Exhibit 99.1
News release via CNW Telbec, Montreal 514-878-2520
Attention Business/Financial Editors:
ACE Aviation reports second quarter 2008 results
<<
SECOND QUARTER OVERVIEW
- Net income of $830 million.
- Operating loss of $2 million.
- EBITDAR of $238 million including EBITDAR of $249 million at Air
Canada.
- Secondary offering of Aeroplan units in April 2008 for net cash
proceeds of $343 million.
- Sale of remaining stakes in Aeroplan and Jazz in early June 2008 for
net cash proceeds of $349 million and $85 million respectively.
- Substantial issuer bid of $500 million completed in June 2008.
- ACTS Aero stake increased to 27.8% in June 2008 following exercise of
put option by Grupo TACA related entity for US$18.4 million.
- ACE cash of $828 million at June 30, 2008.
>>
MONTREAL, Aug. 8 /CNW Telbec/ - ACE Aviation Holdings Inc. (ACE) today
reported net income of $830 million for the second quarter of 2008. This
included pre-tax gains of $908 million from the sale of Aeroplan and Jazz
units in the quarter.
ACE recorded an operating loss of $2 million for the quarter. Air Canada
reported operating income of $7 million, a decrease of $81 million from the
second quarter 2007, on a comparative basis.
EBITDAR(1) for ACE amounted to $238 million. Air Canada reported EBITDAR
of $249 million for the quarter, a decrease of $50 million over second quarter
2007.
"I am pleased with ACE's continued progress on the execution of its
strategy," said Robert Milton, Chairman, President and Chief Executive
Officer, ACE Aviation Holdings Inc.
"In April 2008, we raised a further $343 million in cash through a
secondary offering of Aeroplan units. In June, we also raised a total of
$434 million by way of the sale of our remaining holdings in Aeroplan and
Jazz, and we completed a $500 million substantial issuer bid.
"We are now actively exploring options for our 75 per cent interest in
Air Canada to maximize value for our shareholders," concluded Mr. Milton.
(1) Non-GAAP Measures
EBITDAR is a non-GAAP financial measure commonly used in the airline
industry to assess earnings before interest, taxes, depreciation and aircraft
rent. EBITDAR is used to view operating results before aircraft rent and
depreciation, amortization and obsolescence as these costs can vary
significantly among airlines due to differences in the way airlines finance
their aircraft and other assets. EBITDAR is not a recognized measure for
financial statement presentation under GAAP and does not have standardized
meaning and is therefore not likely to be comparable to similar measures
presented by other public companies. Readers should refer to ACE's Second
Quarter 2008 Management's Discussion and Analysis (MD&A) for a reconciliation
of EBITDAR and EBITDAR (before the provision for cargo investigations) to
operating income (loss).
For further information on ACE's public disclosure file, including ACE's
Annual Information Form, please consult SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar.shtml
CAUTION REGARDING FORWARD-LOOKING INFORMATION
---------------------------------------------
Certain statements in this news release may contain 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, by their nature, are based on assumptions 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, war, terrorist acts, 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, 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
throughout ACE's filings with securities regulators in Canada and the
United States and, in particular, those identified in the Risk Factors section
of ACE's 2007 MD&A dated February 7,2008 and in Section 11 of ACE's Second
Quarter 2008 MD&A dated August 8, 2008. The forward-looking statements
contained herein represent ACE's expectations as of the date they are made and
are subject to change after such date. However, ACE 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.
