MONTREAL,
May 9 /PRNewswire-FirstCall/ - ACE Aviation Holdings Inc. (ACE)
today reported an operating loss (before provision for cargo investigations)
of
$27 million for first quarter 2008.
Air Canada reported an operating loss (before provision for cargo
investigations) of $12 million, an improvement of $66 million over first
quarter 2007, on a comparative basis.
EBITDAR(1) for ACE amounted to $205 million (before provision for cargo
investigations). Air Canada reported EBITDAR of $222 million (before provision
for cargo investigations) for the quarter, an increase of $93 million over
first quarter 2007, on a comparative basis.
The net loss for the quarter of $182 million included the provision for
cargo investigations of $125 million, foreign exchange losses of $89 million,
an aircraft impairment charge of $38 million and an $89 million pre-tax gain
from the sale of Jazz units in January 2008.
"I am pleased with the operating results for the quarter and ACE's
continued progress on the execution of its wind-up strategy," said Robert
Milton, Chairman, President and Chief Executive Officer, ACE Aviation Holdings
Inc.
"Air Canada delivered very strong operating results for the quarter in
spite of a challenging fuel price environment.
"In January 2008, we completed a $1.5 billion substantial issuer bid. We
also raised $97 million by way of an exempt trade in Jazz units. In April
2008, ACE raised a further $343 million in cash through a secondary offering
of Aeroplan units.
"We are now in a position to announce a further substantial issuer bid,"
concluded Mr. Milton.
ACE TO REPURCHASE UP TO CDN$500 MILLION OF ITS CLASS A VARIABLE VOTING
SHARES AND CLASS B VOTING SHARES PURSUANT TO A SUBSTANTIAL ISSUER BID
ACE today announced that its Board of Directors has authorized a
substantial issuer bid (the Offer) to purchase for cancellation up to Cdn$500
million of ACE's Class A Variable Voting Shares and Class B Voting Shares
(collectively, the Shares) for a combined aggregate of up to 23,809,523
Shares. The Offer is being made by way of a "modified Dutch auction" pursuant
to which shareholders may tender all or a portion of their Shares (i) at a
price of not less than Cdn$21.00 and not more than Cdn$24.00 per Share, in
increments of $0.10 per Share, or (ii) without specifying a purchase price, in
which case their Shares will be purchased at the purchase price determined in
accordance with the Offer. The Offer will expire at 5:00 p.m. (Montreal time)
on June 18, 2008, unless withdrawn or extended by ACE.
The purchase price paid for each Share properly tendered (the Purchase
Price) will be based on the number of Shares tendered and the prices specified
by shareholders making tenders, and will be the lowest price that will enable
ACE to purchase up to Cdn$500 million of Shares at a price within the range
specified above. Shareholders will receive the Purchase Price in cash for
Shares tendered at prices equal to or lower than the Purchase Price. All
Shares tendered at prices higher than the Purchase Price will be returned to
shareholders. All Shares purchased by ACE will be purchased at the same price,
even if shareholders have selected a lower price. If the number of Shares
tendered at or below the Purchase Price would result in an aggregate Purchase
Price in excess of Cdn$500 million, those Shares will be purchased on a pro
rata basis.
In accordance with the terms of the convertible Preferred Shares of ACE,
the holders of Preferred Shares will be permitted to participate in the Offer
by depositing their Preferred Shares on an as converted basis.
The Offer is not conditional upon any minimum number of Shares being
deposited, however, the Offer is subject to certain other conditions,
including regulatory approval. Full particulars of the terms and conditions of
the Offer will be contained in the Offer to Purchase and Issuer Bid Circular
and related documents which will be filed with applicable securities
regulatory authorities in Canada and the United States and mailed to holders
of Shares, Preferred Shares and 4.25% Convertible Senior Notes on or about May
13, 2008.
Press release is for informational purposes only
This press release is for informational purposes only and does not
constitute an offer to buy or the solicitation of an offer to sell ACE Shares.
