Air Canada 2014 Annual Report Download - page 20

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2020 2014 Annual Report
In 2014, Air Canada generated adjusted net income of
$531 million, the highest in Air Canada’s history and
an improvement of $191 million from 2013. 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 $105 million or
$0.34 per diluted share compared to net income of
$10 million or $0.02 per diluted share in 2013, an
improvement of $95 million or $0.32 per diluted
share.
Full Year 2014 Financial Summary
The following provides an overview of Air Canada’s
results of operations and financial position for the full
year 2014 compared to the full year 2013.
• Operating revenues of $13,272 million, an increase
of $890 million or 7% from 2013
• Passenger revenues of $11,804 million, an increase
of $783 million or 7.1% from 2013, on traffic
growth of 8.5% partly offset by a yield decline
of 1.3%. An increase in average stage length of
2.3% had the effect of reducing system yield by
1.3 percentage points. On a stage length adjusted
basis, system yield was unchanged from 2013
• An ASM capacity increase of 7.8% from 2013, in
line with the 7.0% to 8.0% full year 2014 ASM
capacity growth projected in Air Canada’s news
release dated November 6, 2014. The capacity
growth in 2014 was primarily driven by increased
seat density from Air Canada rouge and the
introduction of six Boeing 787 aircraft and five
higher-density Boeing 777 aircraft into the
mainline fleet
• The favourable impact of a weaker Canadian
dollar on foreign currency denominated passenger
revenues increased passenger revenues by
$208 million in 2014. The unfavourable impact
of a weaker Canadian dollar on foreign currency
denominated operating expenses (mainly U.S.)
increased operating expenses by approximately
$397 million in 2014
• An adjusted CASM reduction of 2.6% from
2013, in line with the 2.5% to 3.5% decrease
projected in Air Canada’s news release dated
November 6, 2014. Refer to section 20 “Non-
GAAP Financial Measures” of this MD&A for
additional information
• Operating income of $815 million compared to
operating income of $619 million in 2013, an
improvement of $196 million. In 2013, Air Canada
recorded operating expense reductions related
to benefits plan amendments of $82 million as a
result of amendments to defined benefit pension
plans. Air Canada reported an operating margin of
6.1% compared to an operating margin (excluding
the impact of benefits plan amendments) of 4.3%
in 2013, an improvement of 1.8 percentage points
• Net income of $105 million or $0.34 per diluted
share compared to net income of $10 million or
$0.02 per diluted share in 2013. The net income
in 2014 included foreign exchange losses of
$307 million, favourable tax-related provision
adjustments of $41 million, as well as one-
time payments totaling $30 million made to
ACPA members pursuant to the ACPA collective
agreement concluded in October 2014. The net
income in 2013 included foreign exchange losses
of $120 million, 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, impairment charges amounting to
$30 million and the favourable impact of benefits
plan amendments of $82 million
• EBITDAR of $1,671 million compared to
EBITDAR (excluding the impact of benefits plan
amendments) of $1,433 million in 2013, an
increase of $238 million. Refer to section 20 “Non-
GAAP Financial Measures” of this MD&A for
additional information
• Adjusted net income of $531 million or $1.81 per
diluted share compared to adjusted net income
of $340 million or $1.20 per diluted share in 2013,
an improvement of $191 million or $0.61 per
diluted share. Refer to section 20 “Non-GAAP
Financial Measures” of this MD&A for
additional information
• Cash flow from operations of $941 million,
an improvement of $210 million versus
2013, consistent with the improvement in
operating income. Free cash flow was negative
$560 million, a decline of $329 million due to
an increase in capital expenditures which
included the acquisition of one Boeing 777-300
and six Boeing 787-8 aircraft in 2014. 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 “Consolidated Cash Flow Movements”
of this MD&A for additional information
• Adjusted net debt amounted to $5,132 million at
December 31, 2014, an increase of $781 million
from December 31, 2013, mainly due to the
purchase of six Boeing 787-8 and one Boeing 777
5. OVERVIEW