<<
Consolidated Statement of Operations
-----------------------------------------------
Unaudited
(Canadian dollars Three Months Ended Six Months Ended
in millions except June 30 June 30
per share figures) 2008 2007(x) 2008 2007(x)
-------------------------------------------------------------------------
Operating revenues
Passenger $ 2,454 $ 2,336 $ 4,765 $ 4,488
Cargo 139 135 263 275
Other 190 188 481 521
-------------------------------------------------------------------------
2,783 2,659 5,509 5,284
-------------------------------------------------------------------------
Operating expenses
Wages, salaries
and benefits 487 626 983 1,324
Aircraft fuel 848 637 1,563 1,222
Aircraft rent 69 91 132 195
Airport and
navigation fees 255 256 496 499
Aircraft maintenance,
materials and supplies 172 121 375 263
Communications and
information technology 72 69 145 145
Food, beverages and
supplies 81 81 158 164
Depreciation,
amortization and
obsolesence 171 149 340 295
Commissions 47 51 100 110
Capacity purchase
with Jazz 233 76 468 76
Special charge
for labour
restructuring - 6 - 15
Other 350 400 778 909
-------------------------------------------------------------------------
2,785 2,563 5,538 5,217
-------------------------------------------------------------------------
Operating income (loss)
before under-noted item (2) 96 (29) 67
Provision for cargo
investigations - - (125) -
-------------------------------------------------------------------------
Operating income (loss) (2) 96 (154) 67
-------------------------------------------------------------------------
Non-operating
income (expense)
Interest income 23 28 48 61
Interest expense (87) (96) (183) (219)
Interest capitalized 8 28 25 64
Gain on disposal
of assets 915 18 961 25
Gain (loss) on
financial instruments
recorded at fair value 176 (6) 153 28
Equity and other
investment income 5 24 17 27
Other - (1) (1) (1)
-------------------------------------------------------------------------
1,040 (5) 1,020 (15)
-------------------------------------------------------------------------
Income before the
following items 1,038 91 866 52
Non-controlling
interest (32) (56) 32 (79)
Foreign exchange
gain (loss) 48 158 (41) 191
Provision for
income taxes
Current (1) - (1) (6)
Future (223) (75) (208) (112)
-------------------------------------------------------------------------
Income for the period $ 830 $ 118 $ 648 $ 46
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Income per share
Basic $ 15.46 $ 1.14 $ 11.24 $ 0.45
-------------------------------------------------------------------------
Diluted $ 10.76 $ 0.98 $ 8.18 $ 0.44
-------------------------------------------------------------------------
(x) Effective March 14, 2007, May 24, 2007, and October 16, 2007, the
results and financial position of Aeroplan, Jazz and ACTS,
respectively, are not consolidated with ACE. The notes are an
integral part of the interim consolidated financial statements and
are available on SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar.shtml.
Consolidated Statement of Financial Position
----------------------------
Unaudited June 30 December 31
(Canadian dollars in millions) 2008 2007(x)
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 1,481 $ 2,300
Short-term investments 844 839
-------------------------------------------------------------------------
2,325 3,139
-------------------------------------------------------------------------
Restricted cash 42 124
Accounts receivable 943 793
Aircraft fuel inventory 117 98
Fuel derivatives 382 68
Prepaid expenses and other current assets 131 182
Future income taxes - 200
-------------------------------------------------------------------------
3,940 4,604
-------------------------------------------------------------------------
Property and equipment 7,502 7,925
Deferred charges 49 51
Intangible assets 660 647
Deposits and other assets 650 527
-------------------------------------------------------------------------
$ 12,801 $ 13,754
-------------------------------------------------------------------------
LIABILITIES
Current
Accounts payable and accrued liabilities $ 1,183 $ 1,249
Advance ticket sales 1,722 1,245
Current portion of Aeroplan Miles obligation 55 55
Current portion of long-term debt and
capital leases 396 686
-------------------------------------------------------------------------
3,356 3,235
-------------------------------------------------------------------------
Long-term debt and capital leases 4,141 4,006
Convertible preferred shares 194 182
Future income taxes 50 50
Pension and other benefit liabilities 1,738 1,824
Other long-term liabilities 511 483
-------------------------------------------------------------------------
9,990 9,780
-------------------------------------------------------------------------
Non-controlling interest 724 757
SHAREHOLDERS' EQUITY
Share capital and other equity 307 450
Contributed surplus 170 504
Retained earnings 1,368 2,209
Accumulated other comprehensive income 242 54
-------------------------------------------------------------------------
2,087 3,217
-------------------------------------------------------------------------
$ 12,801 $ 13,754
-------------------------------------------------------------------------
(x) Effective March 14, 2007, May 24, 2007, and October 16, 2007, the
results and financial position of Aeroplan, Jazz and ACTS,
respectively, are not consolidated with ACE. The notes are an
integral part of the interim consolidated financial statements and
are available on SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar.shtml.
