Air Canada parent ACE Aviation has Q4 loss of $103M; annual profit $258M
ACE Aviation Holdings Inc., announced more job cuts Friday while reporting a fourth-quarter loss of $103 million, down from a year-earlier profit of $15 million.
September 19, 2007 By Carey Fredericks
MONTREAL (CP) _ ACE Aviation Holdings Inc., the corporate parent of Air Canada, announced more job cuts Friday while reporting a fourth-quarter loss of $103 million, down from a year-earlier profit of $15 million.
Canada's biggest airline said its net income was $258 million in its first full year since emerging from creditor protection, contrasting with a 2004 loss of $880 million which included $871 million in reorganization and restructuring costs.
ACE also announced Friday it will "now proceed with the reduction of non-unionized staffing levels by 20 per cent."
CEO Robert Milton said the elimination of the undisclosed number of management and other non-union employees "is necessary in this cost environment as we advance with the implementation of our business model which removes the layers of complexity that existed at the previous legacy airline."
At the same time, ACE said employees of Air Canada and the Jazz regional operation will receive a total of $54.8 million through its profit sharing plan for 2005.
"Although rising fuel costs have prevented us from achieving our 2005 profitability targets, the ACE board has approved the 2005 profit sharing payments on an extraordinary basis to recognize the efforts of our employees," Milton stated.
Air Canada workers get $43.5 million or an average of 2.7 per cent of their salaries, of which $30 million has already been paid in monthly incentives. Jazz workers get $11.3 million.
Milton said high jet fuel prices made the past year "challenging," but ACE's results "are among the strongest in the industry and we've made good progress in building shareholder value, reinventing our business and winning over more customers."
Fuel costs were up by $592 million or 37 per cent for the year.
Full-year operating revenue rose 10 per cent to $9.83 billion from $8.90 billion, with per-share earnings of $2.46 and an operating profit margin of 4.6 per cent, up from 1.3 per cent in the prior year.
Quarterly revenue was $2.36 billion, up 14 1/2 per cent from $2.06 billion, "reflecting passenger revenue increases in all markets," the airline said. The net loss of $1.02 per share in the seasonally weak October-December quarter compared with a year-ago profit of 17 cents per share.
The latest period included $30 million in writedowns or losses on the sale of assets, including $15 million on inactive Boeing 747s. There also were foreign exchange losses of $11 million, compared with currency gains of $78 million a year ago.
During the year ACE raised $792 million in new equity and debt, plus $287.5 million by spinning off the Aeroplan loyalty program income trust.
Jazz was spun off into an income trust effective Feb. 2, and Milton said ACE will monetize Air Canada Technical Services "at the earliest appropriate opportunity."
He commented that the solid fourth-quarter revenue increase "was not enough to offset rising fuel costs. We must renew our efforts to achieve a cost structure that will allow us to remain profitable in an environment of record high oil prices."