MONTREAL — Air Canada saw net income hit a record $340 million in 2013, up substantially from net income of $55 million in 2012, an improvement of $285 million.
For the fourth quarter of 2013, where the carrier was hit by severe weather and a falling Canadian dollar, Air Canada reported a net loss of $6 million compared to a net loss of $60 million in the fourth quarter of 2012.
“I am extremely pleased to report Air Canada’s best full year financial performance in the Corporation’s history,” said Calin Rovinescu, President and Chief Executive Officer. “Adjusted net income for the year was a record $340 million and represents a six-fold increase from 2012. These results underscore the significant operating leverage opportunity that we have. We achieved this increase in adjusted net income based on total revenue growth of 2.2% for the year and on a decrease in unit costs of 1.5%. Very good progress was made last year in executing on our transformation strategy and this was recognized by the investment community with a tripling of our share price in 2013.
“Our performance in 2013, especially the last three quarters where adjusted net income improved each quarter versus the prior year, establishes a strong foundation for continued success in 2014. We started 2014 facing challenges of extreme weather conditions at our Canadian hubs and a falling Canadian dollar. As we forecasted weakness in the Canadian dollar as part of our annual budgeting process, although not at its current level, we had a head start looking at ways to mitigate the exposure, such as through additional cost reduction and new revenue enhancement initiatives. We also have over $1 billion in U.S. dollar revenues, a currency hedge position and U.S. cash reserves that will absorb some of the exposure. Additionally, historically, the price of crude oil and the Canadian dollar have shown some correlation, where decreases in the value of the Canadian dollar have been associated, to an extent, with decreases in the cost of fuel. However, given severe weather conditions, the weaker Canadian dollar and the impact of increased capacity in certain markets, we expect our first quarter EBITDAR to be below last year’s level by $15 to $30 million. We are confident in our ability to mitigate the financial impact of these factors over the 2014 fiscal year.”