MONTREAL, Feb. 18, 2022 /CNW Telbec/ - Air Canada
today reported its fourth quarter and full year 2021 financial
results.
- Fourth quarter 2021 operating revenues of $2.731 billion, 30 per cent higher than in the
third quarter of 2021, and over three times fourth quarter 2020
operating revenues
- Fourth quarter 2021 operating loss of $503 million compared to an operating loss of
$1.003 billion in the fourth quarter
of 2020
- Fourth quarter 2021 EBITDA(1) (earnings
before interest, taxes, depreciation, and amortization), excluding
special items, of $22 million
compared to negative EBITDA (excluding special items) of
$728 million in the same quarter of
2020
- Full year 2021 operating revenues of $6.400 billion compared to 2020 operating
revenues of $5.833 billion
- Record cargo revenues in 2021 of $1.495
billion compared to 2020 cargo revenues of $920 million
- Full year 2021 operating loss of $3.049
billion compared to an operating loss of $3.776 billion in 2020
- Full year 2021 negative EBITDA (excluding special items) of
$1.464 billion compared to negative
EBITDA (excluding special items) of $2.043
billion in 2020
- Unrestricted liquidity of $10.4
billion at December 31, 2021,
practically unchanged from September 30,
2021, excluding funds that were available at September 30, 2021 under the financial package
with the Government of Canada
"The unpredictable course of COVID-19 made 2021 extremely
challenging for Air Canada and the global airline industry. But the
sequential and year-over-year improvement in Air Canada's fourth
quarter results shows the underlying recovery remains intact
despite the Omicron variant. Our progress rebuilding our airline is
due to the hard work, resourcefulness, and commitment of our
people. I warmly thank our employees for their dedication and
professionalism, which have been unwavering through nearly two
years of a global pandemic. I also thank our customers, including
shippers, for their steadfast loyalty in continuing to choose Air
Canada. As restrictions lift and more people return to flying with
us, they will discover measures introduced for COVID safety have
been adapted to smooth their journey. As we look at our renewed
commitment to customer service excellence, we have more exciting
initiatives to come," said Michael
Rousseau, President and Chief Executive Officer of Air
Canada.
"Our quarterly EBITDA exceeded our expectations and turned
positive for the first time in seven quarters, cash flow from
operations remained positive and accelerated from the third
quarter, and we ended the year with $10.4
billion in unrestricted liquidity, an increase of
$2.3 billion, or about 29 per cent
from the start of the year. We grew our capacity 26 per cent from
the previous quarter, while continuing to successfully manage load
factor and yields in the right direction. Prior to Omicron's onset,
ticket sales reached 65 per cent of pre-pandemic levels in October
and November. These are all encouraging indicators.
"Moreover, robust advance ticket sales, which grew almost
$400 million in the quarter, give us
confidence that our customers will keep returning and that
Omicron's effect on our business is travel deferred, not cancelled.
Our other lines of business thrived throughout the year, Air Canada
Cargo's record annual revenue of nearly $1.5
billion exceeded $1 billion
for the first time, reaching $490
million in the fourth quarter of 2021, our transformed
Aeroplan program reported strong billings, and Air Canada Vacations
bookings sharply rebounded.
"There are other unmistakable signs of revival. We have been
actively restoring our network, with 118 stations served at the end
of 2021 up from 70 at its start, and the average number of daily
flights rising to 665 in December
2021 from 245 in January 2021.
We have been advancing ESG initiatives, including those related to
the environment and diversity. And, most importantly, we have
recalled over 10,000 colleagues, including 3,900 in the fourth
quarter, and we have also begun hiring new employees. As we move
into 2022, all expectations are that the recovery in air travel
will continue, albeit unevenly. Nonetheless, we believe the
regeneration of our business will gain momentum. To this end, we
are working cooperatively with governments as they look to adapt
their policies, based on science, and taking into account the
significant health and safety measures Air Canada and the airline
industry have implemented, to allow Canada to capture the economic
benefits of the global recovery from the COVID-19 pandemic, many of
which will be derived from increased trade and travel," said Mr.
Rousseau.
Fourth Quarter and Full Year 2021 Financial Results
- In the fourth quarter of 2021, Air Canada's operating capacity,
measured as Available Seat Miles (ASMs) increased 134 per cent from
fourth quarter 2020 ASMs. When compared to the fourth quarter of
2019, it represented a decline of 47 percent, which is in line with
the expectations discussed in Air Canada's third quarter 2021
earnings release dated November 2,
2021
- Fourth quarter 2021 passenger revenues of $2.041 billion increased more than four times
from the fourth quarter of 2020
- Fourth quarter 2021 total operating revenues of $2.731 billion increased $1.904 billion or more than three times from the
fourth quarter of 2020
- Fourth quarter 2021 total operating expenses of $3.234 billion increased $1.404 billion or 77 per cent from the fourth
quarter of 2020
- Fourth quarter 2021 net loss of $493
million or $1.38 per diluted
share compared to a net loss of $1.161
billion or $3.91 per diluted
share in the fourth quarter of 2020
- In 2021, Air Canada's ASMs decreased 11 per cent from 2020.