Consolidated Statement of Changes in Shareholders' Equity
-----------------------------------------
Six Months Year Six Months
Ended Ended Ended
Unaudited June 30 December 31 June 30
(Canadian dollars in millions) 2008 2007(x) 2007(x)
-------------------------------------------------------------------------
Share capital
Common shares,
beginning of period $ 243 $ 533 $ 533
Repurchase and cancellation
of common shares (180) - -
Distributions of Aeroplan
units - (306) (354)
Distributions of Jazz units - (70) (72)
Issue of shares through
stock options exercised 37 86 20
-------------------------------------------------------------------------
Total share capital 100 243 127
Other equity
Convertible preferred shares 117 117 117
Convertible senior notes 90 90 92
-------------------------------------------------------------------------
Total share capital and
other equity 307 450 336
-------------------------------------------------------------------------
Contributed surplus
Balance, beginning of period 504 25 25
Repurchase and cancellation
of common shares (329) - -
Fair value of stock
options issued to
Corporation employees
recognized as
compensation expense 2 25 8
Fair value of exercised stock
options to share capital (7) (29) -
Aeroplan negative investment - 483 483
-------------------------------------------------------------------------
Total contributed surplus 170 504 516
-------------------------------------------------------------------------
Retained earnings
Balance, beginning of period 2,209 810 810
Repurchase and cancellation of
common shares (1,489) - -
Cumulative effect of adopting
new accounting policies - 5 8
Repair schemes and Non-compete
agreement - (4) -
-------------------------------------------------------------------------
720 811 818
Net income for the period 648 1,398 46
-------------------------------------------------------------------------
Total retained earnings 1,368 2,209 864
-------------------------------------------------------------------------
Accumulated other comprehensive
income
Balance, beginning of period 54 - -
Cumulative effect of adopting
new accounting policies - (7) (7)
Other comprehensive income 188 61 2
-------------------------------------------------------------------------
Total accumulated other
comprehensive income 242 54 (5)
-------------------------------------------------------------------------
Total retained earnings and
accumulated other
comprehensive income 1,610 2,263 859
-------------------------------------------------------------------------
Total shareholders' equity $ 2,087 $ 3,217 $ 1,711
-------------------------------------------------------------------------
(x) Effective March 14, 2007, May 24, 2007, and October 16, 2007, the
results and financial position of Aeroplan, Jazz and ACTS,
respectively, are not consolidated with ACE. The notes are an
integral part of the interim consolidated financial statements and
are available on SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar.shtml.
Consolidated Statement of Comprehensive Income
-----------------------------------------------
Unaudited Three Months Ended Six Months Ended
(Canadian dollars June 30 June 30
in millions 2008 2007(x) 2008 2007(x)
-------------------------------------------------------------------------
Comprehensive income
Net income for the
period $ 830 $ 118 $ 648 $ 46
Other comprehensive
income (loss),
net of taxes:
Net change in
unrealized loss on
US Airways securities - (4) - (8)
Reclassification of
realized gains on US
Airways securities
to income - (7) - (7)
Net change in
unrealized gain on
Jazz Air Income Fund (6) - 65 -
Reclassification of
net realized gains
on Jazz Air Income
Fund to income (65) - (65) -
Net change in
unrealized gain on
Aeroplan Income Fund 331 - 331 -
Reclassification of
net realized gains
on Aeroplan Income
Fund to income (331) - (331) -
Net gains on fuel
derivatives under
hedge accounting 173 8 273 14
Reclassification of
net realized (gains)
losses on fuel
derivatives to income (62) 2 (85) 10
Unrealized loss on
translation of
self-sustaining
operation
(net of nil tax) - (7) - (7)
-------------------------------------------------------------------------
40 (8) 188 2
-------------------------------------------------------------------------
Total comprehensive
income $ 870 $ 110 $ 836 $ 48
-------------------------------------------------------------------------
(x) Effective March 14, 2007, May 24, 2007, and October 16, 2007, the
results and financial position of Aeroplan, Jazz and ACTS,
respectively, are not consolidated with ACE. The notes are an
integral part of the interim consolidated financial statements and
are available on SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar.shtml.