The solicitation and the offer to buy Shares will be made only pursuant to the
separate Offer to Purchase and Issuer Bid Circular, and related documents. ACE
will file the Offer to Purchase and Issuer Bid Circular and related documents
with Canadian securities regulatory authorities and a Tender Offer Statement
on Schedule T-O with the United States Securities and Exchange Commission
(SEC). Shareholders should carefully read the Tender Offer Statement, the
Offer to Purchase and Issuer Bid Circular, the related letter of transmittal
and other related documents because they contain important information,
including the various terms and conditions of the Offer. The Offer to Purchase
and Issuer Bid Circular, the related letter of transmittal and certain other
documents will be delivered without charge to all holders of Shares, Preferred
Shares and 4.25% Convertible Senior Notes.
The Tender Offer Statement (including the Offer to Purchase and Issuer Bid
Circular, the related letter of transmittal and all other offer documents
filed by ACE with the SEC) will be available without charge at the SEC website
at www.sec.gov or by calling the Corporate Secretary office of ACE at (514)
205-7856. Offer documents required to be filed in Canada will also be
available without charge at www.sedar.com.
(1) Non-GAAP Measures
EBITDAR is a non-GAAP financial measure commonly used in the airline
industry to assess earnings before interest, taxes, depreciation and aircraft
rent. EBITDAR is used to view operating results before aircraft rent and
depreciation, amortization and obsolescence as these costs can vary
significantly among airlines due to differences in the way airlines finance
their aircraft and other assets. EBITDAR is not a recognized measure for
financial statement presentation under GAAP and does not have standardized
meaning and is therefore not likely to be comparable to similar measures
presented by other public companies. Readers should refer to ACE's Quarter 1
2008 Management's Discussion and Analysis (MD&A) for a reconciliation of
EBITDAR (before the provision for cargo investigations) and EBITDAR to
operating loss.
For further information on ACE's public disclosure file, including ACE's
Annual Information Form, please consult SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar.shtml
CAUTION REGARDING FORWARD-LOOKING INFORMATION
---------------------------------------------
Certain statements in this news release may contain 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, by their nature, are based on assumptions 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, energy prices,
general industry, market and economic conditions, war, terrorist acts, changes
in demand due to the seasonal nature of the business, the ability to reduce
operating costs and employee counts, employee relations, labour negotiations
or disputes, 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
throughout ACE's filings with securities regulators in Canada and the United
States and, in particular, those identified in the Risk Factors section of
ACE's 2007 MD&A dated February 7, 2008 and in Section 10 of ACE's Quarter 1
2008 MD&A dated May 9, 2008. The forward-looking statements contained herein
represent ACE's expectations as of the date they are made and are subject to
change after such date. However, ACE disclaims 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.
Consolidated Statement of Operations
-------------------------
Three Months Ended
Unaudited
(Canadian dollars in millions except per March 31 March 31
share figures) 2008 2007(x)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating revenues
Passenger $ 2,311 $ 2,152
Cargo 124 140
Other 291 333
-------------------------------------------------------------------------
2,726 2,625
-------------------------------------------------------------------------
Operating expenses
Wages, salaries and benefits 496 698
Aircraft fuel 715 585
Aircraft rent 63 104
Airport and navigation fees 241 243
Aircraft maintenance, materials and supplies 203 136
Communications and information technology 73 76
Food, beverages and supplies 77 83
Depreciation, amortization and obsolesence 169 146
Commissions 53 59
Capacity purchase with Jazz 235 -
Special charge for labour restructuring - 9
Other 428 515
-------------------------------------------------------------------------
2,753 2,654
-------------------------------------------------------------------------
Operating loss before under-noted item (27) (29)
Provision for cargo investigations (125) -
-------------------------------------------------------------------------
Operating loss (152) (29)
-------------------------------------------------------------------------
Non-operating income (expense)
Interest income 25 33
Interest expense (96) (123)
Interest capitalized 17 36
Gain on disposal of assets 46 7
Gain (loss) on financial instruments recorded
at fair value (23) 34
Equity and other investment income 12 3
Other (1) -
-------------------------------------------------------------------------
(20) (10)
-------------------------------------------------------------------------
Loss before the following items (172) (39)
Non-controlling interest 64 (23)
Foreign exchange gain (loss) (89) 33
Recovery of (provision for) income taxes
Current - (6)
Future 15 (37)
-------------------------------------------------------------------------
Loss for the period $ (182) $ (72)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Loss per share
Basic and Diluted $ (2.96) $ (0.70)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(x) Effective March 14, 2007, the results and financial position of
Aeroplan and effective May 24, 2007, the results and financial
position of Jazz are not consolidated with ACE. Effective October 16,
2007, the results and financial position of ACTS are not consolidated
with ACE. The notes are an integral part of the interim consolidated
financial statements and are available on SEDAR at www.sedar.com and
EDGAR at www.sec.gov/edgar.shtml.