When compared to 2019, it represented a decline of 70 per cent
- 2021 passenger revenues of $4.498
billion increased $116 million
or three per cent from 2020
- 2021 total operating revenues of $6.400
billion increased $567 million
or 10 per cent compared to 2020
- 2021 total operating expenses of $9.449
billion decreased $160 million
or two per cent from 2020
- 2021 net loss of $3.602 billion
or $10.25 per diluted share compared
to a net loss of $4.647 billion or
$16.47 per diluted share in 2020
- Unrestricted liquidity of $10.4
billion at December 31,
2021
2021 Highlights
Since the onset of the pandemic, Air Canada has actively managed
its ASM capacity to account for passenger demand, prevailing market
trends, public health guidelines, travel restrictions, and other
factors. In 2021, Air Canada decreased its ASM capacity by 11 per
cent compared to 2020 (a reduction of about 70 per cent when
compared to 2019).
Financing and Liquidity
On April 12, 2021, Air Canada
entered into a series of debt and equity financing agreements with
the Government of Canada (acting through Canada Enterprise
Emergency Funding Corporation) which allowed Air Canada to access
up to $5.879 billion in liquidity
through the Large Employer Emergency Financing Facility (LEEFF)
program.
In November 2021, Air Canada
withdrew from Government of Canada financial support, having only
accessed the facility solely dedicated to refunding customers'
non-refundable tickets. None of the $3.975
billion available under the secured revolving and the
unsecured non-revolving credit facilities was ever drawn. Air
Canada had the right to terminate these facilities at any time
without penalty, which it did in November
2021.
Air Canada issued to the Government of Canada 14,576,564
warrants initially exercisable during a 10-year term for the
purchase of an equal number of Air Canada shares at an exercise
price of $27.2698 per share. Half of
the warrants vested upon the implementation of the above secured
and unsecured credit facilities, while the remaining half would
have vested on a proportional basis to the amounts that Air Canada
may have drawn under the now terminated unsecured credit
facilities. The warrants were subject to a one-time call right in
favour of Air Canada, pursuant to which Air Canada on certain
conditions could repurchase for cancellation all outstanding
warrants at a price per warrant equal to their fair market value.
The vested warrants were exercisable by the holder either by paying
the exercise price or by using a cashless exercise option. With the
termination of the operating credit facilities, the unvested
warrants were cancelled. In addition, Air Canada exercised its call
right on the vested warrants repurchasing and cancelling the
warrants in January 2022 at a price
of $82 million which is equivalent to
the carrying value of the vested warrants as at December 31, 2021.
In the third quarter of 2021, Air Canada completed a series of
financing transactions generating gross proceeds of about
$7.1 billion. These financing
transactions provide substantial liquidity to Air Canada and
extend debt maturities out until near the end of the
decade.
Additional information relating to these transactions is
available in Section 4 "2021 Highlights" of Air Canada's 2021
Management's Discussion and Analysis of Results of Operations
and Financial Condition.
Navigating through the COVID-19 Pandemic
On June 21, 2021, the Government
of Canada announced the initial phase to ease border measures. This
announcement included removing the quarantine requirement for fully
vaccinated travellers allowed to enter Canada as of July 5, 2021. In the third quarter of 2021,
travel restrictions were further eased, including to allow fully
vaccinated foreign nationals to enter Canada for non-essential
travel, and the cessation of the obligation to quarantine at a
government-approved hotel for all travellers. Certain restrictions
remain in place for foreign nationals who do not meet the
requirements to be considered fully vaccinated, for unvaccinated
children under the age of five, and unvaccinated dependent
adults.
Since November 30, 2021, the
Government of Canada has required all travellers to be fully
vaccinated to board a flight in Canada, with very limited exceptions.
In response to the Omicron variant, the Government of Canada
added post-arrival testing requirements for fully vaccinated
travellers from any country other than the U.S. Since December 2021, it has required such passengers to
take a COVID-19 PCR test upon arrival and to quarantine in a
suitable place until the receipt of a negative arrival test result.
Travellers arriving from the U.S., who have not been in any other
country in the previous 14 days, continue to be subject to a random
selection process for COVID-19 testing upon arrival.