Consolidated Statement of Cash Flows
-----------------------------------------------
Unaudited Three Months Ended Six Months Ended
(Canadian dollars June 30 June 30
in millions 2008 2007(x) 2008 2007(x)
-------------------------------------------------------------------------
Cash flows from (used
for) Operating
Net income for the
period $ 830 $ 118 $ 648 $ 46
Adjustments to
reconcile to net cash
from operations
Depreciation,
amortization and
obsolescence 171 149 340 295
Gain on disposal of
assets (915) (18) (961) (25)
Foreign exchange gain (64) (154) 1 (187)
Future income taxes 223 75 208 112
Excess of employee
future benefit
funding over expense (31) (69) (82) (138)
Decrease in Aeroplan
miles obligation (13) (21) (29) (49)
Provision for cargo
investigation - - 125 -
Non-controlling
interest 36 52 (32) 70
Financial instruments
and other (168) 36 (181) 9
Changes in non-cash
working capital
balances 148 (37) 409 314
-------------------------------------------------------------------------
217 131 446 447
-------------------------------------------------------------------------
Financing
Issue of common shares 29 - 30 19
Repurchase and
cancellation of
common shares (500) - (1,998) -
Aircraft related
borrowings 126 532 313 644
Distributions paid to
non-controlling
interest - (8) - (61)
Reduction of long-term
debt and capital
lease obligations (319) (90) (642) (168)
Other - 1 - -
-------------------------------------------------------------------------
(664) 435 (2,297) 434
-------------------------------------------------------------------------
Investing
Short-term investments (165) 16 (4) (139)
Proceeds from sale of
Aeroplan units 692 - 692 -
Proceeds from sale of
Jazz units 85 - 182 -
Exercise of ACTS Aero
put option (19) - (19) -
Proceeds from escrow
related to sale of
ACTS - - 40 -
Proceeds from sale of
other assets - - 27 45
Proceeds from sale-
leaseback transactions 297 - 708 -
Additions to capital
assets (225) (738) (628) (1,175)
Deconsolidation of
Aeroplan cash - - - (231)
Deconsolidation of
Jazz cash - (138) - (138)
Acquisition of Aeroman,
net of cash - - - (53)
Other 9 (18) 34 (3)
-------------------------------------------------------------------------
674 (878) 1,032 (1,694)
-------------------------------------------------------------------------
Increase (decrease)
in cash and cash
equivalents 227 (312) (819) (813)
Cash and cash
equivalents,
beginning of period 1,254 1,353 2,300 1,854
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 1,481 $ 1,041 $ 1,481 $ 1,041
-------------------------------------------------------------------------
Cash payments of
interest $ 81 $ 71 $ 149 $ 131
Cash payments of
income taxes $ 1 $ 3 $ 3 $ 9
-------------------------------------------------------------------------
(x) Effective March 14, 2007, May 24, 2007, and October 16, 2007, the
results and financial position of Aeroplan, Jazz and ACTS,
respectively, are not consolidated with ACE. The notes are an
integral part of the interim consolidated financial statements and
are available on SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar.shtml.
>>
%SEDAR: 00020954EF %CIK: 0001295721
/For further information: Isabelle Arthur (Montreal), (514) 422-5788;
Peter Fitzpatrick (Toronto), (416) 263-5576; Angela Mah (Vancouver), (604)
270-5741; Internet: aceaviation.com/
(ACE.A. ACE.B.)
CO: ACE AVIATION HOLDINGS INC.
CNW 06:10e 08-AUG-08
