger revenues of $11,021 million, an increase of $284 million or 2.6% from 2012, on traffic growth of 2.1% and a
yield improvement of 0.5%.
• An ASM capacity increase of 1.9% from 2012, slightly below the 2.0% to 2.5% full year 2013 ASM capacity growth
projected in Air Canada’s news release dated November 8, 2013. The lower than projected ASM capacity growth was due
to minor adjustments in the flying schedule versus what Air Canada had assumed in its forecast.
• RASM growth of 0.6% from 2012, mainly reflecting the yield improvement of 0.5%.
• An adjusted CASM reduction of 1.5% from 2012, in line with the 1.5% to 2.0% decrease projected in Air Canada’s news
release dated November 8, 2013. Refer to section 20 “Non-GAAP Financial Measures” for additional information.
• Operating income of $619 million compared to operating income of $442 million in 2012, an improvement of
$177 million. In 2012 and 2013, Air Canada recorded operating expense reductions related to benefit plan amendments
of $127 million and $82 million, respectively, as a result of amendments to defined benefit pension plans determined in
accordance with new collective agreements concluded in 2011 and 2012 and changes to non-unionized employee
pension plans.
• Net income of $10 million or $0.02 per diluted share compared to a net loss of $136 million or $0.51 per diluted share in
2012. The net income in 2013 included foreign exchange losses of $120 million due to a weaker Canadian dollar, an
interest charge of $95 million pertaining to the purchase of the airline’s senior secured notes which were to become due
in 2015 and 2016, an impairment charge of $30 million, and the favourable impact of benefit plan amendments of
$82 million. The net loss in 2012 included foreign exchange gains of $106 million, the favourable impact of benefit plan
amendments of $127 million as described above, a loss on the airline’s investment in Aveos of $65 million and a net loss
from discontinued operations – Aveos of $55 million.
• EBITDAR (excluding benefit plan amendments) of $1,433 million compared to EBITDAR (excluding benefit plan
amendments) of $1,320 million in 2012, an increase of $113 million. Refer to section 20 “Non-GAAP Financial Measures”
for additional information.
• Adjusted net income of $340 million or $1.20 per diluted share compared to adjusted net income of $55 million or $0.20
per diluted share in 2012, an improvement of $285 million or $1.00 per diluted share. Refer to section 20 “Non-GAAP
Financial Measures” for additional information.
• Negative free cash flow of $231 million, a decline of $430 million from 2012. While operating cash flows improved year-
over-year, which was consistent with the improvement in operating earnings, free cash flow was impacted by the
addition of four Boeing 777-300ER aircraft delivered in 2013. Free cash flow (cash flows from operating activities less
additions to property, equipment and intangible assets) is a non-GAAP financial measure. Refer to section 9.5 of this
MD&A for additional information.