On February 15, 2022, the
Government of Canada announced the beginning of a phased easing of
travel restrictions. As part of the announcement, commencing
February 28, 2022 (i) fully
vaccinated travellers arriving to Canada may be randomly selected
for arrival testing, but will no longer be required to quarantine
pending their test result, (ii) children under 12 years old,
travelling with fully vaccinated adults, will continue to be exempt
from quarantine, and without any prescribed conditions limiting
their activities, (iii) travellers will have the option to present
a rapid antigen (rather than a PCR) test result when arriving to
Canada, (iv) the Government will reduce its travel advisory to
level 2 (from level 3) meaning it will no longer recommend that
Canadians avoid travel for non-essential purposes, and (v)
international passenger flights will be permitted to land at all
remaining Canadian airports that are designated by the Canada
Border Services Agency to receive international passenger
flights.
Route Network and Schedule
Between January 31, 2021 and June 26, 2021, Air Canada suspended flights
to Mexican and Caribbean
destinations in response to COVID-19 concerns, particularly
over the spring break period. The decision, designed to
achieve an orderly reduction in service and minimize customer
impact, was taken in collaboration with the Government of Canada
following consultations.
On June 15, 2021, Air Canada
announced its 2021 domestic summer schedule serving a total of 50
Canadian destinations from coast to coast. It included three new
routes, the re-establishment of select regional routes, and
wide-body aircraft featuring Air Canada Signature Class and Premium
Economy Class on select transcontinental routes.
On June 18, 2021, Air Canada
operated its first non-stop service between Montreal and Cairo, serving the large Egyptian community
established in Montreal and
throughout North America, and
providing an additional gateway to Africa.
Following the Government of Canada's announcement to
ease travel restrictions for citizens and permanent residents
of the U.S., on July 19, 2021, Air
Canada announced its U.S. transborder summer schedule which
included 55 routes and 34 destinations in the U.S., with up to 220
daily flights between Canada and the U.S.
In the third quarter of 2021, Air Canada announced a series of
new routes, including new winter services departing from Québec
City to Orlando and Fort Lauderdale, and the resumption of
services to Punta Cana and
Cancun, from Québec City, between
Montreal and Toronto Island. Air
Canada also announced the resumption of non-stop flights to and
from Delhi, following the lifting
of the Government of Canada restrictions on non-stop flights from
India.
In September 2021, Air Canada
Rouge resumed service between Toronto and Las
Vegas, Orlando, and Regina,
with other destinations introduced through the end of 2021,
including Cancun and
Tampa.
In October 2021, Air Canada
announced additional updates to its schedule, including:
- Two new seasonal routes connecting Québec City with
Vancouver and with Calgary. These routes are scheduled to begin
in May 2022.
- Increase in service to several key South American destinations.
Year-round service to São Paulo, Brazil from Montreal resumed in December 2021. Direct service from Montreal to Bogota,
Colombia started in early December
2021. Flights from Toronto
to Bogota increased to four per
week since November 2021. Service
between Toronto and Santiago, Chile resumed in January 2022. Air Canada now serves Buenos Aires, Argentina, with flights offered
from both Toronto and Montreal via São Paulo.
- New seasonal service between Toronto and Santo
Domingo in the Dominican
Republic, which began in December
2021.
- Planned summer 2022 schedule for Europe, Africa, the Middle
East and India. In addition
to its established year-round services, Air Canada announced its
return to key summer seasonal destinations such as Barcelona, Venice, Nice, Manchester, Edinburgh, and Reykjavik.
- Since October 2021, expansion of
services to India with increased
frequency to Delhi from
Toronto, and a new year-round
non-stop route to Delhi from
Montreal.
People and Culture
In 2021, Air Canada was recognized by Mediacorp Canada Inc. as
one of Canada's Best Diversity Employers for the sixth consecutive
year and one of "Montreal's Top
Employers" for the eighth consecutive year. Air Canada was ranked
among the 50 Most Engaged Workplaces™ for the fifth consecutive
year and was recognized as being one of the 'Elite 8' companies
within the 2021 Achievers 50 Most Engaged Workplaces® Awards, which
celebrates the top 50 employers that make engagement, alignment,
and recognition central to the employee experience.
In October 2021, Air Canada was
recognized for its people, products, and services at the 2021
Skytrax World Airline Awards with honours for: Best Airline Staff
in North America, Best Airline
Staff in Canada, Best Business
Class Lounge in North America, and
Skytrax COVID-19 Airline Excellence award.
Customer Experience
In 2021, Air Canada was named the Best Airline in North America for the third straight year by
readers of Global Traveler. The airline also won for Best Airline
Cabin Cleanliness for the second consecutive year in the
18th edition of the GT Tested Reader Survey of the
magazine's readership of frequent business and luxury travellers.
Additionally, in its annual ratings for 2022, the Airline Passenger
Experience Association ("APEX") reaffirmed Air Canada as a
Five-Star Global Airline in the APEX Official Airline Ratings,
based on customer feedback. For the 2022 awards, nearly one million
flights were evaluated by passengers across more than 600 airlines
from around the world using a five-star scale.
