Second-fastest growing air travel market in the world
HALIFAX, April 26 /CNW/ – Jazz Air Income Fund (TSX: JAZ.UN, 'Jazz') announced today that it has agreed to invest $15 million (USD) in Latin American Regional Aviation Holding Corp. ('LARAH') in return for a 33 1/3% non-voting equity interest in the company. At the time of closing of Jazz's investment, LARAH will hold an indirect 75% equity interest in Pluna Lineas Aéreas Uruguayas S.A. ("Pluna"). The remaining 25% equity interest in Pluna is held, indirectly, by the Government of Uruguay. Jazz's $15 million USD investment, together with an additional $5 million USD which the Government of Uruguay has agreed to invest, will be used by Pluna to complete the business restructuring and to fund growth. The completion of Jazz's investment is subject to a number of closing conditions, including certain conditions relating to actions to be taken by the Government of Uruguay in connection with Jazz's investment. At closing, a Jazz representative will be appointed to the 7 member board of directors of Pluna.
Pluna is Uruguay's flagship airline and is headquartered in Montevideo. The airline is a private company and currently operates 6 CRJ 900 NextGen aircraft with 90-seat configuration to destinations in Uruguay, Argentina, Brazil, Chile and Paraguay. Pluna announced on April 14, 2010 that it has signed a follow-on firm order with Bombardier Aerospace for three additional CRJ900 NextGen regional jets and has taken options on an additional six CRJ900 NextGen aircraft. Pluna's target market, represented by a 2,500 km radius semi-circle around Montevideo, encompasses approximately 150 million people and more than 30 cities, each with a population of over 500,000 people.
"This investment provides the potential for significant returns for Jazz," said Joseph Randell, President and Chief Executive Officer, Jazz Air LP. "The South American air travel market is one of the world's fastest growing and this investment provides Jazz with an exciting opportunity to participate in that growth. We chose to invest in Pluna because we see the value and opportunity in the niche markets they serve, and we believe they have a solid business plan. The new, state-of-the-art airport terminal in Montevideo; Pluna's main hub, is a key component to the airline's future success as it provides excellent connecting passenger facilities. Further, Pluna's service extends beyond Uruguay to Argentina, Brazil, Chile and Paraguay and seeks to realize upon the growth potential in those markets. Jazz and Pluna have a common fleet type in the CRJ705/900 series regional jet, and both operate as regional carriers. We anticipate that our involvement with Pluna will produce other synergies that have the potential to create additional opportunities to generate value."
"Jazz has spent the last three years seriously considering and evaluating opportunities for diversification and growth, and we believe this transaction is another solid step in this direction," continued Mr. Randell. "Our recently announced new partnership with Thomas Cook Canada and the future addition of new Q400 NextGen turboprops that we'll fly on behalf of Air Canada, were the initial steps taken to broaden our horizons. We're confident in the Pluna team – the calibre of this group is second to none and we have great chemistry. We're also grateful for the tremendous support we've received thus far from the Government of Uruguay and other interested parties."
"We are very excited about this new partnership with Jazz," said Matias Campiani, Chief Executive Officer of Pluna. "Not only will this investment facilitate our growth plans, we believe that Jazz's operational expertise and experience will enable Pluna to realize upon synergies that will strengthen our business."
To assist our new partner with their growth plans and operations, a Jazz employee with significant operational experience is being seconded to Pluna for a minimum of one year as part of their senior management team. Cash distributions by the Jazz Air Income Fund are not affected by this development; funding for the investment is provided through general working capital.
Investor Conference Call/Audio Webcast --------------------------------------
Jazz will hold an analyst call at 10:00 a.m. ET on Monday, April 26, 2010 to discuss the Pluna transaction. The call may be accessed by dialing 1.888.231.8191 or 647.427.7451 for the Toronto area. The call will be simultaneously webcast via: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3045020 or in the Investor Relations section of Jazz's website, 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, May 3, 2010, by dialing 416.849.0833 or toll free 1.800.642.1687, and passcode 70335530 # (pound key).
CAUTION REGARDING FORWARD-LOOKING INFORMATION ---------------------------------------------
This news release should be read in conjunction with the Jazz's audited consolidated financial statements for the year ended December 31, 2009 and MD&A dated December 31, 2009, filed with Canadian Securities regulatory authorities (available at www.sedar.com).
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, risks relating to Jazz's relationship with Air Canada, risks relating to the airline industry, energy prices, general industry, market credit and economic conditions, competition, insurance issues and costs, supply issues, war, terrorist attacks, epidemic diseases, acts of God, changes in demand due to the seasonal nature of the business, the ability to reduce operating costs and employee counts, secure financing, 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 the Jazz's MD&A dated December 31, 2009. The forward-looking statements contained in this discussion represent the expectations of Jazz as of April 20, 2010, and are subject to change after such date. However, Jazz and Jazz Air LP disclaim 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 LP
Jazz Air LP ("Jazz Air") is indirectly wholly owned by the Jazz Air Income Fund, and has a strong history in Canadian aviation with its roots going back to the 1930s. Since Jazz became publicly traded in February 2006, it has generated some of the strongest operational and financial results in the North American aviation industry. Under a capacity purchase agreement with Air Canada, Jazz Air provides service to and from lower-density markets as well as higher-density markets at off-peak times throughout Canada and to and from certain destinations in the United States. Jazz Air currently operates scheduled passenger service on behalf of Air Canada with approximately 800 departures per weekday to over 80 destinations in Canada and in the United States with a fleet of Canadian-made Bombardier aircraft.
Beginning in November, 2010 Jazz will operate B757-200 aircraft on behalf of Thomas Cook to various sun destinations from Canada for the winter seasons. The service is subject to Jazz obtaining the required regulatory approvals and the execution of definitive leasing and maintenance agreements with Thomas Cook Airlines Ltd. For more information, visit www.flyjazz.ca.
Additional information about Pluna Lineas Aéreas Uruguayas S.A.
Pluna is Uruguay's flagship air carrier, and is headquartered in Montevideo. The airline was founded over 75 years ago and has an excellent safety record. Pluna employs approximately 650 people in 5 countries (Uruguay, Brazil, Argentina, Chile and Paraguay). For more information visit www.flypluna.com.