Chorus Aviation Inc. (ticker: CHR_A.TO, exchange: Toronto Stock Exchange (.TO))
News Release -
Jazz Air Income Fund announces third quarter 2008 financial results - Record Net Income of $42.3 millionHALIFAX, Nov. 5, 2008 (Canada NewsWire via COMTEX News Network) -- Today, the third quarter 2008 results of Jazz Air Income Fund (TSX: JAZ.UN) and Jazz Air LP ("Jazz") were announced.
Q3 2008 HIGHLIGHTS
- Operating revenue of $437.4 million, up 14.0%.
- Performance incentives of $4.1 million.
- Operating income of $45.4 million, up 10.9%.
- Distributable cash(1) of $44.3 million, up 1.8%.
- Net income of $42.3 million, up 6.4%.
"I am very pleased with our results this quarter, especially in light of these difficult economic times," said Joseph Randell, President and Chief Executive Officer of Jazz. "The Jazz team's delivery of excellent operational performance, and focus on cost control have contributed to record profit performance with an impressive $42.3 million in net income."
"We are running an efficient airline and have addressed the one-time maintenance expenses which negatively affected our results in the first six months of this year. Distributable cash increased by 1.8% in the quarter, and demand remains high for our fuel-efficient Dash 8 aircraft as evidenced by our increased charter activity. We remain focused on opportunities to diversify our business and are cautiously optimistic about our future," concluded Mr. Randell.
Financial Performance - Third Quarter 2008
For the third quarter of 2008, operating revenue was $437.4 million, compared to $383.8 million in the same period of 2007, representing an increase of $53.7 million or 14.0%. The increase in operating revenue was primarily attributable to a $45.5 million increase in pass-through costs under the Capacity Purchase Agreement (CPA) with Air Canada. For the three-month period ended September 30, 2008, performance incentives payable by Air Canada to Jazz under the CPA amounted to $4.1 million or 1.7% of Jazz's Scheduled Flights Revenue, as compared to $5.0 million or 2.1% for the same period in 2007. This translates to 73% of the incentives available under the CPA for the quarter versus a 91% attainment in 2007. Incentives earned in the third quarter of 2008 were lower primarily due to the consequential impact of inclement weather conditions which led to lower on-time performance than 2007. Quarter-over-quarter, other revenue (charter flights and other revenue sources) increased from $2.7 million to $4.1 million.
Total operating expenses increased from $342.9 million in the third quarter of 2007 to $392.1 million for the same period in 2008, an increase of $49.2 million or 14.3%. Pass-through costs represented $45.5 million or 92.5% of the total increase in operating costs, rising primarily as a result of the continuing rise in fuel prices. Controllable Costs (includes costs related to operations not covered under the CPA) represented $3.7 million or 7.5% of the total increase in operating costs, rising primarily as a result of increased costs related to depreciation, salaries, wages and benefits and other expenses.
For the third quarter of 2008, EBITDA(1) was $52.8 million compared to $47.4 million in the third quarter 2007, an increase of $5.4 million or 11.4%. Operating income of $45.4 million represented a $4.5 million or 10.9% increase from the same period last year.
Costs per Available Seat Mile, excluding fuel, for the three month period ended September 30, 2008, increased by 3.9% over the same period in 2007.
Distributable cash was $44.3 million up $0.8 million or 1.8% from the third quarter of 2007.
The Controllable Adjusted Actual Margin established under the CPA for the third quarter of 2008 was 16.70%, which is greater than the CPA target of 14.09% by 261 basis points or the equivalent of approximately $6.3 million. This compares to the third quarter of 2007 margin of 14.93% which was greater than the target of 14.09% by 84 basis points or the equivalent of approximately $2.0 million.
In the third quarter of 2008, non-operating expense amounted to $3.1 million, an increase of $1.9 million from the third quarter 2007. The change is mainly attributable to increased net interest expense resulting from lower interest income, and a foreign exchange loss arising as a result of the reduction in value of the Canadian dollar relative to the US dollar.
Net income for the third quarter of 2008 was $42.3 million compared to $39.7 million recorded in the third quarter last year, an increase of $2.5 million or 6.4%.
Jazz Air LP and Jazz Air Income Fund's unaudited interim consolidated financial statements for the three month period ended September 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: firstname.lastname@example.org or (902) 873-5094.
Quarterly Investor Conference Call / Audio Webcast
Jazz will hold an analyst call at 10:00 a.m. ET on Thursday, November 6, 2008 to discuss the third quarter results of Jazz Air Income Fund and Jazz Air LP. The call may be accessed by dialing 1-800-731-5319 or (416) 644-3419 for the Toronto area. The call will be simultaneously audio webcast via: www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2434740 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, November 13, 2008, by dialing (416) 640-1917 or toll-free 1-877-289-8525, and passcode - 21285482# (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 many 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, the Annual Information Form dated March 28, 2008, and interim MD&A dated November 5, 2008. The forward-looking statements contained in this discussion represent Jazz's expectations as of November 5, 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: Manon Stuart, (902) 873-5054, Halifax, Nova Scotia; Debra Williams,
(519) 659-5696, London, Ontario; Analyst Contact: Nathalie Megann, (902) 873-5094,
Halifax, Nova Scotia, www.flyjazz.ca