Aeroplan
Building on the successful launch of the new Aeroplan program,
in 2021, Air Canada announced several enhancements and updates to
its loyalty program. These included:
- Extending Aeroplan Elite Status through the end of 2022 as well
as enhancing other flexible policies.
- Launching partnerships with Starbucks, the Liquor Control Board
of Ontario (LCBO), one of the
world's largest retailers of alcoholic beverages, Rocky
Mountaineer, and with Uber
Canada.
- Launching the new Chase Aeroplan® World Elite Mastercard®
Credit Card providing U.S. cardmembers with the ability to earn
Aeroplan points faster. Chase is the largest co-brand card issuer
in the United States.
- Adding Aeroplan as a transfer option for Ultimate Rewards®
points for eligible Chase cardmembers.
Fleet
In 2021, Air Canada elected to proceed with the purchase of an
additional 12 Airbus A220-300 aircraft, six being delivered in 2024
and six in 2025. These 12 aircraft are those that Air Canada had
previously determined it would no longer be purchasing under an
amendment to the purchase agreement concluded with Airbus in
November 2020. As of December 31, 2021, Air Canada had 27 Airbus
A220-300 in its operating fleet.
In October 2021, Air Canada reached an agreement with
Boeing to accelerate the delivery of four Boeing 737 MAX aircraft
into the fourth quarter of 2021, for a total of seven deliveries in
2021. As of December 31, 2021,
Air Canada had 31 Boeing 737 MAX 8 in its operating fleet with the
remaining nine Boeing 737 MAX aircraft expected to be
delivered in the first half of 2022.
In 2021, Air Canada announced it exercised options for the
purchase of three Boeing 787-9 aircraft which are scheduled to be
delivered in 2022 and in 2023.
Cargo
In 2021, Air Canada operated a total of 10,217 cargo-only
flights, compared to 4,235 cargo-only flights in 2020.
In October 2021, Air Canada
announced the start of a $16-million
project to expand and enhance Air Canada Cargo's cold chain
handling capabilities for shipments such as pharmaceuticals, fresh
food, and other perishables at its Toronto Pearson International
Airport cargo facility. The project is part of Air Canada's
strategy to further develop its cargo division, which also includes
the introduction of additional freighter aircraft, the launch of
dedicated freighter routes and an expansion into the e-commerce
delivery service.
In December 2021, Air Canada
introduced its first Boeing 767 dedicated freighter to its
operating fleet. Air Canada expects, by the end of 2022, to have
three more Boeing 767 freighters in service.
Commitment to Sustainability
In March 2021, Air Canada released
its new Climate Action Plan that includes ambitious climate targets
to achieve its long-term goal of net-zero greenhouse ("GHG")
emissions throughout its global operations by 2050. To reach this,
Air Canada has set the following absolute mid-term GHG net
reduction targets:
- 20% GHG net reductions from its air operations by 2030 compared
to its 2019 baseline
- 30% GHG net reductions from its ground operations by 2030
compared to its 2019 baseline
Air Canada has also committed to investing, by 2030,
$50 million in sustainable aviation
fuels ("SAF"), as well as in carbon reductions and removals.
In 2021, Air Canada engaged with the Edmonton International Airport ("EIA") in a
new partnership to reduce carbon emissions and advance a green and
sustainable aviation sector. The EIA-Air Canada Sustainability
Partnership aims to reduce the carbon impact of air travel with
both organizations working together to test emerging green
technologies at EIA's Airport City Sustainability Campus, an
ecosystem that EIA created to foster environmental innovation. The
partnership reflects both organizations' pledges to sustainability
and reducing carbon emissions to a net-zero future.
In October 2021, Air Canada
launched the new LEAVE LESS Travel Program, which offers its
corporate customers effective options to offset or reduce GHG
related to business travel and reduce their carbon footprint.
In November 2021, Air Canada and
Carbon Engineering Ltd. ("CE") announced a preliminary agreement to
identify potential opportunities for CE's proprietary Direct Air
Capture technology, which captures carbon dioxide from the
atmosphere, to advance aviation decarbonization. The two Canadian
companies plan to explore potential cooperation activities in
SAF, permanent carbon dioxide removal and innovation, including
opportunities for Air Canada to purchase SAF utilizing CE's
technologies.
Consolidation of Air Canada Express flying with Jazz
On March 1, 2021, Air Canada
announced an agreement to revise its capacity purchase agreement
("CPA") with Jazz and consolidated all its regional flying with
Jazz Aviation LP ("Jazz"). As a result of the CPA revisions and
consolidation of regional flying, Air Canada expects to realize
$400 million in cost reductions over
the 15-year term of the agreement expiring in 2035 ($43 million per year until 2026 and $18 million per year thereafter.) In addition,
the revised CPA lowered future contractual capital expenditures and
leasing costs through a restructured CPA fleet, avoiding an
estimated $193 million in future
capital expenditures. The amended CPA was effective on a
retroactive basis to January 1,
2021.
