HALIFAX, Feb. 10 /CNW/ - Today, Jazz Air Income Fund (TSX: JAZ.UN)
announced the fourth quarter and year end 2008 results of Jazz Air LP
("Jazz"). The following are highlights of the financial performance of Jazz.
Q4 2008 HIGHLIGHTS
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- Operating revenue of $392.7 million, up 5.5%.
- Operating income of $39.7 million, up 10.3%.
- Performance incentive of $3.6 million.
- Net income of $34.9 million, down 0.5%.
- Distributable cash(1) of $37.4 million, up 13.1%.
Year end 2008 HIGHLIGHTS
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- Operating revenue of $1,636.3 million, up 9.4%.
- Operating income of $148.3 million, down 3.2%.
- Performance incentive of $15.7 million.
- Net income of $134.8 million, down 10.5%.
- Distributable cash(1) of $144.6 million, down 4.4%.
"I'm proud of Jazz's accomplishments in 2008, and despite the uncertain
economic environment and the weather-related operational challenges we faced,
we're reporting some of the more positive financial and operational results
within the North American aviation industry," said Joseph Randell, President
and Chief Executive Officer of Jazz. "We have established our Capacity
Purchase Agreement rates for the next three years and delivered on our
commitments. Importantly, we took a number of steps to further strengthen our
foundation, to reduce costs, and to position us for continued stability and
growth in the years ahead. Safety remains our absolute priority and I commend
every Jazz employee for maintaining the highest standards of safety and
professionalism - today's positive results would not be possible without their
efforts."
Financial Performance - Fourth Quarter 2008 Compared to Fourth Quarter
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2007
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Operating revenue was $392.7 million, compared to $372.1 million,
representing an increase of $20.6 million or 5.5%. The increase in operating
revenue is attributable to a $6.8 million increase in revenues relating to
pass-through costs; a higher US dollar exchange rate; no margin adjustment
owing to Air Canada recorded in the quarter due to the year-to-date 2008
performance being below the target margin of 14.09% (an adjustment owing to
Air Canada was recorded in the fourth quarter of 2007); and annual rate
increases made pursuant to the Capacity Purchase Agreement (CPA) with Air
Canada.
Performance incentives payable by Air Canada to Jazz under the CPA
amounted to $3.6 million or 1.5% of Jazz's Scheduled Flights Revenue as
compared to $4.0 million or 1.8%. Jazz therefore earned 65% of the incentives
available under the CPA versus 76%. Incentives earned in this quarter were
lower primarily as a result of the consequential impact of inclement weather
conditions leading to lower on-time performance. Other revenue sources
increased from $1.4 million to $3.7 million.
In line with the growth in revenue, total operating expenses increased
from $336.1 million to $353.0 million, an increase of $16.9 million or 5.0%.
Pass-through costs, which rose primarily as a result of increased fuel prices,
represented $6.8 million or 40.5% of the total increase in operating costs.
Aircraft fuel costs increased by $6.0 million due to an increase of $12.2
million in fuel price which was offset by a $6.2 million decrease in fuel
usage related to reduced Block Hours flown and various fuel consumption
reduction initiatives. Controllable Costs represented $10.0 million or 59.5%
of the increase primarily as a result of aircraft rent increasing $7.7 million
due to higher US dollar exchange; the addition of one CRJ705 and two Dash 8
charter aircraft; and new lease arrangements with respect to certain aircraft.
Non-operating expenses amounted to $4.8 million, an increase of $3.9
million or 415.9%, from $0.9 million. The increase was mainly attributable to
increased net interest expense and to a foreign exchange loss arising as a
result of the reduction in value of the Canadian dollar relative to the US
dollar.
EBITDA(1) was $47.6 million compared to $42.9 million in 2007, an
increase of $4.7 million or 11.1%. Operating income of $39.7 million
represents an improvement of $3.7 million or 10.3%. Distributable cash was
$37.4 million up from $33.1 and increase of $4.3 million or 13.1%.
The Controllable Adjusted Actual Margin was 14.91%, which is over the
target of 14.09% by 82 basis points or approximately $1.9 million.