Consolidated Statement of Financial Position
-------------------------
Unaudited March 31 December 31
(Canadian dollars in millions) 2008 2007(x)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 1,254 $ 2,300
Short-term investments 679 839
-------------------------------------------------------------------------
1,933 3,139
-------------------------------------------------------------------------
Restricted cash 55 124
Accounts receivable 841 793
Aircraft fuel inventory 72 98
Fuel derivatives 135 68
Prepaid expenses and other current assets 153 199
Future income taxes 164 200
-------------------------------------------------------------------------
3,353 4,621
-------------------------------------------------------------------------
Property and equipment 7,743 7,925
Deferred charges 51 51
Intangible assets 650 647
Deposits and other assets 624 527
-------------------------------------------------------------------------
$ 12,421 $ 13,771
-------------------------------------------------------------------------
LIABILITIES
Current
Accounts payable and accrued liabilities $ 1,179 $ 1,266
Advance ticket sales 1,437 1,245
Current portion of Aeroplan Miles obligation 55 55
Current portion of long-term debt and capital
leases 701 686
-------------------------------------------------------------------------
3,372 3,252
-------------------------------------------------------------------------
Long-term debt and capital leases 4,035 4,006
Convertible preferred shares 188 182
Future income taxes 50 50
Pension and other benefit liabilities 1,773 1,824
Other long-term liabilities 624 483
-------------------------------------------------------------------------
10,042 9,797
-------------------------------------------------------------------------
Non-controlling interest 692 757
SHAREHOLDERS' EQUITY
Share capital and other equity 336 450
Contributed surplus 277 504
Retained earnings 872 2,209
Accumulated other comprehensive income 202 54
-------------------------------------------------------------------------
1,687 3,217
-------------------------------------------------------------------------
$ 12,421 $ 13,771
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(x) Effective March 14, 2007, the results and financial position of
Aeroplan and effective May 24, 2007, the results and financial
position of Jazz are not consolidated with ACE. Effective October 16,
2007, the results and financial position of ACTS are not consolidated
with ACE. The notes are an integral part of the interim consolidated
financial statements and are available on SEDAR at www.sedar.com and
EDGAR at www.sec.gov/edgar.shtml.
Consolidated Statement of Changes in Shareholders' Equity
------------------------------------------
Three Months Year Three Months
Ended Ended Ended
Unaudited March 31 December 31 March 31
(Canadian dollars in millions) 2008 2007(x) 2007(x)
-------------------------------------------------------------------------
Share capital
Common shares, beginning of
period $ 243 $ 533 $ 533
Repurchase and cancellation
of common shares (115) - -
Distributions of Aeroplan
units - (306) (274)
Distributions of Jazz units - (70) (51)
Issue of shares through
stock options exercised 1 86 19
-------------------------------------------------------------------------
Total share capital 129 243 227
-------------------------------------------------------------------------
Other equity
Convertible preferred shares 117 117 117
Convertible senior notes 90 90 92
-------------------------------------------------------------------------
Total share capital and other
equity 336 450 436
-------------------------------------------------------------------------
Contributed surplus
Balance, beginning of period 504 25 25
Repurchase and cancellation
of common shares (228) - -
Fair value of stock options
issued to Corporation
employees recognized as
compensation expense 1 25 5
Fair value of exercised stock
options to share capital - (29) -
Aeroplan negative investment - 483 426
-------------------------------------------------------------------------
Total contributed surplus 277 504 456
-------------------------------------------------------------------------
Retained earnings
Balance, beginning of period 2,209 810 810
Repurchase and cancellation
of common shares (1,155) - -
Cumulative effect of adopting
new accounting policies - 5 10
Repair Schemes and
Non-compete agreement - (4) -
-------------------------------------------------------------------------
1,054 811 820
Net income (loss) for the
period (182) 1,398 (72)
-------------------------------------------------------------------------
Total retained earnings 872 2,209 748
-------------------------------------------------------------------------
Accumulated other comprehensive
income
Balance, beginning of period 54 - -
Cumulative effect of adopting
new accounting policies - (7) (7)
Other comprehensive income 148 61 10
-------------------------------------------------------------------------
Total accumulated other
comprehensive income 202 54 3
-------------------------------------------------------------------------
Total shareholders' equity $ 1,687 $ 3,217 $ 1,643
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(x) Effective March 14, 2007, the results and financial position of
Aeroplan and effective May 24, 2007, the results and financial
position of Jazz are not consolidated with ACE. Effective October 16,
2007, the results and financial position of ACTS are not consolidated
with ACE. The notes are an integral part of the interim consolidated
financial statements and are available on SEDAR at www.sedar.com and
EDGAR at www.sec.gov/edgar.shtml.