Termination of the Transat A.T. Inc. Arrangement
Agreement
On April 2, 2021, Air Canada
announced that the Arrangement Agreement for the proposed
acquisition by Air Canada of Transat A.T. Inc. ("Transat") was
terminated, with Air Canada paying Transat a termination fee of
$12.5 million, and Transat no longer
being under any obligation to pay Air Canada any fee should Transat
be involved in another acquisition or similar transaction in the
future.
Outlook
Air Canada plans to increase its first quarter 2022 ASM capacity
by 243 per cent from the same quarter in 2021.
When compared to the same period in 2019, first quarter ASM
capacity is expected to decrease by about 44 per
cent.
Air Canada will continue to adjust capacity and take other
measures as required, including so as to account for
passenger demand, public health guidelines, and travel
restrictions globally, as well as other factors, such
as inflation and other cost pressures.
(1) Non-GAAP Measures
Below is a description of certain non-GAAP financial measures
used by Air Canada to provide readers with additional information
on its financial and operating performance. Such measures are not
recognized measures for financial statement presentation under
GAAP, do not have standardized meanings, may not be comparable to
similar measures presented by other entities and should not be
considered a substitute for, or superior to, GAAP results. Readers
are advised to refer to the tables accompanying this release for
reconciliations of the non-GAAP financial measures, used in
this release to the most comparable GAAP financial
measures.
EBITDA
EBITDA (earnings before interest, taxes, depreciation, and
amortization) is commonly used in the airline industry and is used
by Air Canada as a means to view operating results before interest,
taxes, depreciation, and amortization. These costs can vary
significantly among airlines due to differences in the way airlines
finance their aircraft and other assets. Air Canada excludes
special items from EBITDA as these items may distort the analysis
of certain business trends and render comparative analysis to other
airlines less meaningful.
Adjusted pre-Tax Income (Loss)
Adjusted pre-tax income (loss) is used by Air Canada to assess
the overall pre-tax financial performance of its business without
the effects of foreign exchange gains or losses, net financing
expense relating to employee benefits, gains or losses on financial
instruments, gains or losses on sale and leaseback of assets, gains
or losses on disposal of assets, gains or losses on debt
settlements and modifications, and special items as these items may
distort the analysis of certain business trends and render
comparative analysis to other airlines less meaningful.
Adjusted Cost per Available Seat Mile (CASM)
Adjusted CASM is used by Air Canada to assess the operating and
cost performance of its ongoing airline business without the
effects of aircraft fuel expense, the cost of ground packages at
Air Canada Vacations, and special items as these items may distort
the analysis of certain business trends and render comparative
analysis to other airlines less meaningful.
In calculating adjusted CASM, aircraft fuel expense is excluded
from operating expense results as it fluctuates widely depending on
many factors, including international market conditions,
geopolitical events, jet fuel refining costs and Canada/U.S.
currency exchange rates. Air Canada also incurs expenses related to
ground packages at Air Canada Vacations which some airlines,
without comparable tour operator businesses, may not incur. In
addition, these costs do not generate ASMs and therefore excluding
these costs from operating expense results provides for a more
meaningful comparison across periods when such costs may vary.
Excluding aircraft fuel expense, the cost of ground packages at
Air Canada Vacations and special items from operating expenses
generally allows for a more meaningful analysis of Air Canada's
operating expense performance and a more meaningful comparison to
that of other airlines.
Air Canada's 2021 Consolidated Financial Statements and Notes
and its 2021 Management's Discussion and Analysis of Results of
Operations and Financial Condition are available on Air Canada's
website at aircanada.com and will be filed on
SEDAR at www.sedar.com.
For further information on Air Canada's public disclosure file,
including Air Canada's 2020 Annual Information Form dated
March 11, 2021, and Air Canada's
upcoming 2021 Annual Information Form, which will be filed on
February 25, 2022, consult SEDAR at
www.sedar.com.
Fourth Quarter and Full Year 2021 Conference Call
Air Canada will host its quarterly analysts' call today,
Friday, February 18, 2022, at
8:00 a.m. ET. Michael Rousseau, President and Chief Executive
Officer, Amos Kazzaz, Executive Vice
President and Chief Financial Officer, and Lucie Guillemette, Executive Vice President and
Chief Commercial Officer, will be available for analysts'
questions. Following the analysts' questions, Mr. Kazzaz and
Pierre Houle, Vice President and
Treasurer, will be available to answer questions from term loan B
lenders and holders of Air Canada bonds.
Media and the public may access this call on a listen-in basis.
