HALIFAX, Nov. 8 /CNW/ – Today, Jazz Air Income Fund (TSX: JAZ.UN, JAZ.DB) (the "Fund") announced the third quarter 2010 financial results.
The following are highlights of the financial performance.
Q3 2010 FINANCIAL HIGHLIGHTS
- Operating revenue of $379.1million.
- Operating income before amortization of CPA asset of $26.9 million.
- Net income of $19.1 million.
- Distributable cash1 of $30.6 million.
- Payout ratio of 60.1%.
Q3 2010 CORPORATE HIGHLIGHTS
- Concluded labour negotiations with all bargaining units; new collective agreements are in place.
- Negotiated a five-year flight services agreement with Thomas Cook Canada Inc.
"I'm pleased with our performance in the third quarter," said Joseph Randell, President and Chief Executive Officer of Jazz Air LP ("Jazz"). "The activities of the last quarter were primarily focused on the execution of two significant events scheduled for this month: the start-up of our operations on behalf of Thomas Cook Canada, and our corporate conversion plan. These are important milestones that we anticipate will deliver value to our employees, owners and other stakeholders."
Financial Performance -Third Quarter 2010 Compared to Third Quarter 2009
Operating revenue was $379.1 million, compared to $379.7 million, representing a decrease of $0.6 million or 0.2%. The decrease in operating revenue was mainly attributable to a lower US dollar exchange rate, a 1.1% reduction in Billable Block Hours, and a reduction in the mark-up charged by Jazz under the CPA (which became effective on August 1, 2009), offset by rate increases made pursuant to the CPA, a 0.7% increase in departures, and an increase in pass-through costs.
Other revenue earned from charter flights and other sources, such as groundhandling, decreased from $3.6 million to $3.5 million.
Total operating expenses increased from $344.9 million to $352.2 million, an increase of $7.3 million or 2.1%. Salaries, wages and benefits increased by $4.1 million due to wage and scale increases under new collective agreements, and increased pension expense resulting from a revised actuarial valuation; offset by decreased incentive compensation expense. Aircraft maintenance expense decreased by $2.0 million as a result of: the effect of the lower US dollar exchange rate on certain material purchases of $1.0 million; and a decrease in Block Hours flown of $0.5 million; offset by other maintenance costs of $0.5 million.
Non-operating expenses amounted to $0.7 million, representing a decrease of $0.8 million. This change was mainly attributable to a foreign exchange gain arising as a result of the change in the value of the Canadian dollar relative to the US dollar; offset by a reduction in gain on disposal of property and equipment, and a net increase in interest expense relating to the issuance of convertible debentures by Jazz in November 2009.
EBITDA1 was $34.3 million compared to $42.5 million in 2009, a decrease of $8.2 million or 19.3%. Operating income, before the amortization of the CPA asset, of $26.9 million represents a reduction of $7.9 million or 22.7%. Distributable cash was $30.6 million, down $7.3 million or 19.3% from $37.9 million.
Net income for the third quarter of 2010 was $19.1 million compared to $25.3 million in 2009, a decrease of $6.2 million or 24.6%.
Jazz Air Income Fund's unaudited interim consolidated financial statements for the period ended September 30, 2010, 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: email@example.com or (902) 873-5094.
Quarterly Investor Conference Call / Audio Webcast
Jazz will hold an analyst call at 11:00 a.m. ET on Tuesday, November 9, 2010 to discuss the third quarter 2010 financial results of Jazz Air Income Fund. The call may be accessed by dialing 1-888-231-8191. The call will be simultaneously audio webcast via: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3237740 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, Tuesday, November 16, 2010, by dialing (416) 849-0833 or toll-free 1-800-642-1687, and passcode 14293125# (pound key).
1Non-GAAP Financial Measures
EBITDA (earnings before interest, taxes, depreciation, amortization and obsolescence) is a non-GAAP financial measure commonly used throughout all industries to view operating results before interest expense, interest income, depreciation and amortization, gains and losses on property and equipment and other non-operating income and expense. Management believes EBITDA assists investors in comparing Jazz's performance on a consistent basis without regard to depreciation and amortization, which are non-cash in nature and can vary significantly depending on accounting methods and non-operating factors such as historical cost. EBITDA should not be used as an exclusive measure of cash flow because it does not account for the impact on working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statement on cash flows.
Distributable cash is a non-GAAP measure generally used by Canadian open-ended trusts as an indication of financial performance. It should not be seen as a measurement of liquidity or a substitute for comparable measurements 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 the Fund's Management Discussion and Analysis for a reconciliation of distributable cash to cash provided by operating activities.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This news release should be read in conjunction with the Fund's unaudited interim consolidated financial statements for the period ended September 30, 2010 and MD&A dated November 8, 2010, 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 and Thomas Cook Canada Inc., 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 Fund's MD&A dated November 8, 2010. The forward-looking statements contained in this discussion represent the expectations of the Fund and Jazz as of November 8, 2010, and are subject to change after such date. However, the Fund and Jazz 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 Income Fund
The 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.
About Jazz Air LP
Jazz Air LP ("Jazz") 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 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 currently operates scheduled passenger service on behalf of Air Canada with approximately 790 departures per weekday to 85 destinations in Canada and in the United States with a fleet of Canadian-made Bombardier aircraft.
Jazz began operating two B757-200 aircraft this month on behalf of Thomas Cook and to various sun destinations from Canada and will be operating a total of six B757-200 aircraft by December for the winter seasons.
For more information, visit www.flyjazz.ca.