Consolidated Statement of Comprehensive Income
-------------------------
Three Months Ended
Unaudited March 31 March 31
(Canadian dollars in millions) 2008 2007(x)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Comprehensive income (loss)
Net loss for the period $ (182) $ (72)
Other comprehensive income, net of taxes:
Net change in unrealized loss on US Airways
securities (net of tax of $1) - (4)
Net change in unrealized gain on Jazz Air
Income Fund (net of tax of ($15)) 71 -
Net gains on fuel derivatives under hedge
accounting (net of taxes of 2008 - ($46),
2007 - ($3)) 100 6
Reclassification of net realized (gains)
losses on fuel derivatives to income
(net of taxes of 2008 - $11, 2007 - nil)) (23) 8
-------------------------------------------------------------------------
148 10
-------------------------------------------------------------------------
Total comprehensive loss $ (34) $ (62)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(x) Effective March 14, 2007, the results and financial position of
Aeroplan and effective May 24, 2007, the results and financial
position of Jazz are not consolidated with ACE. Effective October 16,
2007, the results and financial position of ACTS are not consolidated
with ACE. The notes are an integral part of the interim consolidated
financial statements and are available on SEDAR at www.sedar.com and
EDGAR at www.sec.gov/edgar.shtml.
Consolidated Statement of Cash Flows
-------------------------
Three Months Ended
Unaudited March 31 March 31
(Canadian dollars in millions) 2008 2007(x)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flows from (used for)
Operating
Net loss for the period $ (182) $ (72)
Adjustments to reconcile to net cash from
operations
Depreciation, amortization and obsolescence 169 146
Gain on disposal of assets (46) (7)
Foreign exchange (gain) loss 65 (33)
Future income taxes (15) 37
Excess of employee future benefit funding
over expense (51) (69)
Decrease in Aeroplan miles obligation (16) (27)
Provision for cargo investigation 125 -
Non-controlling interest (68) 18
Other (13) (25)
Changes in non-cash working capital balances 261 351
-------------------------------------------------------------------------
229 319
-------------------------------------------------------------------------
Financing
Issue of common shares 1 19
Repurchase and cancellation of common shares (1,498) -
Aircraft and facility related borrowings 187 112
Distributions paid to non-controlling interest - (53)
Reduction of long-term debt and capital lease
obligations (323) (78)
Other - (1)
-------------------------------------------------------------------------
(1,633) (1)
-------------------------------------------------------------------------
Investing
Short-term investments 161 (155)
Proceeds from sale of Jazz units 97 -
Proceeds from escrow related to sale of ACTS 40 -
Proceeds from sale of other assets 27 45
Proceeds from sale leaseback transactions 411 -
Additions to capital assets (403) (437)
Deconsolidation of Aeroplan cash - (231)
Acquisition of Aeroman, net of cash - (53)
Other 25 12
-------------------------------------------------------------------------
358 (819)
-------------------------------------------------------------------------
Decrease in cash and cash equivalents (1,046) (501)
Cash and cash equivalents, beginning of period 2,300 1,854
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 1,254 $ 1,353
-------------------------------------------------------------------------
Cash payments of interest $ 68 $ 60
Cash payments of income taxes $ 2 $ 6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(x) Effective March 14, 2007, the results and financial position of
Aeroplan and effective May 24, 2007, the results and financial
position of Jazz are not consolidated with ACE. Effective October 16,
2007, the results and financial position of ACTS are not consolidated
with ACE. The notes are an integral part of the interim consolidated
financial statements and are available on SEDAR at www.sedar.com and
EDGAR at www.sec.gov/edgar.shtml.
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