Details are as follows:
Live audio
webcast:
|
https://bell.media-server.com/mmc/p/9pudh4cy
|
By
telephone:
|
416-406-0743 or
1-800-898-3989 (toll free), passcode 9204523#.
|
|
Please allow 10
minutes to be connected to the conference call.
|
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This news release includes forward-looking statements
within the meaning of applicable securities laws. Forward-looking
statements relate to analyses and other information that are based
on forecasts of future results and estimates of amounts not yet
determinable. These statements may involve, but are not limited to,
comments relating to guidance, strategies, expectations, planned
operations or future actions. Forward-looking statements are
identified using terms and phrases such as "preliminary",
"anticipate", "believe", "could", "estimate", "expect", "intend",
"may", "plan", "predict", "project", "will", "would", and similar
terms and phrases, including references to assumptions.
Forward-looking statements, by their nature, are based on
assumptions including those described in this news release and the
documents incorporated by reference herein and are subject to
important risks and uncertainties. Forward-looking
statements cannot be relied upon due to, among other things,
changing external events and general uncertainties of the business
of Air Canada. Actual results may differ materially from results
indicated in forward-looking statements due to a number of factors,
including those discussed below.
Air Canada, along with the rest of the global airline
industry, continued to face significantly lower traffic in 2021, as
compared to the year 2019, and a corresponding decline in revenue
and cash flows as a result of the COVID-19 pandemic and the travel
restrictions imposed in many countries around the world, including
in Canada. While there are signs
of improvement, there is limited visibility on future demand trends
given changing government restrictions. Air Canada cannot predict
the full impact or the timing for when conditions may improve. The
COVID-19 pandemic is also having and may continue to have
significant economic impacts, including on business and consumer
spending and behaviour, which may in turn significantly impact
demand for travel. The return of business travel to pre-pandemic
levels may be challenged by the evolving nature of business models
and remote-work practices in light of the impacts of the COVID-19
pandemic, including the growth and continued use of
videoconferencing and other remote-work technologies as well as
tendencies towards less environmentally impactful business and
consumer behaviour. Air Canada is actively monitoring the situation
and will respond as the impact of the COVID-19 pandemic evolves,
which will depend on a number of factors including the course of
the virus including its variants, availability of rapid, effective
testing, vaccinations and treatments for the virus, government
actions including health measures and other restrictions, and
passenger reaction, the complexities of restarting an industry
whose many stakeholders must act in coordination with each other as
well as timing and extent of recovery in international and business
travel which are important segments of Air Canada's market, none of
which can be predicted with certainty.
Other factors that may cause results to differ materially
from results indicated in forward-looking statements include
economic and geopolitical conditions, Air Canada's ability to
successfully achieve or sustain positive net profitability,
industry and market conditions and the demand environment, Air
Canada's ability to pay its indebtedness and maintain or increase
liquidity, competition, Air Canada's dependence on technology,
cybersecurity risks, energy prices, Air Canada's ability to
successfully implement appropriate strategic and other important
initiatives (including Air Canada's ability to manage operating
costs), other epidemic diseases, terrorist acts, war, Air Canada's
dependence on key suppliers, Air Canada's ability to successfully
operate its loyalty program, interruptions of service, Air Canada's
ability to attract and retain required personnel, the availability
of Air Canada's workforce, casualty losses, changes in laws,
regulatory developments or proceedings, climate change and
environmental factors (including weather systems and other natural
phenomena and factors arising from man-made sources), Air Canada's
dependence on regional and other carriers, Air Canada's ability to
preserve and grow its brand, employee and labour relations and
costs, Air Canada's dependence on Star Alliance® and joint
ventures, pending and future litigation and actions by third
parties, currency exchange, limitations due to restrictive
covenants, insurance issues and costs, pension plans, as well as
the factors identified in Air Canada's public disclosure file
available at www.sedar.com and, in
particular, those identified in section 18 "Risk Factors" in Air
Canada's 2021 MD&A. The forward-looking statements contained or
incorporated by reference in this news release represent Air
Canada's expectations as of the date of this news release (or as of
the date they are otherwise stated to be made) and are subject to
change after such date. However, Air Canada disclaims any intention
or obligation to update or revise any forward-looking statements
whether because of new information, future events or otherwise,
except as required under applicable securities regulations.
Internet:
aircanada.com/media
Media Resources:
Photos
Videos
Articles
Selected Financial Metrics and Statistics
The financial and operating highlights for Air Canada for the
periods indicated are as follows:
|
|
|
(Canadian dollars
in millions, except per share data or where
indicated)
|
Fourth
Quarter
|
Full
Year
|
Financial
Performance Metrics
|
2021
|
2020
|
$
Change
|
2021
|
2020
|
$
Change
|
Operating
revenues
|
2,731
|
827
|
1,904
|
6,400
|
5,833
|
567
|
Operating
loss
|
(503)
|
(1,003)
|
500
|
(3,049)
|
(3,776)
|
727
|
Loss before income
taxes
|
(617)
|
(1,275)
|
658
|
(3,981)
|
(4,853)
|
872
|
Net loss
|
(493)
|
(1,161)
|
668
|
(3,602)
|
(4,647)
|
1,045
|
Adjusted pre-tax loss
(1)
|
(574)
|
(1,326)
|
752
|
(3,768)
|
(4,425)
|
657
|
EBITDA (excluding
special items) (1)
|
22
|
(728)
|
750
|
(1,464)
|
(2,043)
|
579
|
Unrestricted
liquidity (2)
|
10,361
|
8,013
|
2,348
|
10,361
|
8,013
|
2,348
|
Diluted loss per
share
|
(1.38)
|
(3.91)
|
2.53
|
(10.25)
|
(16.47)
|
6.22
|
Operating
Statistics (3)
|
2021
|
2020
|
%
Change
|
2021
|
2020
|
%
Change
|
Revenue passenger
miles ("RPMs") (millions)
|
9,612
|
2,432
|
295.2
|
21,045
|
23,239
|
(9.4)
|
Available seat miles
("ASMs") (millions)
|
14,057
|
6,000
|
134.3
|
33,384
|
37,703
|
(11.5)
|
Passenger load factor
%
|
68.4%
|
40.5%
|
27.9 pp
(8)
|
63.0%
|
61.6%
|
1.4 pp
|
Passenger revenue per
RPM ("Yield") (cents)
|
21.2
|
19.5
|
8.8
|
21.4
|
18.9
|
13.3
|
Passenger revenue per
ASM ("PRASM") (cents)
|
14.5
|
7.9
|
83.6
|
13.5
|
11.6
|
15.9
|
Operating revenue per
ASM (cents)
|
19.4
|
13.8
|
40.9
|
19.2
|
15.5
|
23.9
|
Operating expense per
ASM ("CASM") (cents)
|
23.0
|
30.5
|
(24.6)
|
28.3
|
25.5
|
11.1
|
Adjusted CASM (cents)
(1)
|
16.7
|
29.8
|
(43.9)
|
23.3
|
21.6
|
7.8
|
Average number of
full-time-equivalent ("FTE") employees (thousands)
(4)
|
25.2
|
17.9
|
40.8
|
19.8
|
21.1
|
(6.4)
|
Aircraft in operating
fleet at period-end (5)
|
337
|
344
|
(2.0)
|
337
|
344
|
(2.0)
|
Seats dispatched
(thousands)
|
8,772
|
3,673
|
138.8
|
21,105
|
22,780
|
(7.4)
|
Aircraft frequencies
(thousands)
|
71.5
|
31.1
|
130.5
|
175.3
|
191.5
|
(8.4)
|
Average stage length
(miles) (6)
|
1,602
|
1,634
|
(1.9)
|
1,582
|
1,655
|
(4.4)
|
Fuel cost per litre
(cents)
|
83.9
|
50.4
|
66.6
|
74.7
|
61.4
|
21.7
|
Fuel litres
(thousands)
|
791,581
|
372,204
|
112.7
|
2,108,144
|
2,153,764
|
(2.1)
|
Revenue passengers
carried (thousands) (7)
|
5,836
|
1,625
|
259.2
|
13,192
|
13,760
|
(4.1)
|
(1)
|
Adjusted pre-tax
income (loss) and EBITDA (excluding special items) (earnings before
interest, taxes, depreciation, and amortization) are non-GAAP
financial measures, and adjusted CASM is a non-GAAP financial
ratio. Readers are advised to refer to the Non-GAAP Measures
section of this news release for descriptions of the non-GAAP
measures and to the tables accompanying this release for
reconciliations of the non-GAAP financial measures, used in this
release to the most comparable GAAP financial
measures.
|
(2)
|
Unrestricted
liquidity refers to the sum of cash, cash equivalents and short and
long-term investments, and the amount of available credit under Air
Canada's credit facilities. At December 31, 2021, unrestricted
liquidity amounted to $10,361 million consisted of $9,403 million
in cash and cash equivalents, short-term and long-term investments,
and $958 million available under undrawn credit facilities. At
December 31, 2020, unrestricted liquidity of $8,013 million
consisted of cash, cash equivalents and short-term investments of
$7,501 million, and long-term investments of $512
million.
|
(3)
|
Except for the
reference to average number of FTE employees, operating statistics
in this table include third party carriers operating under capacity
purchase agreements with Air Canada.
|
(4)
|
Reflects FTE
employees at Air Canada and its subsidiaries. Excludes FTE
employees at third party carriers operating under capacity purchase
agreements with Air Canada.
|
(5)
|
The number of
aircraft in Air Canada's operating fleet at December 31, 2021 and
at December 31, 2020 include several aircraft that were grounded
due to the impact of the COVID-19 pandemic.
|
(6)
|
Average stage length
is calculated by dividing the total number of available seat miles
by the total number of seats dispatched.
|
(7)
|
Revenue passengers
are counted on a flight number basis (rather than by
journey/itinerary or by leg) which is consistent with the IATA
definition of revenue passengers carried.
|
(8)
|
"pp" denotes
percentage points and refers to a measure of the arithmetic
difference between two percentages.
|
Non-GAAP Reconciliation
EBITDA
EBITDA is reconciled to GAAP operating income (loss) as
follows:
|
|
|
|
Fourth
Quarter
|
Full
Year
|
(Canadian dollars
in millions)
|
2021
|
2020
|
$
Change
|
2021
|
2020
|
$
Change
|
Operating loss –
GAAP
|
$
|
(503)
|
$
|
(1,003)
|
$
|
500
|
$
|
(3,049)
|
$
|
(3,776)
|
$
|
727
|
Add
back:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
399
|
|
435
|
|
(36)
|
|
1,616
|
|
1,849
|
|
(233)
|
EBITDA (including
special items)
|
$
|
(104)
|
$
|
(568)
|
$
|
464
|
$
|
(1,433)
|
$
|
(1,927)
|
$
|
494
|
Remove:
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
items
|
|
126
|
|
(160)
|
|
286
|
|
(31)
|
|
(116)
|
|
85
|
EBITDA (excluding
special items)
|
$
|
22
|
$
|
(728)
|
$
|
750
|
$
|
(1,464)
|
$
|
(2,043)
|
$
|
579
|
Adjusted Pre-tax Income (Loss)
Adjusted pre-tax income (loss) is reconciled to GAAP income
(loss) before income taxes as follows:
|
|
|
(Canadian dollars
in millions)
|
Fourth
Quarter
|
Full
Year
|
2021
|
2020
|
$
Change
|
2021
|
2020
|
$
Change
|
Loss before income
taxes – GAAP
|
$
|
(617)
|
$
|
(1,275)
|
$
|
658
|
$
|
(3,981)
|
$
|
(4,853)
|
$
|
872
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
items
|
|
126
|
|
(160)
|
|
286
|
|
(31)
|
|
(116)
|
|
85
|
Foreign exchange
(gain) loss
|
|
(22)
|
|
(88)
|
|
66
|
|
52
|
|
293
|
|
(241)
|
Net financing expense
relating to employee benefits
|
|
(2)
|
|
1
|
|
(3)
|
|
8
|
|
27
|
|
(19)
|
(Gain) loss on
financial instruments recorded at fair value
|
|
(59)
|
|
214
|
|
(273)
|
|
55
|
|
242
|
|
(187)
|
Loss on debt
settlements and modifications
|
|
-
|
|
-
|
|
-
|
|
129
|
|
-
|
|
129
|
Gain on sale and
leaseback of assets
|
|
-
|
|
(18)
|
|
18
|
|
-
|
|
(18)
|
|
18
|
Adjusted pre-tax
loss
|
$
|
(574)
|
$
|
(1,326)
|
$
|
752
|
$
|
(3,768)
|
$
|
(4,425)
|
$
|
657
|
Adjusted CASM
Adjusted CASM is reconciled to GAAP operating expense as
follows:
|
|
|
(Canadian dollars
in millions)
|
Fourth
Quarter
|
Full
Year
|
2021
|
2020
|
$
Change
|
2021
|
2020
|
$
Change
|
Operating expense
– GAAP
|
$
|
3,234
|
$
|
1,830
|
$
|
1,404
|
$
|
9,449
|
$
|
9,609
|
$
|
(160)
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft
fuel
|
|
(665)
|
|
(187)
|
|
(478)
|
|
(1,576)
|
|
(1,322)
|
|
(254)
|
Ground package
costs
|
|
(91)
|
|
(14)
|
|
(77)
|
|
(120)
|
|
(250)
|
|
130
|
Special
items
|
|
(126)
|
|
160
|
|
(286)
|
|
31
|
|
116
|
|
(85)
|
Operating expense,
adjusted for the above-noted items
|
$
|
2,352
|
$
|
1,789
|
$
|
563
|
$
|
7,784
|
$
|
8,153
|
$
|
(369)
|
ASMs
(millions)
|
|
14,057
|
|
6,000
|
|
134.3%
|
|
33,384
|
|
37,703
|
|
(11.5)%
|
Adjusted CASM
(cents)
|
¢
|
16.74
|
¢
|
29.82
|
¢
|
(13.08)
|
¢
|
23.32
|
¢
|
21.62
|
¢
|
1.70
|
SOURCE Air Canada